United States

As summer cools off, state amnesties begin to heat up

TAX BLOG

When the 2017 legislative session kicked off in January, states were not yet discussing tax amnesties as a mechanism to relieve budget deficits and revenue shortfalls. Earlier in the year, the Commonwealth of Pennsylvania was the only scheduled state tax amnesty, recently concluding in July. However, amnesty activity picked up steam as legislative sessions came to a close. The chart below provides a high-level summary of current and upcoming amnesty programs: 

 

State

Amnesty Period

General Benefits

RSM Perspective

Multistate Tax Compact (MTC): online marketplace program 

Aug. 17 - Oct. 17, 2017

Waiver of penalty and interest

MTC nexus program offers limited-time amnesty for Amazon retailers

New Jersey: limited program for referral arrangements

Aug. 21 – Nov. 21, 2017

Waiver of penalty

New Jersey offers limited click-through nexus voluntary disclosure

Oklahoma

Sept. 1 - Nov. 30, 2017

Waiver of penalty and interest

Oklahoma enacts tax amnesty program

Rhode Island

75 days, ending by Feb. 15, 2018

Waiver of penalty and reduced interest

Rhode Island enacts tax amnesty program

Ohio

Jan. 1 - Feb. 15, 2018

Waiver of penalty and half interest

Ohio enacts broad tax changes in FY18 budget bill

Virginia

Sept. 13 - Nov. 14, 2017

Waiver of penalty and half interest

Virginia issues tax amnesty program guidance

 

Most of the programs apply to the majority of taxes administered by the respective state taxing authority. However, each state has specific eligibility requirements which may vary greatly among the programs. Additionally, many states independently offer voluntary disclosure programs.

A couple other states to keep an eye on include South Carolina and Texas. In 2015, the South Carolina legislature authorized the department of revenue to designate an amnesty period, but that program has not yet been established. This year, the Texas fiscal year 2018-2019 budget included a provision requiring the comptroller to establish an amnesty. No further information has been provided on the program as of the date of this blog.

Tax amnesty and voluntary disclosure programs can be extremely beneficial to taxpayers with outstanding liabilities, but can also cause headaches for those eligible that fail to apply. Amnesty programs often impose additional penalties on taxpayers with eligible liabilities that do not apply and are later subject to assessment. That consideration, and other nuances such as choosing an amnesty over a voluntary disclosure, are considerations that should be discussed with your tax advisor.


Mo Bell-Jacobs

Manager

Mo examines state and local tax issues and the impact of legislation on middle market companies. Contact him at mo.bell-jacobs@rsmus.com.

Areas of focus: State and Local TaxWashington National Tax