Hey, fellow Texans? Need a fresh tax start? Then you’re in luck for the next couple of months.
On June 15, a tax amnesty began that will waive penalties and interest for Lone Star Staters who underreported their taxes. Since Texas has no personal income tax, this opportunity primarily benefits businesses.
Under the program, delinquent taxpayers can get right with the tax man (or, in our case, the tax woman) by paying what they owe during the amnesty period. By doing so, they won’t face penalties or interest on the overdue amounts.
State taxes administered by the Texas Comptroller, except unclaimed property and the Public Utility Commission gross receipts assessment, are eligible for amnesty, which runs through Aug. 15.
One other caveat: This two-month no-penalty period only applies to folks who haven’t been caught. If your unpaid assessments have already been identified by the Comptroller, you’re currently under audit or review, or you’ve already received a call or other communication from the Comptroller about an audit or possible deficiency, you can’t use the amnesty offer to eliminate associated penalties and interest
Also, Texas taxpayers who have signed a settlement agreement or voluntary disclosure agreement with state tax officials before the amnesty began on Friday also are ineligible.
In announcing the amnesty, Susan Combs, Texas Comptroller of Public Accounts, emphasized that Texans choosing to participate will benefit from the opportunity to:
- Pay without penalty and interest;
- Clear up unpaid, underreported or overdue taxes without fear of retaliation;
- Avoid legal action; and
- Reduce the chance of being audited.
"This is also a great opportunity for businesses that have neglected to get a tax permit and report state taxes," said Combs. "This is their chance to begin meeting their tax responsibilities without fear of being penalized for past mistakes."
Conversely, added Combs, taxpayers who don’t take advantage of the amnesty will be responsible for all taxes, interest and penalties, which can be as high as 60 percent of the tax due.
Individual taxes, too: While we Texans don’t have to deal with income taxes, there are some assessments that individuals might have overlooked and could pay up during this amnesty period.
For example, the state collects tax on all retail sales of motor vehicles in Texas. The sales tax also applies to private vehicle sales/purchases, as discussed in this earlier blog item, as well as to autos that Texas residents crossed state lines to buy and bring back onto public roadways.
Speaking of out-of-state purchases, Texas, like most states with sales taxes, also levies a use tax on purchases, by individuals and businesses, of items elsewhere and brought back into the state. This includes mail order and Internet transactions. And use tax violations are included in the amnesty program.
More about Texas’ 2007 tax amnesty is available at Fresh Start.
Iowa amnesty on the way: Hawkeye State tax officials also are offering a tax amnesty this year, but not until the fall: specifically Sept. 4 through Oct. 31.
Iowa’s amnesty period also isn’t quite as lenient. Penalties and civil or criminal prosecution will be waived for residents who apply in writing for amnesty. But they’ll still have to pay, in addition to their delinquent taxes, 50 percent of the interest that is due on that owed amount.
And, as in Texas, there are a few instances of ineligibility. Iowa tax amnesty will not be granted to a taxpayer who is the subject of an active criminal investigation or who is a party to a criminal proceeding involving nonpayment or fraud.
You can find more on the Iowa amnesty at the blog of Des Moines-based Roth & Company, PC.
Amnesty overview: About: Tax Planning has more on the general concept of tax amnesties. And the Federation of Tax Administrators offers a historical look at state tax amnesty programs.
