Tax Alert of Upcoming Tax Amnesty
Background:
The recent Budget Bill passed by the Ohio General Assembly included two tax amnesty
programs: (i) the General Tax Amnesty program, and (ii) the Consumer Use Tax Amnesty
program. These programs are in addition to the Voluntary Disclosure Program already available
to Ohio taxpayers. Prior to determining whether a particular program makes sense for you,
it is important that you work with a qualified tax professional experienced in these matters to
ensure you minimize, as much as possible, the negative impact a disclosure may have on you
personally, or on your business.
1. The Voluntary Disclosure Program ("VDP")
A. Period Covered
The VDP is an ongoing program and available for various tax years for which a taxpayer
may have a liability.
B. Eligible Taxes include
- Sales tax
- Commercial activity tax
- Personal income tax
- Seller’s use tax (out of state vendors collecting Ohio
- sales tax)
- Corporation franchise tax
- Employer Withholding
C. Restrictions
The restrictions may vary depending upon the type of tax involved. But, in general, as
long as the taxpayer has not been contacted by the ODT prior to disclosure, the taxpayer
should qualify for the VDP.
D. Payment Requirements
The payment plans will vary depending on the facts and circumstances. Generally,
however, it is recommended that payment be made with the final agreement signed by the
taxpayer and the Tax Commissioner.
E. Benefits and Terms
Although the benefits and terms may vary depending on the type of tax, the general
benefits and terms include:
- The taxpayer must file the relevant tax returns for the current year and each of the three previous years (four years in total) and pay the tax due plus interest.
- The taxpayer waives the right for refund for those three previous years. Refund requests will be honored for the returns due in the current year.
- The Tax Commissioner is precluded from assessing the taxpayer or requiring it to file returns for taxable years prior to the years covered by the agreement if the taxpayer has not been previously contacted by the ODT.
- The Tax Commissioner will waive all penalties associated with the years covered by the agreement.
- The Tax Commissioner may audit the tax returns filed by the taxpayer for the years covered by the agreement.
- See this link for information on the ODT website: http://tax.ohio.gov/channels/other/voluntary_disclosure.stm
2. General Tax Amnesty
A. Period Covered
The General Tax Amnesty covers taxes due and payable as of May 1, 2011, which were
unreported, underreported, and remain unpaid. The program is open from May 1, 2012 to
June 15, 2012.
B. Eligible Taxes include
- Sales tax
- Commercial activity tax
- Personal income tax
- Seller’s use tax (out of state vendors collecting Ohio sales tax)
- School district income tax
- Corporation franchise tax
- Estate tax
C. Restrictions
Although certain taxes are eligible, the General Assembly has placed restrictions on
eligibility. As an example, the General Tax Amnesty is not available if:
- A notice of assessment has been issued.
- A notice of audit has been issued.
- A tax bill has been issued.
- An audit has been conducted.
- An audit is currently being conducted.
D. Payment Requirements
The participant must pay the full amount of the delinquent tax and one half of the interest
between May 1, 2012 and June 15, 2012.
E. Benefits and Terms
The General Tax Amnesty requires taxpayers to fully pay all delinquent taxes due for all
periods prior to May 1, 2011. The benefits are:
The taxpayer need only pay one half of the interest that would otherwise be due on such prior delinquent taxes—the other one half of the interest is abated.