The Indiana Legislature has enacted a Tax Amnesty Bill that offers important relief to Hoosiers with back tax problems. H.E.A. 1004, 114th Leg., (IN, 2005). The bill provides an opportunity for taxpayers with certain outstanding "listed tax" liabilities to settle their account with the State without having to pay penalties, fees or interest. To take advantage of the limited opportunity, taxpayers must act before November 15, and should get started as soon as possible on an amnesty plan.
After the taxpayer has paid the listed tax liability, or the Indiana Department of Revenue ("IDOR") has approved a payment plan for the liability, IDOR will not impose any penalties, collection fees, or cost on the liability and will release any liens that have been imposed due to the tax liability. Other collection efforts similarly will cease. In addition, there will be no civil or criminal prosecution of an individual or entity taking advantage of this opportunity to settle an account with the State.
UST Fee Payments Yield Special Beneifts
Owners and operators of underground storage tanks ("USTs") may obtain special benefits for the tax amnesty. They are required to pay all registration fees to be eligible for reimbursement of monies spent on the cleanup of petroleum releases. If the owners and operators of USTs now pay all of the required registration fees, provide evidence of this payment, and present a corrective action plan, then the owner or operator is eligible for clean-up funds from the Excess Liability Trust Fund ("ELTF").
UST registration fees are "listed taxes" collected by IDOR and are eligible for payment under the Tax Amnesty Program. A taxpayer who pays all accrued registration fees by November 15, 2005, or who sets up a payment plan before then, avoids penalties and interest and satisfies a key requirement of eligibility to receive ELTF funds. The State thus has provided UST owners and operators with a very important way to catch up on their ELTF eligibility.
The Tax Amnesty Program does not cover all tax liabilities, but only those "listed taxes" due and payable prior to July 1, 2004. "Listed taxes" are only those set out by statute and include certain state/county/municipality income taxes, retail and use taxes, food/tobacco/alcohol taxes, innkeepers and gambling taxes, gas/fuel/vehicle taxes, hazardous material/waste taxes, underground storage tank fees, and any other tax or fee that IDOR is required to collect or administer. The "listed taxes" do not include property or unemployment taxes.
Other Eligible Taxes
Prior to payment of the tax liability, the taxpayer must fill out all necessary forms and/or register with IDOR. Some taxpayers will be mailed packets containing the necessary forms at their last known address, but if the taxpayer is admitting to an unpaid tax liability for the first time, they will need to register with IDOR by filling out the tax amnesty registration forms for an individual or new business. Taxpayers may utilize the assistance of an attorney or representative as long as the taxpayer attaches a completed Power of Attorney, POA-1, Form.
A taxpayer qualifies even if the State has begun the collection process, the taxpayer did not file required Indiana tax returns, had underreported income and/or tax on a previously filed tax return, claimed excessive deductions, or did not pay previously assessed taxes, interest, penalties, and/or collection fees. The taxpayer does not need to be an Indiana resident to qualify. The taxpayer must, however, completely settle or arrange for payment of its account with IDOR during the Tax Amnesty Program.
Taxpayers Must Act Now
The payment of the tax amnesty balance must be completed by November 15, 2005. If a taxpayer cannot pay by this deadline, it may set up an amnesty payment plan between September 15 and November 15, 2005, to pay the outstanding amnesty liability by June 15, 2006. If the payments of the liability are not properly made, the taxpayer will not only lose the protective shield of the tax amnesty but will also suffer additional penalties.
Penalties for Not Complying with the Tax Amnesty Program
Penalties will be imposed by IDOR upon a taxpayer who fails to participate in or comply with the Tax Amnesty Program. The failure to take advantage of the plan leaves the taxpayer liable for all of the original penalties, cost, and fees for the unpaid tax liability and the original assessed penalties will be doubled. The only exceptions to this doubling of damages is a situation in which a tax appeal is timely filed, challenging the tax or penalty and the tax court enjoins the collection, or a legitimate hold on making the tax payment is in place, as of May 12, 2005, due to an audit, bankruptcy, protest, taxpayer advocate action, or other reason permitted by the IDOR.
Conclusion
The State has provided Indiana taxpayers with a tremendous opportunity to resolve past unpaid tax liabilities. Taxpayers who fail to pursue this opportunity face increased penalties and an IDOR which may be more aggressive in pursuing outstanding liabilities as its workload is reduced by those voluntarily complying. Please contact us to determine what liabilities you may be in a position to settle and how we can be of assistance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.