Program to begin July 1, 2018; applies to most taxes
On March 6, 2018, Alabama Governor Kay Ivey signed House Bill 137, establishing a tax amnesty for a three month period beginning July 1, 2018 and ending on Sept. 30, 2018. Eligible taxpayers will receive a complete waiver of interest and penalties. Additionally, a limited look-back of 36 months applies separately to each applicable tax. The amnesty is available for most taxes administered by the Alabama Department of Revenue, except for motor fuel, motor vehicle and property taxes.
Taxes eligible for the amnesty include the following:
- Taxes due prior to Jan. 1, 2017
- Taxes for taxable periods that began before Jan. 1, 2017
Participating taxpayers must agree to waive the right to protest or initiate an administrative or judicial proceeding. The amnesty agreement will only apply to the specific tax and period for which amnesty is granted.
Taxpayers that have been contacted by the department in the past two years concerning the tax type at issue are ineligible to apply for amnesty for that tax. Additional ineligible taxpayers include:
- Taxpayers party to a criminal investigation or criminal litigation for nonpayment, delinquency, or fraud concerning any state tax administered by the department
- Taxpayers that deliver a false or fraudulent amnesty application or other document
- Taxpayers issued a final assessment in which the appeal period has ended
- Taxpayers that entered into a voluntary disclosure agreement before Dec. 31, 2017
- Taxpayers granted amnesty under the Alabama Tax Delinquency Amnesty Act of 2016
Taxpayers granted amnesty must submit all applicable returns, supporting documentation and the full payment of tax by Nov. 15, 2018. Additionally, no payment plans will be permitted for taxes approved for amnesty.
Takeaways
The last two years have been active for tax amnesties, with states like Connecticut, New Jersey, Ohio, Oklahoma, Rhode Island and Virginia, and the Multistate Tax Commission, offering some version of an amnesty program. A Texas amnesty program is currently scheduled to begin on May 1, 2018. According to the fiscal notes of House Bill 137, Alabama collected $5.7 million during the Alabama Tax Delinquency Amnesty Act of 2016, a program similar to the new 2018 program.
Taxpayers considering applying for amnesty or who would like to discuss the benefits and risks of the programs should contact their state tax adviser.
