As summer cools off, state amnesties begin to heat up

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: 

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.