Pennsylvania Enacts New Tax Amnesty Program

Pennsylvania has enacted legislation requiring the state’s Department of Revenue (DOR) to establish a 60-day amnesty program to end no later than June 30, 2017. The program would generally apply to all taxes administered by the DOR that are delinquent as of December 31, 2015. Taxpayers who are under audit or criminal investigation are not eligible to participate. Under the program, qualifying taxpayers may be eligible for waiver of all penalties and 50% interest on the overdue tax. Qualifying taxpayers with “unknown liabilities” reported and paid under this program generally will not be liable for any taxes of the same type due prior to January 1, 2011. The legislation also includes a non-participation penalty of 5% of the unpaid tax liability plus penalties and interest if a taxpayer fails to remit an eligible tax due or has an unreported or underreported liability for an eligible tax on or after the first day following the end of the Department’s amnesty period. Any taxpayer that participates in this amnesty will be prohibited from participating in any future amnesty programs. In addition, the department may assess and collect all penalties and interest waived under the program if within two years after the end of the program the taxpayer is delinquent for three consecutive periods in payment of taxes due or filing of returns for monthly or quarterly returns or for 8 or more months for returns filed on an annual basis. Taxpayers participating in the amnesty program are barred from contesting any amounts filed under amnesty. (H.B. 1198 (Act 84))

UPDATE: The Department has announced that the tax amnesty program will run from April 21, 2017 through June 19, 2017. Recently issued guidance states that participants reporting and paying taxes which are unknown to the Department may possibly qualify for a limited filing period. In such cases, only unknown tax delinquencies dating back to January 1, 2011 must be filed and paid before the close of the tax amnesty period. All non-filed or underreported periods due after December 31, 2015 must be filed by June 19, 2017 to be approved for tax amnesty. Taxpayers that participated in the state’s 1996 tax amnesty program are eligible to participate in the 2017 amnesty program. Taxpayers who participated in the state’s 2010 tax amnesty program are not eligible to participate in the 2017 amnesty program. Pennsylvania’s voluntary disclosure program remains active during the 2017 amnesty program. The amnesty program includes a non-participation penalty of 5% of the unpaid tax liability and penalties and interest, which would be levied against a taxpayer subject to an eligible tax if the taxpayer failed to remit an eligible tax due or had an unreported or underreported liability for an eligible tax on or after June 20, 2017.

Posted on July 25, 2016