The marketing for Washington DC’s Tax Amnesty Program may seem like it’s being run by MTV, but the initiative is about big business. The District expects to generate about $20 million during the amnesty period, which runs from August 2 to September 30, with about 42,000 individual and business tax payers owing the city almost $130 million. Though amnesty participants will be able to avoid penalties and fees, they will still owe accrued interest on their tax liability and will also have to pay the total amount by September 30, the last day of the city’s fiscal year.
While the program is an excellent opportunity for certain tax debtors to catch up their liability, the city does plan to come down hard on those who don’t. The legislation allows for the city to order employers to increase withholding for employees with city tax debts.
Retailers who have under-reported their credit card receipts may want to use the amnesty program to shield themselves from future collection efforts. Starting in 2011, all credit card receipts must be turned over to the Internal Revenue Service, and the IRS will share that information with state tax collectors. If those receipts show a sudden jump in credit card receipts from 2010 to 2011, that business will be immediately marked for an audit, said Stephen Cordi, deputy CFO for the Office of Tax and Revenue.
Early this month, the city sent out 42,000 tax bills and letters explaining the tax amnesty program, though you can go to www.dctaxamnesty.com to find out more info. To participate in the program, you would need to complete a DC Amnesty Application and send full payment of your liability including interest, and the program will only be available until September 30.