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As part of the 2015 budget bill, the Indiana General Assembly authorized and directed the Indiana Department of Revenue, for the first time in over a decade, to implement a tax amnesty program. The program is expected to generate over one hundred million dollars in revenue for the state.
The amnesty program is designed much like the state’s first amnesty program in 2005. The program provides an opportunity to taxpayers, both individuals and businesses, to disclose and pay unreported taxes administered by the Department in exchange for a waiver of interest and penalties. The program includes Indiana’s adjusted gross income tax, sales and use tax, financial institutions tax and all of the other “listed taxes” enumerated in Indiana Code § 6-8.1-1-1.
As with the 2005 amnesty program, this amnesty program may also provide an opportunity for taxpayers with uncertain tax positions to initiate discussions with the Department in order to resolve such uncertainties. This program could be particularly beneficial to taxpayers who are required to report uncertain tax positions for financial reporting purposes and hold reserves for such positions.
The program is designed as “a carrot and a stick” program. That is, while the program offers benefits to taxpayers who are eligible to participate and do so, taxpayers who are eligible and elect not to participate are subject to an additional penalty.
This legislation, which was signed into law by Governor Mike Pence, authorizes the Department to enact emergency regulations detailing the parameters of the program, and it is our understanding that the Department is currently in the process of drafting such regulations. The amnesty program will last for an eight week period and is required to occur prior to 2017. The Department is currently planning on conducting the program this fall, from the middle of September until the middle of November. Additionally, while the statute only provides the amnesty relief for tax years through 2012, the Department may be open to settling issues in later tax years as well. There is no relief, however, for taxpayers that participated in the 2005 amnesty program, as those taxpayers are statutorily precluded from participating this time around.
This program provides a wide range of opportunities to taxpayers. Not only can Indiana residents and businesses benefit, but those outside of Indiana that conduct business in Indiana can utilize this program to become current with Indiana tax obligations and at the same time may be able to eliminate uncertainties. For those taxpayers who are interested in seeking a resolution of uncertain tax positions, it is advisable to initiate that process well in advance of the eight week program.