Tax amnesty is a limited time opportunity for taxpayers to pay a defined amount of outstanding income, sales or other taxes in exchange for forgiveness of interest and penalties and waiver of criminal prosecution relating to a previous tax period or periods. Amnesty programs can potentially reduce state tax liabilities by a third or more.
Virginia Tax Amnesty Program
Virginia establishes a tax amnesty program administered by the Virginia Department of Taxation between July 1, 2017 through June 30, 2018, which will last for no less than 60 and no more than 75 days. The Program will be open to any taxpayer that is required but has failed to file a return or to pay any tax administered by the Department. Under the amnesty program, civil or criminal penalties will be waived and one‐half of assessable interest from nonpayment, underpayment, nonreporting or underreporting of tax liabilities will be waived.
Voluntary Disclosure Program
Virginia also has a separate and ongoing voluntary disclosure program to encourage taxpayers who are not properly registered and who have unreported tax liabilities to come forward voluntarily and “catch up” on their tax responsibilities. This is an on-going program and is not related to any tax amnesty program. Voluntary disclosure is for businesses with Virginia nexus but who have not yet registered with Virginia. In exchange for coming forward and moving into compliance, Virginia will limit its audit lookback period to three years, reduce the interest owed to the lookback period, and waive penalties.
Amnesty details: The tax commissioner is authorized to issue guidelines for the program, and those guidelines will be exempt from the Administration Process Act. Taxpayers who are under investigation or prosecution for filing fraudulent returns or failing to file a return intending to evade taxes will not be eligible to participate in the amnesty program. Additionally, taxpayers cannot participate in the amnesty program if the date of assessment or failure to file a return is less than 90 days prior to the first day of the amnesty program. Eligible taxpayers that have a remaining balance after the amnesty program ends will be subject to a 20% penalty on unpaid tax, in addition to other applicable penalties. If a taxpayer defaults on an agreement to pay tax and interest under the amnesty program then the taxpayer is subject to reinstatement of the penalty and interest forgiven and the imposition of a penalty on the original outstanding balance at the end of the amnesty program.
If you have questions about tax amnesty or need assistance with tax planning, Barnes Dennig can help. For additional information call us at 513.241.8313 or click here to contact us. We look forward to speaking with you soon!
 L. 2017, H2246 (c. 53), effective 07/01/2017.