SALT Strategies

State Tax Oktoberfest 2014 – Timing is Everything For State Tax Amnesty Programs

For many reasons, October is one of my favorite months.  It marks the last of the year’s tax “busy season.” Fall oktoberfest 300x193 300x193 - State Tax Oktoberfest 2014 – Timing is Everything For State Tax Amnesty ProgramsFoliage throughout the region is coming into full color and there are excellent Oktoberfest feasts to enjoy.

As I reviewed my projects for the post October 15th season, however, I became increasingly aware that this month is an ideal time to focus on opportunities that may require my immediate or additional state tax attention. Most importantly, there are several states that have pending amnesty programs – some of which may close as early as October 31st.

October 2014 State Tax Amnesty Programs

State tax amnesty programs can provide excellent opportunities to lessen state tax exposures.  Generally a state tax amnesty program will contain provisions that partially or fully abate penalties arising from the additional tax due or failure to timely file the tax return in question.  State tax amnesty programs may also offer a reduced interest rate on the tax being remitted pursuant to the state’s amnesty’s program.  The following is a summary of the State Tax Amnesty Programs (“STAPs”) that are available right now.  The following Summary STAPs was derived from the COST state amnesty program update published in late September.

  •  Louisiana             LOUISIANA TAX AMNESTY PROGRAM                       Ends 11-14-2014
  •  Massachusetts   MASSACHUSETTS TAX AMNESTY PROGRAM         Ends 10-31-2014
  •  New Jersey       NEW JERSEY “Closing Agreement” TAX AMNESTY  Ends 11-17-2014

Note that Louisiana’s Tax Delinquency Amnesty Program was the product of legislation that mandated that the state have an amnesty program to be held for at least two months in 2013, at least one month in the second half of 2014 and at least one month in during the second half of 2015.  Depending on which amnesty program a taxpayer pursued, an eligible taxpayer was entitled to varying abatement of interest and penalties – with the most beneficial abatement of interest and penalties being available to eligible taxpayers who applied to the 2013 amnesty program. A careful review of the Louisiana STAP 2014 and 2015 interest and penalty abatement provisions is definitely warranted.

State Tax Amnesty Programs – Trick or Treat

Each of these programs may offer significant savings to you or your clients.  However, note that STAPs will generally impose specific limitations on eligibility to enter into the program.  In addition, you need to perform a careful analysis of the types of taxes that are eligible as well as the tax years or periods to be covered by the STAP before applying for any STAP.

A number of states have formal or informal Voluntary Disclosure Agreement {VDA”} programs that may offer limited look back periods for eligible taxpayers.  VDAs may be excellent vehicles to lessen potential state tax exposures – especially those arising from potential nexus issues.   Analysis of the state tax compliance enhancements potentially afforded by VDA’s should be a best practice for any taxpayer who has state tax exposure concerns.

Oktoberfest 2014 – Planning and Moderation Key to Enjoyment

I have always admired the qualities associated with the Teutonic culture – its focus on planning, hard work and precision.  I especially identify with the Teutonic culture’s enthusiasm for celebration as the fruit of one’s hard work that is most clearly evidenced by Oktoberfest.  Hopefully after this long 2014 tax busy season and a careful review of the potential benefits that one or more of the above state tax amnesties may yield, each of us may enjoy a well deserved Oktoberfest celebration.

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