Issue
Arizona, Connecticut, New Jersey, and Virginia have announced tax amnesty programs.
Taxpayers Potentially Affected
Businesses that have not filed the appropriate tax returns in any state offering amnesty.
Background
Amnesty programs offer taxpayers the ability to settle past tax exposures on a favorable basis. Without an amnesty program, a state can assess taxes, penalties, and interest for all open years. In general, a taxpayer participating in an amnesty program is allowed to voluntarily settle unpaid taxes with reduced penalties, reduced interest, or both.
Amnesty programs are not for everyone, and each state’s program has a separate set of rules and qualification factors. Taxpayers need to do their due diligence before submitting returns through any amnesty program.
Arizona
Arizona is offering an amnesty program for:
- Individual income tax
- Corporate income tax
- Fiduciary income tax
- Withholding tax
- Luxury tax (liquor and tobacco)
- Sales and use taxes
Arizona’s amnesty program is available for nonfilers as well as filers that underreported income or claimed excess deductions. Taxpayers currently under audit by Arizona can use the amnesty program if the audit has not become final.
For taxes filed on an annual basis, amnesty is available for tax years beginning before Jan. 1, 2008. For taxes filed on a monthly basis, amnesty is available for tax periods beginning on or after Jan. 1, 2003, and ending before Jan. 1, 2008. Arizona will waive civil tax penalties and assess interest at a 3 percent rate.
The amnesty period started on May 1, 2009, and runs through June 1, 2009.
ConnecticutUnder Connecticut’s amnesty program, all taxes that are administered and collected by the state's Department of Revenue Services are eligible for amnesty, including:
- Corporate income tax
- Sales and use taxes
- Withholding tax
- Trust and estate income tax
- Composite income tax
- Individual income tax
- Gift tax
- Attorney occupational tax
- Cigarette tax
- Gift tax
- Motor vehicle fuels tax
- Withholding tax
The Connecticut amnesty program does not offer a limited look-back period and applies to taxable periods ending on or before Nov. 30, 2008. The state will waive penalties and will assess a reduced rate of interest. The amnesty period began on May 1, 2009, and runs through June 25, 2009.
New Jersey
New Jersey is offering an amnesty program that applies to most state tax liabilities for tax returns due on or after Jan. 1, 2002, and before Feb. 1, 2009. New Jersey will waive penalties and half of the balance of the interest that remains due as of May 1, 2009.
The amnesty period began on May 4, 2009, and ends at midnight on June 15, 2009.
Virginia
Virginia will offer an amnesty program for any person, individual, corporation, estate, trust, or partnership required to file a return or pay any tax administered or collected by the state’s Department of Taxation. Virginia will waive penalties and half of the assessed interest.
The exact dates of the tax periods affected by the amnesty program have not been announced, but the amnesty period is expected to occur between July 1, 2009, and June 30, 2010.
Contact Information
If you have questions about participating in any of the state amnesty programs, please contact:
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Under U.S. Treasury rules issued in 2005, we must inform you that any advice in this communication to you was not intended or written to be used, and cannot be used, to avoid any government penalties that may be imposed on a taxpayer.
