Important information regarding tax amnesty and related programs

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These programs encourage taxpayers to file their delinquent returns and taxes without the state initiating any contact first

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Important information regarding tax amnesty and related programs

  1. 1. Important Information Regarding Tax Amnesty and Related Programs
  2. 2. Individual and business taxpayers alike are oftentimes guilty of not filing their tax returns on time or overstating their deductions and expenses in order to get larger tax refunds. In most cases, the IRS will eventually catch up with these taxpayers and the consequences of these their actions are oftentimes severe, depending on the amount of money that is involved. As a result, the interest and penalties that accumulate can be extremely high if the taxpayer does not work with the IRS to resolve these issues.
  3. 3. For these individuals, tax amnesty and voluntary compliance or disclosure programs allow these individuals to pay their delinquent taxes and have the penalties on them reduced in the process. For the IRS and the taxpayer alike, this is a win-win situation in that the IRS eventually receives all the money that is owed them and the taxpayer no longer suffers for their actions. However, most of these programs require that all back taxes and accrued penalties must be paid in full. Where state tax agencies will occasionally reduce interest and penalties, the IRS typically does not.
  4. 4. Tax Amnesty Program Goals There is one common goal shared by tax amnesty, voluntary compliance, and voluntary disclosure programs and that is to encourage all taxpayers to file their delinquent returns and pay any applicable back taxes. As a result, state tax agencies oftentimes reduce the amount of interest and penalties that have accrued. In some cases (but not all), they may even waive the entire amount.
  5. 5. When taxpayers pay the full amount of taxes that are due including any interest by the program deadline, they may qualify for a waiver of the penalties. Taxpayer's must also sign the agreement for settlement of taxes wherein they agree to file all future returns and pay any taxes that they owe. You will probably have to file amended and/or original tax returns as well and the IRS will reflect the taxes that you have reported to your state tax agency.
  6. 6. Voluntary Compliance Programs The Voluntary Compliance Initiative is a hybrid of tax amnesty and voluntary disclosure programs. Typically, these initiatives run for only a short time period and target those taxpayers with very specific types of circumstances or situations. Initially, state tax agencies are unaware of who these individuals that fall into this category are. As an example of this, a Voluntary Compliance Initiative was employed by the IRS to uncover those taxpayers who had been hiding their income using a variety of tax shelters.
  7. 7. Voluntary Disclosure Programs These programs encourage taxpayers to file their delinquent returns and taxes without the state initiating any contact first. These programs are more open-ended than others but if you have already received a state notice about needing to file a return for a particular year or that you owe them more taxes than what you paid, you cannot qualify for this type of program. On-going voluntary disclosure programs are available in some but not all states which means that there is no firm deadline on these specific programs.
  8. 8. Advocate Tax Solutions is a full service tax defense firm engaged in practice before the Internal Revenue Service and forty-three State Tax Administrations. ATS prides itself in its ability to effectively and efficiently perform our services. Our tax professionals will perform a comprehensive investigation into your tax liabilities and thoroughly analyze your applicable financial information prior to making any case resolution recommendations. Resources: http://salestaxstrategies.com/voluntary-disclosure-services.html http://ezinearticles.com/?Important-Information-Regarding-Tax- Amnesty-and-Related-Programs&id=7373484
  9. 9. Thank you for reading!
  10. 10. Thank you for reading!

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