Practice and Procedure: ‘Tis the Season for Tax Amnesty and Voluntary Disclosure Programs

Oklahoma and Virginia are currently holding voluntary disclosure and tax amnesty programs that offer various levels of penalty and interest waivers intended to induce payment of outstanding tax and filing of delinquent returns and reports. Other state legislatures have authorized such programs to be developed by state revenue departments and held in the near future.

Oklahoma

The Oklahoma Voluntary Disclosure Initiative began on Sept. 1, 2017, and will end on Nov. 30, 2017. Taxpayers who voluntarily file delinquent returns and reports and pay the full amount of taxes due will be granted a full waiver of penalties and interest. Participating taxpayers must continue to make payments and fulfill any filing requirements associated with the voluntarily disclosed delinquency for at least one year, otherwise the interest and penalties will be reinstated.

Oklahoma will also permit taxpayers to enter into a monthly payment plan, not to exceed six months, if they cannot pay the tax due in full during the initiative period. The required down payment is 10 percent of the tax due. Subsequent payments will be due on the 15th of each month.

The taxes eligible for the voluntary disclosure program are:

• Income Tax
• Withholding Tax
• Sales Tax
• Use Tax
• Mixed Beverage Tax
• Gasoline and Diesel Tax
• Gross Production and Petroleum Excise Tax

There are several disqualifiers for this program. Taxpayers who have been contacted by the Oklahoma Tax Commission, or a related third party, about their tax delinquency are not eligible nor are those who have collected taxes from others and failed to report them to the commission. Also, those who have done a voluntary disclosure agreement for a particular tax type in the last three years are not eligible to participate in this program for that same tax type.

Virginia

The Virginia Tax Amnesty program began on Sept. 13, 2017, and will end on Nov. 14, 2017. All taxes administered by the Virginia Department of Taxation are generally eligible for amnesty. Participating taxpayers will receive a waiver of all penalties and one-half of the accrued interest in exchange for paying the full amount of tax due and one-half of the accrued interest.

Some of the tax filings and corresponding periods eligible for amnesty are as follows:

• Corporate Income Tax – Tax Year 2015 and Prior
• Pass-Through Entity Information Return – Tax Year 2015 and Prior
• Employer Income Tax Withholding – Month of April 2017 and Prior
• Individual Income Tax – Tax Year 2015 and Prior
• Retail Sales and Use Tax – Month of April 2017 and Prior
• Bank Franchise Tax – Tax Year 2016 and prior
• Fiduciary Income Tax – Tax Year 2015 and Prior
• Cigarette Tax – Filings Due by June 15, 2017, and Prior
• Insurance Premiums License Tax – Tax Years 2013 through 2016
• Motor Vehicle Fuel Sales Tax – Month of June 2013 and Prior

Numerous other tax types are eligible for amnesty, and they are set forth in the program guidelines released by the Virginia Tax Commissioner. There are also several disqualifiers for the program. Bills with an assessment date after June 15, 2017, are generally ineligible for amnesty subject to specific exceptions. Also, obligations of taxpayers with active jeopardy or fraud assessment along with obligations of taxpayers under criminal investigation or prosecution for intending to evade tax are ineligible for amnesty.

Virginia will penalize amnesty-eligible taxpayers who failed to participate in the program by assessing a post-amnesty penalty of 20 percent of the unpaid amnesty-eligible taxes. The penalty will not be assessed on any outstanding interest or penalties.

Rhode Island

Rhode Island mandated the establishment of a tax amnesty program in the fiscal year 2018 appropriations bill, H.B. 5175. The program will run from Dec. 2, 2017, until Feb. 15, 2018. Taxpayers will be granted a full waiver of penalties in exchange for paying the full amount of delinquent tax and interest accrued at the statutory rate reduced by 25 percent. Detailed guidelines will be available from the Rhode Island Division of Taxation.

Texas

In the appropriations bill for the 2018–2019 biennium period—Sept. 1, 2017 to Aug. 31, 2019—Texas authorized the establishment of a tax amnesty program. The Texas Comptroller of Public Accounts will administer and develop specific guidelines for the program.

Ohio

Ohio will hold a tax amnesty program from Jan. 1, 2018, until Feb. 15, 2018. Taxpayers will be granted a full waiver of penalties and one-half of accrued interest in exchange for paying all of the delinquent tax and one-half of the accrued interest. The Ohio Department of Taxation will administer and develop specific guidelines for the program.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Do tax amnesty and voluntary disclosure programs unintentionally encourage tax delinquency?

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