Enacted in 2016, the Pennsylvania Tax Amnesty program (amnesty program) will run from April 21, 2017, through June 19, 2017 (amnesty period). Taxpayers electing to participate in the amnesty program will receive a waiver of all penalties, collection and lien fees and one-half of the interest due on outstanding liabilities for eligible taxes. To participate and receive the amnesty program benefits, a taxpayer must file any and all amnesty returns and pay all delinquent taxes (plus one-half of interest due) no later than June 19, 2017. In addition, taxpayers wanting to participate in the amnesty program must apply online.
Eligible taxes are those administered by the Pennsylvania Department of Revenue (the Department) and delinquent as of December 31, 2015, including any interest, penalty and fees. Although these aren’t eligible for the amnesty program, all unpaid taxes, penalties and interest for periods subsequent to the amnesty period must be filed for a taxpayer’s amnesty program participation to be approved. Eligible taxpayers include any person, association, fiduciary, partnership, corporation or other entity required to pay or collect any of the eligible taxes. Eligible taxpayers who don’t elect to participate in the amnesty program are subject to a 5 percent nonparticipation penalty.
These taxpayers are ineligible to participate in the 2017 amnesty program:
- Any taxpayer who participated in the 2010 Pennsylvania Tax Amnesty program
- Taxpayers currently under criminal investigation
- Taxpayers who have been named as a defendant in a criminal complaint alleging a violation of any law imposing a tax administered by the Department prior to the amnesty period
- Taxpayers who are defendants in a pending criminal action for an alleged violation of any law imposing an eligible tax
- Taxpayers in bankruptcy unless the bankruptcy court grants permission
- Taxpayers with a current voluntary disclosure agreement for periods eligible within the amnesty program
It should also be noted that the amnesty agreement contains language that could be problematic for taxpayers in the future. First, taxpayers who participate in the 2017 amnesty program won’t be eligible to participate in any future tax amnesty programs. Second, the Department may re-impose all penalty and interest abated during the amnesty period if either of these occur within two years of the amnesty period conclusion:
- The taxpayer becomes delinquent for three consecutive periods for semi-monthly, monthly or quarterly filings or payments unless the taxpayer has timely filed administrative or judicial appeals for the tax delinquencies
- The taxpayer becomes delinquent and is eight or more months late in filing of reports and/or payments due on an annual basis unless the taxpayer has timely filed administrative or judicial appeals for the tax delinquencies
Finally, a taxpayer who elects to participate in the amnesty program agrees to waive the right to protest or pursue an administrative or judicial proceeding, or claim a refund of money paid, with regard to returns filed under the amnesty program.
A taxpayer who may have unpaid Pennsylvania taxes for periods through December 31, 2015, should consider the benefits of participating in the amnesty program to become compliant and avoid paying penalties and one-half of interest owed.
Contact your BKD advisor to learn more about this amnesty program.