More Amnesty Programs On the Way

States need cash fast and there are plenty of taxpayers who owe it to them.  During the past month several states have announced tax amnesty program.  From the info I have, it looks like Alabama, Arizona, New Jersey, Connecticut, and soon Maryland will all have some type of amnesty program. 

I'm not surprised by this movement at all.  Amnesty programs can be effective at infusing cash into the system and getting new taxpayers enrolled.  After amnesty programs expire, the states usually have more restrictive use of voluntary disclosure agreements and other non-amnesty type of voluntary payments.  Most amnesty programs don't provide for payment plans and the look back can vary from 3 years to unlimited. If an amnesty program is too restrictive it may keep some taxpayers away if they perceive they cannot afford the liability. 

During these tight economic times, the last thing your business can afford it a surprise hit from one or more departments of revenue.  If you even suspect you have a prior liability you should evaluate the amnesty programs or voluntary disclosure.  The more uncertain you are about your historical liability the more you should consider the voluntary disclosure program.  Most states limit the look back to 3 years and will abate all the penalty.  Under audit, states are going back 5 to 10 years with limited waiver of penalty.  Don't take the risk on letting an auditor determine your liability.  Be proactive and participate in the amnesty programs or the voluntary disclosure programs.