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Tax amnesty alert: Massachusetts, Nevada and Pennsylvania

For most taxpayers at both the federal and state levels, tax filing season wrapped up earlier this month. 

But some folks always seem to overlook their tax responsibilities.

Well, they could be getting a second chance to make things right with their state tax officials if they live in Massachusetts, Nevada and Pennsylvania.

Yep, tax amnesties in those states are underway or will be later this summer.

Under these amnesty programs, individuals and businesses that haven't filed get a chance to pay what's due and escape some of the usual penalty and interest charges.

While it might seem counter-intuitive for states that are struggling to raise money -- and trust me, these three states, just like most of their 47 counterparts across the country, are cash-strapped right now -- to be so accommodating to scofflaws, it does make sense.

States have learned that when they forgive some of the ancillary charges -- as well as drop threats of jail time! -- many previous non-payers will hand over the overdue tax money.

Plus, carrot-wielding state tax collectors still keep a pretty hefty tax stick close at hand. In most cases, notes my tax blogging colleague William Perez of About.com: Tax Planning: U.S., penalties are often increased for anyone who doesn't take advantage of the amnesty offering.

So if you live in one of the three jurisdictions now offering an amnesty and you owe, check out you can get in on the deal. Below are some of the program basics and links to more more details.

Massachusetts flag Massachusetts: The Bay State's tax amnesty program began April 1 and will run through June 1.

This amnesty, though, is only for delinquent business taxpayers, not individuals. And only firms that received a Tax Amnesty Notice from the Massachusetts Department of Revenue are eligible.

However, Massachusetts tax officials say business owners who didn't receive a notice but believe they should be eligible for tax amnesty, may contact the Department or Revenue at 617-887-6367 to see if they do indeed qualify for the program.

Taxpayers who are eligible to take advantage of the Massachusetts amnesty will not have to pay penalties or any interest directly attributable to those penalties. However, they will have to pay interest on the unpaid tax.

Nevada flag Nevada: The Silver State doesn't have an individual income tax, but it does collect sales and use taxes. And its amnesty, which was part of a comprehensive budget bill signed into law on March 12, is offering a break to those Nevadans who haven't paid those purchase-related taxes.

The amnesty begins July 1 and runs through Oct. 1.

Section 64 of the bill (A.B. 6) "requires the Department of Taxation to allow a person who on July 1, 2010, is delinquent in the payment of a tax, fee or assessment to pay the amount due without any penalty or interest in certain circumstances."

To participate, Nevada taxpayers must file a request for relief and pay the amount due during the three-month amnesty period.

Note, though, that Nevada won't grant amnesty to folks who already have a compromise or settlement agreement in effect with the Nevada Department of Taxation.

Pennsylvania flag Pennsylvania: The Keystone State's amnesty kicked off this week and runs through June 18.

During this 54-day amnesty, the Pennsylvania Department of Revenue will waive all late filing penalties and half of the interest if delinquent taxpayers:

  • File an amnesty application online with the Department of Revenue,  
  • Pay delinquent taxes in full plus 50 percent of the interest due and, if applicable,
  • Prepare and file state tax returns for all periods that were neglected or file amended returns for all years tax was underreported.

Applications and details are available at PATaxPayUp.com.

You might, however, want to wait a bit and let Pennsylvania tax collectors work out a few bugs. Taxgirl, a Philly-based tax attorney and blogger, reports that her state's amnesty effort is plagued by weak IT and phone support.

UPDATE, 4/30/10, 4:50 p.m.: Per my end of item request, @PhilaTaxAmnesty dropped me note via Twitter to point out that in addition to the state tax forgiveness program, Philadelphia is showing some brotherly (and sisterly) tax love via its own city tax amnesty that runs through June 25.

And when it comes to any tax amnesty, Perez offers this sage advice:

Tax amnesty programs sound like a good deal, and they usually are a good deal. However there are some significant considerations. First, any late tax returns will need to be filed with the state governments. Second, any tax owed will need to be paid in full. If you cannot afford to pay in full, you may want to review other options with your accountant.

Other amnesties? If your state is having an amnesty, please let me know and I'll share that info.

And if you want to check out your state's policy on tax forgiveness, you can find a link to its official tax office on the ol' blog's State Tax Departments page.

You'll likely find news about an amnesty there sooner or later. They might not be the best tax policy, but amnesties are here to stay.

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