Courtesy of mcdonaldhopkins.com
Under a tax amnesty program, businesses and individuals who owe back taxes in Virginia can pay up without penalties and reduced interest until November 14.
Earlier this year, the 2017 General Assembly approved a tax amnesty program in which individuals and businesses are given the opportunity to repay back taxes without being charged penalties and only 50 percent of the normal interest rate on late payments. The General Assembly hopes to ideally collect as much as $89.5 million which will be used towards supporting public safety, education, and health, as well as towards setting up a cash reserve. Hundreds of thousands of households and businesses located in areas where tax debt is most common have been sent notices by the Virginia Department of Taxation.
Tax amnesty programs are not unheard of; other states as well as cities, counties, and towns have made the same type of offer to those who have not settled their debts with local governments. Oklahoma is also offering tax amnesty this year, while Ohio, Rhode Island, and Texas have approved amnesty
programs for next year. However, Virginia business owners and residents who owe back taxes should pay up now, as tax amnesty programs are few and far between within individual states and localized areas.
Since the program went into effect on September 13, only one third of the notices sent out were sent to people and businesses on the state’s list of tax debtors. If you have received a notice but don’t owe, don’t be alarmed, as not everyone who was sent a postcard notification owes back taxes. The amnesty offered by the state program includes all taxes collected by the state’s Department of Taxation, from income to corporate taxes to real estate to motor vehicle taxes. Many Virginians may owe back taxes on any one of the state’s 42 taxes without even realizing a debt is owed and may not have received a notice. Those who are unsure of any taxes owed should consult a tax consultant. The Department of Taxation has also published an amnesty information page
and guidelines for the 2017 amnesty program
to help individuals and businesses choose the wisest course of action as well as to determine whether or not back taxes are owed.
While the program will help many to save hundreds and thousands of dollars by avoiding penalties and interest, taking part in the program may not be the best alternative for some. To receive the full 100 percent waiver of penalties and 50 percent of interest, individuals and business must pay the full amount of their debt as well as the entire amount of the reduced interest charges by the program’s end date on November 14. More than a few taxpayers are likely to be unable to pay the entire amount by the due date while those who are able will, by participating, be forfeiting their right to file for an appeal or contest taxes and assessments paid during the duration of the amnesty program. Those who do not pay up during the amnesty period will be assessed an additional 20 percent penalty to amounts not paid in full, however, paying less than the full amount during the amnesty period will result in less interest and penalties.
The General Assembly, as of now, has not indicated when another amnesty program will be offered by the state.