Businesses and individuals have an opportunity to save some money through a new tax amnesty program in Ohio. This program is available for a limited time (Jan. 1 through Feb. 15). If you or your business has unreported or underreported income, you can finally acknowledge those tax liabilities without the worry of excessive penalties and interest charges.
By paying all of your overdue taxes, you’ll avoid penalty charges and owe only half of the interest charges that you would’ve typically had to pay. Penalties that have amassed over the years could be wiped away, giving you the cheapest route to get out from under your tax debt. That being said, be aware that amnesty, unlike a voluntary disclosure agreement (VDA), does not offer you a clean slate. The state can still audit returns you submit via amnesty and years before as well.
Read Also: Local Taxes Apply To All Taxable Income
Amnesty Is Not For Everyone
But before we get too far ahead of ourselves, we need to point out that the amnesty program does not serve as a limitation to liability for past taxes. It doesn’t give you a clean slate. For example, if the state of Ohio previously sent a bill to you or your business about unreported income, then those taxes won’t qualify for the program. In other words, this program isn’t for everybody. For those with very special circumstances, this amnesty program may provide you with an opportunity for significant savings.
Flashback To 2012
The tax amnesty program was last offered in 2012. This time around, the program is making a reappearance as part of the state budget. In 2012, the program allowed Ohio to collect more than $30 million from 2,700 businesses and individuals. This time around, the state expects to spend around one million dollars on marketing the program but is estimating to bring in more than $20 million that otherwise would not have been collected.
Which Taxes Qualify For Amnesty?
The amnesty program can only be applied to taxes due before May 1, 2017, and includes the following:
- individual income tax
- school district income tax
- employer withholding tax
- employer withholding for school district income tax
- pass-through entity tax
- sales & use tax
- commercial activity tax (CAT)
- financial institutions tax
- cigarette/tobacco products taxes
- alcoholic beverage taxes
You can visit the program’s website for more information about eligibility and requirements. Or you can find out more by calling the Ohio Department of Taxation at 800.304.3211.
If you have further questions about your state and local taxes or want to know whether the tax amnesty program is a good fit for you, email Rea & Associates to be put in contact with one of our state and local tax experts.
By Luke Lucas, CPA (Medina)