Pennsylvania’s budget for Fiscal Year 2016-17 included the chance for delinquent or non-filers to come into state tax compliance through a 60-day amnesty period. Last fall, the Pennsylvania Department of Revenue (DOR) set the official dates and guidelines for the 2017 Tax Amnesty Program, which begins Friday, April 21 and concludes Monday, June 19.
As the start date for the Commonwealth’s 2017 Tax Amnesty Program nears, we rounded up some key questions taxpayers may have about the process and highlight important points to keep in mind.
How will the PA Tax Amnesty Program work?
Starting on April 21, businesses and individuals that have delinquent tax liabilities as of December 31, 2015, may come into compliance with DOR until June 19. Eligible program participants can file back taxes with penalties waived and pay only half of the interest that has accrued over time. This could represent a significant reduction in interest charges for certain taxpayers.
What tax types are eligible for amnesty?
According to program guidelines, all taxes owed to the Commonwealth administered by DOR – whether it is gross receipts, corporate net income or sales and use – are eligible for the Amnesty Program. DOR notes that taxes, interest and penalties collected under the International Fuel Tax Agreement owed to other states or provinces are not eligible for the Amnesty Program. The program fact sheet issued last year by DOR provides a full listing of eligible tax types.
Who can participate?
Business and individual taxpayers that have not paid or underpaid state taxes as of December 31, 2015, are eligible for amnesty during this time period. This also includes taxpayers that recognize an error in reporting or payment on a previously filed return and want to correct it. For taxpayers currently appealing a tax liability, this amount may be included in the 2017 Tax Amnesty Program, but keep in mind that the administrative or judicial appeal will be withdrawn before amnesty is granted by DOR.
Keep in mind, if delinquent or unpaid taxes after December 31, 2015, exist, they must be filed before admittance to the 2017 Amnesty Program is granted, even though these delinquencies are not eligible for the preferential treatment.
Who cannot participate?
Individual and business taxpayers who participated in the previous 2010 tax amnesty program are not eligible to take part in the 2017 program. Taxpayers that are currently under investigation, currently being prosecuted or have been convicted for violating any tax law (local, state or federal) are also excluded from participation. Other exclusions include taxpayers in bankruptcy (unless permission is granted by the Bankruptcy Court) and those with an existing voluntary disclosure agreement with DOR already covering tax liability during the eligibility period.
What happens to eligible taxpayers that do not enroll?
This program is a limited time opportunity created by the General Assembly and offered through DOR with the intent of increasing compliance with and payment of a wide variety of state taxes. At the conclusion of this tax amnesty period, DOR will impose an additional five percent penalty on eligible taxpayers that did not enter the program.
The only situations in which eligible yet nonparticipating taxpayers will be spared the additional DOR penalty are:
- Currently in bankruptcy protection
- Have proof of an active deferred payment plan
- Timely administrative or judicial appeal covers the state tax liability
How can taxpayers apply?
According to the DOR, between April 21 and June 19, 2017, taxpayers must do three things to apply for the program: file an amnesty application, file all necessary returns and pay all back taxes and interest by the close of the amnesty program on June 19.
Need to determine if you are eligible for amnesty? Want to calculate anticipated penalty and interest payments? Seeking assistance to enroll in the program? RKL’s state and local tax team is here to help. Contact me at firstname.lastname@example.org or 717.525.7447.
Contributed by Jason C. Skrinak, CPA, State and Local Taxes (SALT) Practice Leader for RKL’s Tax Services Group. Highly regarded throughout the region for his deep knowledge and expertise in SALT consulting, Jason has significant experience representing taxpayers before Pennsylvania’s Board of Appeals and Board of Finance and Revenue.