Ohio recently announced that it will offer tax amnesty from January 1, 2018 through February 15, 2018 for certain taxes. Sales, use, income, school district income, and commercial activity qualifying delinquent taxes as well as financial institution, cigarette, tobacco products qualifying delinquent taxes are eligible for amnesty. Taxpayers may seek amnesty for all unreported or underreported qualifying delinquent taxes that were due and owing as of May 1, 2017 and have not yet been paid. Both personal and business taxes are eligible for amnesty.
A qualifying delinquent tax does not include a tax for which a notice of assessment, notice of audit or bill has been issued. Amnesty also does not apply to taxes that relate to a tax period ending after June 30, 2017 or for which an audit has been conducted or is currently underway. To qualify for amnesty, therefore, taxpayers must voluntarily disclose and pay the delinquent Ohio tax during the amnesty period.
Taxpayers who pay the full amount of qualifying delinquent taxes and one-half of any interest due on those taxes during the amnesty period will receive an abatement of all applicable penalties, including the balance of interest due and any criminal or civil action with respect to the outstanding liability.
Taxpayers interested in Ohio’s amnesty program should carefully evaluate their circumstances to determine whether seeking amnesty is appropriate. Taxpayers should be reasonably certain that the taxes under consideration are in fact owed.
Amnesty may be particularly attractive to taxpayers who have underreported taxes that are likely due. Perhaps someone made a mistake? Or, an on-point court case for another taxpayer was decided in the Department’s favor? Amnesty can also offer taxpayers peace of mind for periods in which they have determined they owed taxes, though taxpayers should be aware that Ohio could potentially still audit those tax periods. Indeed, audits often follow taxpayers’ amnesty filings.
Taxpayers may also wish to evaluate whether applying for amnesty or utilizing Ohio’s voluntary disclosure program is more beneficial. Ohio’s voluntary disclosure program offers a full penalty waiver, but no interest relief. The lookback period varies depending on the tax. For example, the lookback period for Ohio’s commercial activity tax is three years. The lookback period for sales tax that was not collected is 48 months, while the lookback period for sales tax that was collected but not remitted is unlimited.
Taxpayers should consult with their tax advisor before seeking amnesty from Ohio to ensure that taking advantage of the program is the best course of action for them.