On October 9, Governor Edward G. Rendell signed into law House Bill 1531 (Act 48) ending Pennsylvania's 2009-2010 budget stalemate. Act 48 authorizes a tax amnesty program, which is scheduled to commence April 26, 2010 and to end June 18, 2010 ("Amnesty Period"). During the Amnesty Period, any tax administered by the Pennsylvania Department of Revenue ("Department") that is delinquent as of June 30, 2009, will be eligible for amnesty. Participating taxpayers will receive a waiver of all penalties and one-half of any interest due ("Program").
Taxpayers with unknown tax liabilities, i.e., liabilities for which no return was ever filed and no payment was made, or for which a return was filed and the tax was underreported, are eligible for amnesty for taxes due within five years prior to June 30, 2009.1 A participating taxpayer with unknown liabilities will not be liable for any taxes of the same type due prior to July 1, 2004.
Taxpayers who are eligible for the Program but who choose not to participate will be subject to an additional 5 percent penalty, based upon any unpaid tax that was eligible for amnesty. The non-participation penalty will not apply to taxpayers who have an administrative or judicial appeal pending as of the last day of the Amnesty Period.
To be a participating taxpayer, a tax amnesty return must be filed and payment of all taxes, plus one-half of the interest due, must be made during the amnesty period. The participating taxpayer is also required to file tax returns for all required years for which the taxpayer did not previously file, and file amended returns for all required years for which the taxpayer underreported the eligible tax liability. As part of the Program, the Department will not pursue any administrative or judicial proceeding against a taxpayer with respect to an eligible tax that a tax amnesty return discloses. The taxpayer is also barred from pursuing such proceedings and from claiming any refund of money paid pursuant to the Program. Note, however, that the Department is not barred from instituting civil or criminal proceedings against a taxpayer with respect to a tax liability that is not disclosed or with respect to any amount that is disclosed but is not paid.
Amnesty is contingent upon continued compliance. The Department may assess and collect from a taxpayer all penalties and interest waived through the Program if the taxpayer becomes delinquent paying any taxes or filing any tax returns within two years after the Program ends.
A taxpayer who participates in the Program will not be eligible to participate in a future Program.
Footnote
1. A tax liability is considered unknown only where the taxpayer has not been contacted by the Department regarding the unfiled returns or underreported tax.
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.
