Owner Miles Consulting Group
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A Tsunami of Tax Amnesty Programs is Coming

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Mar 27th 2018
Owner Miles Consulting Group
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There always seems to be an amnesty program going on somewhere, particularly if you know where to look.

States are aggressively pursuing delinquent taxpayers, while still making it relatively easy for them to come forward themselves. Last year, we wrote an article about some interesting amnesty programs in Connecticut (CT), Ohio (OH), and Rhode Island (RI).

Most amnesty programs allow for a waiver of penalties and a limitation on interest if businesses come forward under the terms of the program as specified by the state legislature. Most of the programs are limited in time (often only a two to three month window) and only cover certain taxes. 

Yet, with the right fact pattern, a company might benefit from engaging in such a program. But not always. As with most things related to multi-state tax issues, the answer may require a little more research and analysis.

Current Amnesty Programs

Connecticut’s “Fresh Start” amnesty program is currently active. It began on October 31, 2017 and will end on November 30, 2018. This program provides incentives to taxpayers to voluntarily come forward and pay unreported tax liabilities and is available to both individuals and businesses. For more information on this program, click here.

The other two states we discussed in the fall of 2017 (Rhode Island and Ohio) both ended their programs on February 15th.

Texas is on the Horizon

Many of our clients sell products (and services) in Texas. Texas will begin an amnesty program beginning on May 1 and closing on June 29, 2018. This program provides delinquent taxpayers with relief from penalties and interest on tax due.

It applies to periods prior to January 1, 2018, and includes only liabilities that have not been previously reported to the Texas Comptroller. This amnesty program was passed by the Texas Legislature in 2017 and it requires the Comptroller of Public Accounts to establish a tax amnesty program to encourage voluntary reporting by:

  • Delinquent taxpayers who do not have a Texas Sales and Use Tax Permit, or are not registered for a tax or fee administered by the Comptroller’s office
  • Taxpayers who have a permit, but may have underreported or owe additional taxes or fees

The amnesty program is the perfect opportunity for taxpayers to get into compliance. This program is only available for a limited time, so companies that want to participate should act fast. For more information on this program, click here.

That said, from our perspective, the amnesty doesn’t really provide additional benefit from what the state already allows under its voluntary disclosure program. So, again, performing a taxability exposure analysis early, and determining the best course of action is key – in Texas and other states!

Next Steps

With all the establishment of various amnesties, it is a good time for you to support your clients with evaluating their situations (e.g., determining nexus or not) and whether it’s more beneficial to participate in amnesty or whether a traditional Voluntary Disclosure Agreement (VDA) with states where your client may have nexus may be more advantageous.

Talking about advantages and assisting your clients with this kind of critical advisory services will be a great way to build deep, trusting relationships which in turn will result in more high-margin, recurring business for your practice.

The original artilce appeared on the Miles Consulting Group blog.

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