Tax Amnesty Coming to a State Near You
Forget holing up your money in those suspicious accounts in the Grand Caymans and Switzerland. Delaware, California and 32 other states offer limited-period tax amnesty programs for residents who are late, delinquent or just lazy about paying their state income taxes.
Though not a panacea, amnesty or “voluntary compliance” programs offer taxpayers a way to come forward with their unpaid earnings while avoiding criminal charges. Generally, taxpayers have six months to pony up what they owe interest and penalty-free. Participants should be forewarned however that states are likely to share individual tax information with the IRS, and if the feds notice discrepancies between state and federal filings, taxpayers could be in for more than they bargained for.
Not surprisingly, states with a higher per capita incomes, like New York and California, have significantly more to gain from tax amnesty programs while smaller states rarely collect more than peanuts.
Tax experts anticipate a growth in popularity for state amnesty programs as offshore havens become more closely monitored–and litigated–and late payments become increasingly common with Obama’s aggressive tax proposals.