Take Advantage of Tax Amnesty Programs in 2018

Maintaining compliance with state tax regulations has become increasingly complex over the past few years.

There seems to be an endless number of changes to tax laws that not only impact when nexus is triggered but the various state taxes which need to be paid. What makes the situation more challenging is the lack of conformity between states. Depending on the company and business activities it’s possible to have state tax liabilities and not be aware of it. While this can be challenging the good news is that several states are offering tax amnesty programs which make it easy for Colorado companies to achieve compliance. Currently, programs are being offered in Ohio, Rhode Island, Connecticut and California. If your company has business connections in these states, then now is the time to act. To help clients become aware of and take advantage of these programs, Hanson & Co has provided a summary of each program below.

Ohio Tax Amnesty Program

The Ohio Tax Amnesty program begins on January 1, 2018 and concludes on February 15, 2018. Taxpayers that have an unreported or underreported tax that was due on or before May 1, 2017, may be eligible to qualify for the program. There are numerous taxes which are covered in this program including; employer withholding, pass-through entity tax, sales tax, use tax and the Commercial Activity Tax. Taxpayers that qualify for the program will be required to pay back taxes and only half of the interest due. To participate in the program, you will need a completed Ohio Tax Amnesty Application, copies of completed and signed tax returns, fill payments for the totals due on the application, and a tax registration form for companies located outside the state. It’s important to note that the program only applies to those who voluntarily disclosure their delinquent Ohio taxes during the program period. If you have received a notice of assessment or are currently under audit, then you are not eligible to participate.

Rhode Island Tax Amnesty Program

The Rhode Island Tax Amnesty program began on December 1, 2017 and concludes on February 15, 2018. Taxpayers with underreported or unreported tax due on or before December 31, 2016, may be eligible to participate in the program. There are numerous taxes which are covered in the program including; corporate income tax, fiduciary income tax, sales tax, use tax and most employer taxes. Taxpayers that qualify for the program will be required to pay outstanding taxes due and 75% of the interest due. To participate in the program taxpayers must complete the tax amnesty return available online. It’s important to note that taxpayers facing criminal investigation or those party to any civil or criminal proceedings for fraud in the state are not eligible.

Connecticut Tax Amnesty Program

The Connecticut Tax Amnesty program is available now through November 30, 2018 Taxpayers with underreported or unreported tax due on or before December 31, 2016, may be eligible to participate in the program. There are various taxes which are covered in this program including; state income tax, sales tax, use tax, corporation business tax and gift tax. Qualifying participants will not be subject to any penalties, will only be required to pay half of the interest due, no be subject to criminal prosecution and will enjoy a limited look back period. To participate in the program, taxpayers must complete an online application before the program’s end. Taxpayers participating in the program must agree to file and pay taxes in a timely manner for the next three years after their application into the program is accepted.

California Voluntary Disclosure Program

The California Voluntary Disclosure Program started in 2017 and was recently expanded to include additional out-of-state taxpayers. Qualified entities, shareholders and beneficiaries that have an unreported or underreported state tax liabilities may be eligible to participate. Those who participate the program are required to disclose their California income and franchise tax liability for the preceding six years. Qualifying participants will not be subject to any penalties related to the filings. In addition, there will be no additional taxes, fees or penalties for years preceding the disclosure period. To participate in the program, taxpayers must complete an application and mail to the California Franchise Tax Board. Those who enter the program must fully disclose all materials facts pertaining to the franchise or income tax liability. Once the agreement has been signed, the taxpayer has 30 days to file tax returns and pay all applicable fees and interest. Finally, participants must agree to make timely filings and payments on taxes due in the future.

Contact Us

Businesses that have a tax risk or liability in these states can come into compliance in 2018 through these programs. Before applying it’s important to speak with a professional that can assess your situation to determine your qualification status. If you have questions about the programs outlined above or need assistance with a different multistate tax issue, Hanson & Co can help. For additional information please call us at (303) 388-1010, or click here to contact us. We look forward to speaking with you soon.

TaxMichael Malody