A tax amnesty has been enacted for eligible Pennsylvania taxes that are delinquent as of June 30, 2009. Act 48 of 2009 (H.B. 1531). A delinquency includes liabilities for returns not filed, liabilities of record, and liabilities not reported or not yet established. An eligible tax is any tax administered by the Pennsylvania Department of Revenue, and that term also includes any applicable interest and penalty. For taxes collected under the International Fuel Tax Agreement the term only applies to tax owed to the commonwealth. The amnesty period will be from April 26, 2010 through June 18, 2010, inclusive. A taxpayer with a delinquency is eligible for the program unless the taxpayer is the subject of a criminal investigation regarding an eligible tax, or has been named as a defendant in a criminal complaint or in a pending criminal action regarding an eligible tax. Taxpayers with existing deferred payment plans also are eligible to seek amnesty for amounts remaining on the liability.

 

 

Taxpayers with known liabilities must file returns and make payments of all eligible taxes plus half of the interest due. Penalties will be waived. Taxpayers reporting unknown liabilities will not be liable for any tax, interest or penalties prior to July 1, 2004. An unknown liability is a liability for which no return or report has been made, or a return or report has been filed and the tax was underreported, and the taxpayer has not been contacted by the Department of Revenue concerning that liability.

 

 

Taxpayers who can demonstrate financial hardship may pay 50 percent of the amount due with the amnesty return, or within the amnesty period, and the balance in no more than two installments before the end of the amnesty period.

 

 

If a taxpayer becomes delinquent in any Pennsylvania tax within two years of filing the amnesty return, and has not filed a timely appeal, the Department of Revenue may assess and collect all penalties and interest waived.

 

 

If upon review an assessment is issued with respect to an amnesty return the Department of Revenue may impose penalties and pursue criminal action only with respect to the difference between the amount reported and the amount due. If a refund is determined to be due no interest will be paid if the refund is issued within 180 days after the amnesty return is filed.

 

 

A taxpayer who participates in the program will not be eligible to participate in any future amnesty program. Participation in the program is conditioned upon the taxpayer’s agreement not to pursue any administrative or judicial proceeding with regard to the amnesty returns filed. An additional penalty of 5 percent will be levied on any unpaid, under-reported or unreported liability that exists at the end of the amnesty period. That penalty will be in addition to all other penalties provided by law.

 

 

The Department of Revenue will publish guidelines for the program in the Pennsylvania Bulletin by December 8, 2009.

 

 

Pennsylvania’s existing Voluntary Disclosure Program will be suspended during the amnesty period, but will resume on June 19, 2010.

Taxpayers with undisputed known liabilities as of June 30, 2009 may want to consider deferring payment until the amnesty period commences. This would include taxpayers who have already paid the tax, but continue to owe interest and penalties. Taxpayers with unknown liabilities are at risk of being contacted by the Department of Revenue before the amnesty period commences. If contacted, the taxpayer will lose the benefit of the five year lookback. Taxpayers with unknown liabilities may be eligible for the Voluntary Disclosure Program and may want to consider using that program to avoid the possibility of being liable for all delinquent periods. The program terms are different and taxpayers with unknown liabilities should evaluate which program produces the better result.