Va. of­fer­ing amnesty for delin­quent tax­pay­ers

State plans to col­lect about $90 million in pro­gram run­ning through Nov. 14

Richmond Times-Dispatch - - FRONT PAGE - BY CAROL HAZ­ARD

For most peo­ple and busi­nesses that owe back taxes to Vir­ginia, now is the time to pay up.

The Vir­ginia Depart­ment of Tax­a­tion is of­fer­ing an amnesty pro­gram for delin­quent tax­pay­ers through Nov. 14. Tax­pay­ers can pay the tax and half the in­ter­est, and the state will waive any re­main­ing in­ter­est and all penal­ties.

Tax amnesty pro­grams don’t roll around of­ten. This one is the fourth since the first pro­gram was of­fered in 1990. The sec­ond was in 2003 and the third in 2009.

Post­cards for delin­quent tax­pay­ers started show­ing up last week in mail­boxes, said Paige Tucker, a spokes­woman for the Vir­ginia Depart­ment of Tax­a­tion.

The state mailed a to­tal of 900,000 post­cards ad­dressed to “oc­cu­pants”

in tar­geted ZIP codes — in ar­eas where a high num­ber of delin­quent tax­pay­ers re­side.

Not ev­ery re­cip­i­ent who gets a post­card owes back taxes, since ZIP codes were the de­ter­min­ing fac­tor for this mail­ing.

“While peo­ple who get the post­cards may not owe back taxes, they may know some­one who does,” Tucker said.

How­ever, peo­ple and busi­nesses that re­ceived mail­ers last month are on the state’s list of delin­quent tax­pay­ers — and in­ter­est and penal­ties are pil­ing up. More than 300,000 mail­ers — rep­re­sent­ing $725.6 million in past-due taxes and split about evenly be­tween in­di­vid­u­als and busi­nesses — were sent in early Septem­ber.

“As of Sept. 29, we’ve re­ceived about 32,000 phone calls about tax amnesty,” Tucker said. “We’re pleased with tax­pay­ers’ re­sponses so far to this op­por­tu­nity to clear up the taxes they owe. From pre­vi­ous amnesty pro­grams, we know that most tax­pay­ers will wait closer to the Nov. 14 dead­line to file and pay.”

The pro­gram has been in ef­fect since Sept. 13.

Vir­ginia ex­pects to col­lect $89.5 million from the amnesty pro­gram — an amount in­cluded in the 2017 Ap­pro­pri­a­tions Act, which will go into the gen­eral fund, Tucker said. The tax depart­ment is em­bark­ing on a broad aware­ness cam­paign to spread the word and en­sure the pub­lic that the pro­gram is le­git­i­mate.

“We think it is a very good pro­gram and tax­pay­ers that have un­paid or un­filed taxes should take ad­van­tage of the pro­gram,” said Terry Bar­rett, a cer­ti­fied pub­lic ac­coun­tant spe­cial­iz­ing in state and lo­cal taxes at Keiter, an ac­count­ing firm in Hen­rico County. “It may be many years be­fore we see such an amnesty pro­gram again.”

Tax­pay­ers who par­tic­i­pate in the pro­gram may be able to save hun­dreds if not thou­sands of dol­lars in in­ter­est and penal­ties, de­pend­ing on their sit­u­a­tions, she said.

How­ever, amnesty may not be the best an­swer for all tax­pay­ers, Bar­rett said. Other al­ter­na­tives may be more ap­pro­pri­ate to the tax­payer’s spe­cific sit­u­a­tion to re­solve out­stand­ing tax li­a­bil­i­ties with the

state. “We sug­gest tax­pay­ers who are un­sure about what to do reach out to a tax ad­viser for help.”

Tax­pay­ers who par­tic­i­pate in amnesty, for ex­am­ple, give up their rights to file ap­peals or lit­i­gate for taxes or as­sess­ments paid dur­ing the amnesty pe­riod, Bar­rett said.

The dead­line for a sim­i­lar tax amnesty pro­gram of­fered by the city of Rich­mond is Mon­day. Peo­ple ow­ing back taxes on real es­tate, busi­ness per­sonal prop­erty (ex­clud­ing ve­hi­cles), busi­ness li­cense, ad­mis­sion, meals and lodg­ing have had the op­por­tu­nity since Aug. 15 to pay the orig­i­nal tax amount owed — with all penal­ties and in­ter­est waived.

“This is a great op­por­tu­nity to get right with the city,” Mayor Le­var Stoney said. “Rich­mond is the only city in the com­mon­wealth that can of­fer amnesty for both penal­ties and in­ter­est.”

The city to date has re­ceived com­mit­ments for $1 million of out­stand­ing tax debts.

The state is of­fer­ing amnesty on all taxes col­lected and ad­min­is­tered by the Vir­ginia Depart­ment of Tax­a­tion. These in­clude in­come, re­tail sales and cor­po­rate taxes, but it could be on any of 42 state taxes, in­clud­ing air­craft con­sumer use tax, soft drink ex­cise tax, es­tate and in­her­i­tance taxes, mo­tor ve­hi­cle rental tax — and the list goes on.

Each tax type el­i­gi­ble for tax amnesty has spe­cific li­a­bil­ity pe­ri­ods to qual­ify.

“If you pass up this lim­ited-time op­por­tu­nity to clear up your tax debt, the com­mon­wealth of Vir­ginia will add a penalty of 20

per­cent of the un­paid tax to any bill or delin­quent pe­riod for which the full ‘amnesty amount due’ has not been paid,” the mailer says.

To par­tic­i­pate, tax­pay­ers must file tax re­turns with pay­ments due for the delin­quent pe­ri­ods and pay 100 per­cent of the tax due and 50 per­cent of the in­ter­est due. Even if they can­not pay the full amount due for each pe­riod, they can still par­tic­i­pate in the pro­gram on a pe­riod-by-pe­riod ba­sis, pay­ing as much as pos­si­ble to re­duce po­ten­tial penal­ties.

The to­tal amount of taxes owed is a mov­ing tar­get, Tucker said. Some peo­ple ap­peal or con­test the amount the state says they owe. Or, tax­pay­ers of­ten pay back taxes through a pay­ment plan and they may go on and off the plans, de­pend­ing on their fi­nan­cial con­di­tions. Also, the state can’t col­lect from delin­quent tax­pay­ers who are in bank­ruptcy.

It’s chal­leng­ing as well to col­lect on older bills due to peo­ple who have died or moved away with­out pro­vid­ing ad­dress changes, Tucker said.

“We use our re­sources to col­lect as much of the cur­rent and past taxes that are owed, and the tax amnesty pro­gram gives el­i­gi­ble tax­pay­ers a great op­por­tu­nity to clear their tax debt with the ben­e­fit of half the in­ter­est and all of the penal­ties waived,” she said.

The Gen­eral As­sem­bly de­cides when tax amnesty pro­grams will be of­fered. No dates have been set for another pro­gram.

Bar­rett

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