Would a state sales/use tax amnesty program benefit your company?

Many states are struggling financially and are constantly devising additional ways to increase revenue. One alternative method can be a benefit to both taxpayers and the government. It is called amnesty. Amnesty programs allow taxpayers who have past tax liabilities to come forward voluntarily and pay off their debts; in exchange the states generally waive penalties. Some states even reduce or waive interest.

Reduced paperwork requirements is another potential benefit. For example, a state may not require the taxpayer to file each return individually, but may allow submission of a spreadsheet of liabilities instead. Amnesty programs are generally limited to non-filing taxpayers or taxpayers who have not yet been identified by the state. Taxpayers who are currently under audit or have previously received a nexus questionnaire are often denied participation in such programs.

Don’t wait too long to apply. Amnesty programs are generally only available for limited time periods, generally between a two month and six month period. Additionally, many state amnesty programs subsequently penalize taxpayers for not taking advantage of the amnesty. This can lead to additional penalties and interest. Some states have gone so far as doubling the amount of penalties and charging 50% more in interest.

Even if a state is not offering amnesty or your company does not qualify, there may still be ways your company can pay off its debt without paying penalties. See also Exposure Resolution.

The good news is that remedies are often available when you’ve discovered obligations before auditors contact you. We can often help even if you are already under audit.

To learn more about how we can help with these or the following issues, please Contact us today:

• Assistance with proactive minimization of prior period sales/use tax liabilities
• Help with nexus questions and issues
• Other sales and use tax related questions

What are your priority issues and when do you want them resolved?

Please click here for more Sales Tax Tips. For additional insight on common sales tax concerns, please see the Did You Know? section of our website.

* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.

AFFILIATED NEXUS — A HANDFUL OF STATES ARE STRETCHING THE CONSTITUTIONAL LIMITATIONS ON NEXUS FURTHER AND FURTHER WHEN IT COMES TO A SALES AND USE TAX FILING AND COLLECTION OBLIGATION FOR OUT-OF-STATE BUSINESSES. MORE STATES ARE LIKELY TO PASS SIMILAR LEGISLATION.