Can I use you as a reference?

TWTP

I apologize for the delay in responding – but I am usually out of the office all day on Wednesdays.

Ideally a federal amnesty program would allow individual and corporate taxpayers to pay in full all outstanding federal tax liabilities for income and payroll returns filed prior to the announcement of the program by a certain target date and have all accrued penalties and interest on such liabilities abated. If I owed “Sam” $15,000, which is made up of $9,000 in actual federal income tax and $6,000 of accrued interest and penalties, I could pay $9,000 by a certain due date and have my account marked “paid in full”.

The amnesty could also give taxpayers who have not filed a required tax form (1040 or 1120) for a past period the ability to file the return and pay the tax by the Amnesty due date and no penalty or interest would be assessed on the payment. So if I did not file my 2004 Form 1040 I could do so under the Amnesty program and pay only the $2,000 net tax liability. There would be no penalty or interest for late filing or late payment assessed on the $2,000.

The amnesty would not apply to individual or corporate taxpayers who were involved in criminal tax fraud action prior to the announcement of the program. However, it could allow “uncaught” tax criminals, or any other taxpayer, the ability to file a Form 1040X or amended corporate or payroll tax return to properly report income and expenses and pay the additional tax due without penalty or interest charges before they are caught by the IRS
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What the best Amnesty program would be saying is that if the IRS has told you that you owe additional tax, and you agree, or if you discover that you owe additional tax, or did not report all income or claimed erroneous deductions on a past return, if you pay up now all interest and penalties will be abated. You only have to pay the actual tax.

In determining the amount of tax liability available for amnesty, the IRS should apply all previous payments on the account to tax liability first. So if I initially owed $9,000 in tax and $6,000 in P+I but had made payments of $2,000 prior to the Amnesty, I could satisfy my account by sending “Sam” $7,000.

While state Amnesty programs have required payment in full by a targeted due date, a federal amnesty program could allow a delinquent taxpayer to pay the outstanding tax liability monthly, quarterly or annually over a 2 or 3 year period and still have all accrued P+I wiped out. If the taxpayer does not make a required payment on time under this type of agreement then all bets would be off and the debtor would owe all penalties and interest.

The legislation that creates such a program should include the statement that Congress could not institute another such Amnesty program within 10 or 15 years of the passage of the original Act.

So how does that sound?

The Wandering Tax Pro

First of all, with a previous mayor, there was hardly any awareness or reminders that these real estate taxes existed – even sending invoices through the mail proved to be slow and inefficient. But with the last two mayors, large banners announcing tax amnesty has provided more information to the residents, and it also reminds them that “Hey, we’ve been very lenient with you with these amnesties so you no longer have any excuse to forget paying your real estate taxes.” It actually got my mom to pay, which is a big deal because before she started paying it regularly, she would let it sit and gain interest for years.

I have been saying for a quite a while now that the federal government should institute a “Tax Amnesty” program similar to the kind that the individual states have been using successfully for many years to collect back taxes and raise revenue.

I agree that a large portion of outstanding IRS debt is the result of the near usurious accrual of penalties and interest to the point that the taxpayer will never be able to settle his account. It would be “more better” for the IRS to be able to collect the actual tax due without penalty or interest than to collect nothing at all.

The Wandering Tax Pro