Across the U.S., amnesty seems to be a popular topic these days. The Multistate Tax Commission’s (MTC) special amnesty program for marketplace retailers recently ended. And a few other states have recently announced their own amnesty programs so that they can benefit from potential increased compliance as well. Connecticut (CT), Ohio (OH) and Rhode Island (RI) are the latest states to roll out amnesty programs of their own. And we expect others to follow. The states administer amnesty programs because they want to induce companies to become compliant by waiving, or limiting penalties and interest for prior unpaid taxes.
Recent MTC amnesty program
Many states just took part in a special amnesty program. The MTC had negotiated this special program for online sellers using marketplace fulfillment services (such as Fulfillment by Amazon) that created nexus and thereby had sales tax and income tax obligations. Twenty five states participated, including CT and RI. To find out more about this amnesty program, click here.
This special amnesty program waived taxes in addition to interest and penalties. We’ve cautioned our clients not to expect amnesties to be that generous in the future. Most state amnesties allow taxpayers to waive penalties and some interest, but rarely the tax itself.
Amnesty program in Rhode Island
Beginning December 1, 2017, the Rhode Island Division of Taxation is administering an amnesty program that will only last 75 days; it will close on February 15, 2018. Taxpayers will be allowed to pay the full amount of overdue taxes they owe plus 75% of any interest due, without having to pay the remaining interest and any penalty amounts due. Taxpayers will also not be subject to any other civil or criminal penalties. The division will begin accepting applications for this program on December 1, 2017. This program applies to taxes due for taxable periods ending on or before December 31, 2016.
For more information on this program, click here.
Ohio’s new amnesty program
Ohio has decided to roll out an amnesty program of its own early next year. On June 30, 2017, Ohio’s 2018-2019 biennial budget legislation was signed into law by Governor John Kasich. Part of this budget bill includes this amnesty program that will begin on Jan 1, 2018 and end on Feb 15, 2018.
It is aimed at taxpayers with delinquent Ohio taxes who voluntarily come forward during this short amnesty program and pay the full amount of taxes. The state will waive all penalties and one-half of interest otherwise due.
Unreported or underreported Ohio taxes which were due and payable as of May 1, 2017 are eligible for this program. Both personal and business taxes are eligible.
For more information on OH’s amnesty program, click here.
Connecticut’s “Fresh Start” Program
CT is calling their upcoming amnesty program a “Fresh Start” Program so that companies can get a “Fresh Start” in regards to their taxes in the state. The governor of Connecticut signed into law on October 31st a bill that allows the CT Department of Revenue (DOR) to implement a “Fresh Start” program for eligible taxpayers through November 30, 2018. This program provides incentives to taxpayers to voluntarily come forward and pay unreported tax liabilities and is available to both individuals and businesses. Some of these incentives include penalties being waived and a 50% reduction on the interest applied to the tax reported.
Taxpayers may be eligible if they failed to file a return, or failed to report the full amount of tax on a previously filed return for any tax return due on or before December 31, 2016.
For more information on this program, click here.
We can help!
With all the establishment of the various amnesties, it is a good time for companies to evaluate their situations (e.g., determining if your company has nexus or not) and whether it’s more beneficial to participate in amnesty or whether a traditional Voluntary Disclosure Agreement (VDA) with states where you may have nexus may be more advantageous.
We recommend to our clients that it’s not a good idea to act with haste. If you have any doubts about your company’s multistate tax filing situation, consult with professionals (like Miles Consulting Group) about your situation before acting on it.
Specifically, if your business has operations in CT, OH or RI, now is a good time to take a look at your current situation and see if these amnesty programs are right for you, particularly in OH and RI where the programs have very short windows. There is more time to participate in the CT amnesty, as this program is available through November 30, 2018.
If you have any questions, please don’t hesitate to contact us at info@milesconsultinggroup.com. We are happy to help with all of your multistate tax needs.
