Alabama to offer tax amnesty starting July 1

The Alabama Department of Revenue (ADOR) has been authorized to offer a short-term tax amnesty program this summer. Tax amnesty programs are designed to encourage taxpayers with outstanding taxes to step forward and pay the tax they owe. Alabama’s program will run for three months, from July 1 through September 30, 2018.

Once granted amnesty, taxpayers must provide the ADOR with all necessary supporting documentation by November 15, 2018. In addition, they must pay — in full — the outstanding tax by that date.

Eligible taxes

Most taxes administered by the ADOR qualify for the Alabama Tax Delinquency Amnesty Act of 2018 (HB 137), including sales and use tax. However, the program is open only to taxes due prior to January 1, 2017, or those for tax periods beginning prior to that date. Motor fuel taxes, motor vehicle taxes, and property taxes don’t qualify for tax amnesty.

Eligible taxpayers

To be accepted into the program, taxpayers must agree to waive any right to protest or initiate an administrative or judicial proceeding regarding the delinquent taxes for which amnesty is being sought.

The amnesty program is closed to any taxpayer who entered into a voluntary disclosure agreement with the ADOR prior to December 31, 2017. And it’s closed to taxpayers granted amnesty for the tax type under the Alabama Tax Delinquency Amnesty Act of 2016 (SB 20).

In addition, amnesty is closed to taxpayers who’ve been contacted by the ADOR during the past two years about the outstanding tax, or those facing a criminal investigation or involved in litigation over the outstanding tax. Disqualifying contact includes:

• An audit or audit notice
• Filing a return
• Payment of tax
• Registering for tax
• Requesting a filing extension

Furthermore, submitting a false or fraudulent application, or any other statement to the department in connection with the amnesty application, automatically disqualifies an applicant from acceptance into the program.

Perks of tax amnesty

The ADOR will waive applicable interest and penalties for taxpayers who fulfill the terms of the amnesty program.

However, failure to comply with the terms of the amnesty program can lead to steep penalties. Additional details will be revealed by the ADOR in due time.

Tax amnesty programs can be a terrific opportunity for taxpayers with outstanding taxes. If you think you may qualify for tax amnesty and are interested in speaking with a tax advisor about it, Avalara Professional Services can help.