• 2015 State-Level Tax Amnesty Programs Generally Exceed Expectations
  • February 10, 2016 | Author: Thomas R. Kendall
  • Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Cincinnati Office
  • As government entities large and small struggle to make ends meet within existing revenue structures, collecting existing taxes is especially important. One collection strategy that many governments may have used in the past, or at least considered, is tax amnesty. A well-designed amnesty program increases a taxpayer's incentive to pay delinquent tax bills by reducing or eliminating applicable penalties and/or interest. The program should also create a sense of urgency by being offered infrequently, and only for a limited time.

    At least six states completed tax amnesty programs in the second half of 2015, with varying goals and eligibility criteria. As we move into the new year, many of the results of these programs have been tabulated and published. Generally speaking, the programs were successful, but a couple fell short of expectations. Here's how they break down:
    • Arizona ran a two-month program, which concluded 10/31/15. A total of $46.7 million was raised for state coffers, more than tripling initial projections of just $15 million. The rousing success of the program versus prior programs may be attributed to the fact that taxpayers were allowed to cure their delinquency by paying only the tax amount; both penalties and interest were waived. In addition, all taxpayers, not just non-filers, were eligible to participate. Credit: Howard Fischer, Arizona tax amnesty program raises $46 million, Arizona Daily Star, November 3, 2015.
    • Indiana's 60-day program collected $137.6 million, with additional taxpayer promises of $21.6 million through payment plans during the first half of 2016. These results are well in excess of the program's stated goal of $90 million. More than 78,000 taxpayers participated.
    • Kansas also conducted a two-month program, with a goal of raising $30 million. The program fell somewhat short of that goal, netting about $23 million. About three-quarters of the receipts were collected from corporate taxpayers. Credit: Jonathan Shorman, Kansas tax amnesty snagged $23M, $7M less than expected, The Topeka Capital-Journal, Jan. 7, 2016.
    • Missouri gave delinquent taxpayers three months to participate. The result was an estimated $35 million boost to the state treasury. According to the governor's office, the funds will allow for the expansion of dental care to 282,000 low-income residents.
    • Oklahoma met with tremendous success during its nine-week amnesty program, which yielded $129 million in collections, plus additional taxpayer promises via payment plans. In total the program could net more than $146 million for the state. Initial projections were just $35 million, which means that the state might finish at more than 400% of goal.
    • Louisiana and Maryland also completed amnesty programs in 2015. As of this writing, the results of these programs have not yet been released and are expected in the coming weeks.
    • New Hampshire is currently in the midst of its program, which concludes February 15th.
    These results prove that amnesty programs can be effective revenue generators. In light of the general success of recent state-level programs, other state and local governments might consider whether such a program could provide a valuable boost to their 2016 revenues.