Alabama Tax Amnesty Program...Will it be the First of Many?

The Alabama Department of Revenue is implementing "Operation Clean Slate" which will allow registered and non-registered taxpayers to participate in a tax amnesty program which begins February 1,2009.  The amnesty program applies to unpaid Alabama sales tax only for non-registered businesses.

Eligible taxpayers are those who:

• Did not file a required return or report
• Understated or omitted any tax liability
• Erroneously claimed credits or deductions
• Not under audit
• Have not been contacted by state

Under the program the Department will waive penalty and limit the look back to 36 months.  For taxpayers that have collected sales tax but not remitted, there is no limited look back but the state will abate the penalty. 

The program begins February 1 and will likely last for 60 to 90 days.

During 2009 I suspect we will see several other states implement amnesty programs.  Last year there were a few states that implemented amnesty programs or simplified voluntary disclosure programs and the results were quite successful.

If you have identified a tax likability or believe you may have a liability for sales tax or state income it is in your best interest to be proactive in resolving the liability.  The two most common ways to resolve this are waiting for Amnesty programs or by entering into a voluntary disclosure agreement with the states. I many cases the VDA program may yield as good as even better results than the Amnesty program.  Plus, if you wait for an amnesty program, you always stand the chance that you will be detected and audited.  Under audits, the states may go back 5 to 7 or even 10 years for the liability. 

If your company has received a nexus questionnaire or has in any other way been contacted by the state it is unlikely that you will be able to participate in either an amnesty program or a voluntary disclosure program. In these cases waiting will cost you money...perhaps a lot of money.

Please feel free to leave some comments below on your experience with VDAs or tax amnesty programs.

What's your New Year's "Reservation"?

 We have all made and promptly broken many a new year's resolutions, but this year I realized that I also have many new year's "reservations".  Despite all my best intentions, I can barely keep a "resolution" for more than a few weeks.  When it comes to my "reservations" I am hoping upon hope, that none of them come to fruition.  You may have your own set of "reservations".

So what are my reservations?  I'm very concerned about the state of the U.S. economy and the efforts that Congress is making to "stimulate" it.  I have never seen so many people so anxious to spend a trillion dollars of other people's money in my life.  What are these people thinking?  Many of the new programs are called "temporary" programs.  I have never heard of a successful "temporary government program".  They are all permanent.  I have serious reservations about how much this is going to cost those of us who actually pay income tax. 

I have serious reservations about the plan to "grow the middle class". At first, I thought the plan was to bring people from the lower levels up the the middle class level.  I'm now convinced the plan is to bring people down from the upper class income levels to the middle class income levels. 

I have reservations about how the states are going to survive in the slowing economy.  This will certainly require more compliance from corporate tax payers and from individuals also. 

I have reservations that we will ever regain confidence in the financial markets as a way to save money and invest for our future.  Between Maddof and Meryl Lynch, where are we to turn for adequate ways to invest with a reasonable way to measure and manage our risk. 

I have reservations about the value of my home and whether it will ever regain the value it had just a year ago. 

I sincerely hope that none of my reservations comes to fruition.  I sincerely hope that the business community of this country can rally and capitalize on the opportunity that is before us.  I sincerely hope that the state and federal governments exercise restrain in flooding the market with cash only to spike inflation and continue to perpetuate a weak dollar policy. 

Sorry if this is a downer, but this year I have both "resolutions" and "reservations". 

How about you?  Give us some feedback.  Please tell me I'm all wet and that I should have nothing to worry about.

Happy New Year...Welcome to 2009

If you are like me, 2008 may have been the fastest year on record.  With the elections behind us (except for Minnesota) with the economy in the tank, and Congress poised to "help" us with our problems, I could not wait for a new year to begin. 

But as we enter this new year, I'm reading that the Governors have asked Congress for $ 1 Trillion in funds to help stimulate the economy by investing in certain state and local capital projects. The list contains roads, bridges, and schools.  It also includes swimming pools, museums, tennis courts, and other projects of questionable economic benefit.   My question to you is "When is this bail out mentality going to stop?"
At some point in time, we (you and me, and our children, and grand children) are going to have to pay this back.  That means higher taxes.  Much higher taxes. 

I can't even fathom how much more tax we will all have to pay to support these programs.  From what I've seen, there is no way that only the "wealthy" can pay for these items.  At some point in time, the day of tax credits and tax rebates will be over and everyone, regardless of their income, will pay something.  My focus is on the states because that's what I do.  I'm a state tax consultant. 

A year ago I proposed that the states would be very short of revenue and would become aggressive at finding non-compliant tax payers.  My prediction was too conservative. 

I'm a little surprised that the states have not unleashed a torrent of auditors and nexus investigation teams to go after the thousands of businesses who legally have an obligation to collect and remit sales tax on taxable transactions and to make them pay income tax when due.

If your business is shaky, don't think you can hide behind bankruptcy for the past due sales tax.  In many cases these taxes are a priority claim and the liability can follow you as the owner of the business.  If you have any question about whether you may have a historical liability find someone to help you analyze it. 

I'm happy to talk with you for free just to answer any questions you may have.  Call me at 877-893-5304 ext. 702. 

Happy New Year and buckle your seat belt for a bumpy ride.