The Philippines have issued a statement clarifying that their ongoing tax amnesty program also applies to estate tax. It’s not a 100% clean slate but does give immunity from prosecution to qualified applicants. The program also imposes an “amnesty tax” of 5% on certain transactions depending on the types of taxpayers and their capitalization (for corporations). Amnesty is only allowable for tax years through 2005 – some other restrictions apply.
That, my friends, is brilliant.
Yes, I believe in tax amnesty. I understand the resentment that many folks have towards allowing those who haven’t paid their taxes to get a substantial break. But this is the scoop.
Most of the folks that walk through my doors with a tax problem aren’t repeat offenders because they want to willfully evade their taxes. Most of them made a mistake – usually connected to a divorce, payroll issue at their place of business or independent contractor gig (by far, the most common) – and they don’t know how to fix the mistake. With interest and penalties, it gets bigger and bigger. So, they stop opening mail from the IRS. They stop filing taxes because they’re hoping to get off of the radar screen. They ask to be paid in cash. They don’t keep bank accounts. In other words, they more or less freeze when it comes to the IRS, taxes and money. If they could make it all go away, most of them would not make the same mistake twice.
I can relate. In law school, I checked out some books from the library. Summer came and went, and I forgot about the books. Then I moved to a new apartment so the books were packed away. Eventually, I rediscovered the books and tried to return them to the library – only the library made it hard. You couldn’t simply drop them in a box. You had to go through security and return them in person at the desk. I was too embarrassed – after all, who is willing to admit keeping Marilu Henner’s autobiography for that long? I called the library on a hopeful note: was there an amnesty program? No. So I kept the books on my desk, trying to figure out what to do. We moved again, this time to a house, and the books were again packed away. Years later, they resurfaced. All grown up now, but still embarrassed, I decided on a course of action. I packed the books up and shipped them to the library together with a check for fees, a note of apology and a donation. But it took me awhile to get to that point. If I could have just dropped them somewhere with a mea culpa, I would have felt better. And I wouldn’t have kept any more books for that long (for the record, I haven’t).
Amnesty offers a chance for a fresh start. Whether their reluctance to resolve their issues stems from fear or embarrassment, most taxpayers would welcome the opportunity to start over. Why not give them one?