Pennsylvania signed into law a tax amnesty program on October 9, 2009 and Philadelphia has proposed a tax amnesty program which is pending final approval by the City Council. Both programs will take place during specified periods in 2010. Below is an overview of the programs.
State of Pennsylvania Tax Amnesty Program
Pennsylvania’s tax amnesty program will run from April 26, 2010 to June 18, 2010. During this period, the Pennsylvania Department of Revenue will waive all penalties and half of the interest due on any delinquent tax liability as of June 30, 2009. Taxpayers participating in the program must file all delinquent tax returns and pay all taxes and half of the interest due during the amnesty period.
All taxes administered by Pennsylvania Department of Revenue are eligible for the tax amnesty program. The program does not include the Unemployment Compensation Tax which is administered by Pennsylvania Department of Labor & Industry.
In addition to delinquencies known to the Department of Revenue, the amnesty program includes the following tax liabilities:
1) Tax liabilities for which either no return was filed, no payment was made, and the taxpayer has not been contacted by the Department of Revenue regarding unfiled returns or unpaid tax.
2) Tax liabilities for which a return has been filed but the tax was underreported, and the taxpayer has not been contacted by the Department of Revenue regarding the underreported tax.
For taxpayers that have not previously filed tax returns with the Department of Revenue, only undisclosed tax delinquencies dating back to July 1, 2004 will be required to be filed and paid under the amnesty program. For those taxpayers which have filed returns with the Department or for which the Department is aware of the filing obligation, the tax due for all periods must be paid under the amnesty program.
Taxpayers who have unpaid delinquencies at the end of the amnesty period will be assessed a 5% non-participation penalty on all unpaid tax, penalty and interest not paid in full during the amnesty period. Taxpayers with existing deferred payment plans, in active appeals, or bankrupt entities are exempt from this penalty.
City of Philadelphia Tax Amnesty Program
The city of Philadelphia is currently working on adopting a tax amnesty program to coincide with the Pennsylvania state tax amnesty program. The program is awaiting final approval from City Council at this time.
The proposed amnesty program would begin May 3, 2010 and last 45 days. During this period, the city of Philadelphia will waive half of the interest and all penalties for delinquent taxes. Taxpayers participating in the program will pay their delinquent taxes and half of the accrued interest during the amnesty period. The taxes included under the amnesty program are wage tax, property tax, school tax, and business privilege tax. Philadelphia sales tax is included under the state amnesty program since the Pennsylvania Department of Revenue administers this area.
Contact Drucker & Scaccetti for Further Information
The tax amnesty programs described above are an excellent opportunity for taxpayers to avoid paying substantial interest and penalty on delinquent or unpaid taxes owed to Pennsylvania and Philadelphia. These programs are particularly beneficial to out of state businesses or individuals that should have filed Pennsylvania or Philadelphia tax returns in prior years but failed to do so. Drucker & Scaccetti can assist you in the process of participating in the amnesty programs described above. For more information regarding participation in either of the amnesty programs please call our offices at (215) 665-3960 and ask to speak to one of our shareholders or email us at info@taxwarriors.com.