How to Claim Amnesty on Income Taxes
Tax amnesty is a relatively rare occurrence. From time to time, a state might seek to collect short term revenue from unpaid income, sales, use or franchise taxes. A relatively brief window, usually only a few months is established in which individuals or businesses can submit payment for back taxes and have all the penalties and fees (but usually not the interest) waived. Each amnesty is unique, but there are common features that typically apply.
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Instructions
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Establish eligibility. Though each state amnesty program can have different qualifications, in most cases, individuals who are under criminal investigation or prosecution for tax evasion are not eligible. Otherwise, subject to the particular restrictions of the specific amnesty program, most any individual or business who underpaid their state taxes in any previous year is eligible to claim amnesty. Federal income tax amnesty only applies to specific kinds of organizations or particular taxes or duties, but usually not income taxes.
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Submit the amnesty application. The details of the form will vary, but it will generally allow the tax payer to identify themselves and the year or years in which they underpaid state taxes. Typically, the form will lead the taxpayer to total their entire outstanding liability and, if they are submitting a payment with the application, the remaining balance.
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Pay outstanding taxes plus interest. The full balance of the outstanding tax liability must be postmarked by the end of the amnesty window in order to have fees and penalties waved. This does not mean it must all be sent with the application or in a lump sum. Payments can be made up to the end of the window, or, in some cases, an installment plan of longer duration might be applicable.
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File amended tax return. The final requirement is to file an amended tax return for the year or years corrected under the amnesty program. This helps ensure the state's records properly reflected your corrected payments.
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Tips & Warnings
Amnesty is not the same as settlement. When the amount of an individual's tax liability is under dispute, a settlement process can be initiated to reach an agreement on the amount. The settlement agreement might or might not offer waiver of fees or penalties.
