Starting September 2, 2012 and running through November 15, 2012, the program is open to all taxpayers who are delinquent on any state taxes – such as personal income tax, corporate income tax and unemployment insurance tax. This also applies to Household Employer Unemployment Insurance taxes owed. Tax amnesty programs can provide full tax relief but like Rhode Island’s, they only offer a short window of opportunity, typically 2-3 months.
The goal of an amnesty program is for the government to collect as much revenue as possible within a short period of time. Since many states are facing budget deficits and underfunded state unemployment funds, tax amnesty programs may become a more common strategy to raise revenues.
As reported in recent blogs, we have seen unprecedented enforcement efforts in many states to recover lost tax revenue. Amnesty provides states the opportunity to collect funds – and quickly – without the expense of prosecuting and recovering unpaid taxes. The state’s Tax Division will post the form to be used by amnesty applicants on its website this month: http://www.tax.ri.gov. The Division is also hiring an outside firm to promote the amnesty.
For taxpayers, amnesty programs offer an opportunity to come current on delinquent taxes with no penalties and often no interest. Rhode Island is reducing its applicable interest rate by 25 %, so 2011’s rate of 18% would go to 13.5%. The amnesty will be open to any taxpayer who pays the tax and interest due upon filing the amnesty return, or who enters into a bona fide installment payment agreement for reasons of financial hardship. Participation in the program ensures that the Division will not pursue criminal prosecution, and also that the Division will not pursue a further examination of the taxpayer for tax periods covered under amnesty.