Department of Revenue 2017 Tax Amnesty Program Guidelines

The 2016-17 Pennsylvania budget legislation includes provisions for an amnesty program for certain delinquent Pennsylvania taxes.

The program allows a taxpayer with unpaid delinquent taxes to pay all of the back taxes plus one-half of the interest that would otherwise be due.  The other half of the interest and all penalties are waived.

The Pennsylvania Department of Revenue recently announced details on the amnesty.  The Pennsylvania Tax Amnesty Program (the “Amnesty Program”) begins April 21, 2017, and ends on June 19, 2017 (the “Amnesty Period”).  The most recent prior amnesty program was in 2010.  Generally, all taxes administered by the Department of Revenue are eligible for the Amnesty Program.  Below is a brief overview of the Amnesty Program:

  1. Eligible for Amnesty. Individuals, businesses, and other entities with Pennsylvania tax delinquencies as of December 31, 2015, are generally eligible to participate in the Amnesty Program.
  2. Notification of the Amnesty Program. A written notice will be sent for each tax delinquent, where there is a valid address on the Department’s records.  This notice will contain information to participate in the Amnesty Program.  Taxpayers with delinquencies for multiple tax types may receive more than one notification.
  3. Participation Requirements. Participants in the program must complete the following:  File an online Amnesty Return; Make payment of all taxes and one-half interest due to the Commonwealth; File completed tax returns for all required periods for which the taxpayer previously has not filed a tax return; File completed amended returns for all required periods for which the taxpayer underreported tax liability; and File all returns for tax periods not eligible for the Amnesty Program.
  4. Amnesty Return. The taxpayer must register and complete an online Amnesty Return.  Along with the payment for all taxes reported on the Amnesty Return and one-half of the interest on those taxes, all missing and unfiled tax returns or reports must be filed no later than June 19, 2017.
  5. Extension of Time for Filing Requirements. There is NO extension available for filing missing tax returns or reports eligible for the Amnesty Program.
  6. Continued Compliance. The Department may re-impose all waived penalties and interest if the taxpayer does not remain in compliance with tax obligations following the conclusion of the Amnesty Program.  In addition, all taxes and returns for periods after December 31, 2015 must be paid and filed prior to the Amnesty Period.
  7. Future Amnesty Programs. Participants in the 2017 Amnesty Program will be prohibited from participating in any future amnesty program offered by the Commonwealth.
  8. Non-participation Penalty. Once the Amnesty Period ends on June 19, 2017, a 5% non-participation penalty will be assessed on all eligible taxes, penalties and interest that remain unpaid after the Amnesty Period ends.

Key Takeaways:

  1. Taxpayers with known delinquencies should begin the process of preparing for the Amnesty Program by engaging tax counsel or tax return preparers.  It may take significant time to prepare all of the unfiled tax returns that are due with the Amnesty Return and payment.  Tax return preparers should be given adequate time to prepare past due returns because the Amnesty Period begins immediately after the end of the 2016 tax return preparation season.
  2. Election to not participate in the Amnesty Program will expose those taxpayers with delinquencies to an additional 5% non-participation penalty, in addition to other penalties and interest.
  3. The Amnesty Program is also available to taxpayers who are under existing Deferred Payment Plans with the Department of Revenue.
  4. Taxpayers who are denied interest and penalty abatement under the Amnesty Program have certain appeal rights to the Pennsylvania Department of Revenue Board of Appeals.
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