March 24, 2017

Virginia Offers 2017 Tax Amnesty Program

Virginia’s 2017 Tax Amnesty Program lasts from Sept. 13 to Nov. 14, 2017

If you have been agonizing over back taxes owed and mounting interest and penalty fees adding up, there may be some relief on the horizon for you.

The Commonwealth of Virginia recently announced that it will be offering a Tax Amnesty Period in 2017 that will allow qualifying residents and business owners to have a portion of penalties and interest owed waived if they pay off their balances. This could amount to thousands of dollars in savings for some.

Here is a brief overview of what the Virginia Tax Amnesty Program is, and how to determine if you qualify.

What is a Tax Amnesty Program?

The Virginia Tax Amnesty Program was recently enacted by the commonwealth’s 2017 General Assembly. It offers persons and businesses that are behind on filing or paying taxes and who owe penalties and interest to have a portion of the penalties and interest waived if they pay during the official Tax Amnesty Period. The Commonwealth will soon announce a period of between 60 to 75 days during Fiscal Year 2018 (July 1, 2017-June 30 2018), which shall serve as the Tax Amnesty Period.

Anyone who pays off their remaining balances during that period will be entitled to have all penalties waived, as well as 50 percent of any interest.

Consequently, any back taxes not paid off during the amnesty period will incur an additional 20-percent penalty after the period ends.

Who Qualifies For Amnesty?

Any person who has an outstanding assessment more than 90 days old, or who has not filed a tax return on any previous taxes more than 90 days overdue, is eligible to complete and submit an application for amnesty to the Tax Commissioner, who will oversee the program.

Most types of taxes qualify for amnesty, including individual and fiduciary taxes, business income tax, real estate tax, retail sales tax, use tax, employer income tax withholding, and estate taxes.

There are certain persons who are not eligible. Those are:

  • Any taxpayer currently under investigation for failing to file a tax return for the purpose of evading taxes, or for filing a potentially fraudulent tax return;
  • Any taxpayer with an assessment or unfiled tax return that has a due date less than 90 days before the Tax Amnesty Period begins;
  • Any taxpayer with an individual, fiduciary or corporate income tax liability for Taxable Year 2016 or later;
  • Any taxpayer with a tax liability that relates to a Virginia court decision rendered Jan. 1, 2016 or later.

What If I Can’t Pay My Balance in Full?

You can still take advantage of the Tax Amnesty Program. The waiver of penalties and 50 percent of interest owed can be applied to the portion of your taxes that you can pay.

Unfortunately, that still means the portion of your balance you are not able to pay off during the amnesty period will incur the additional 20 percent penalty after the amnesty period passes. So it definitely pays (pun intended) to find a way to pay your balance in full, if at all possible.

How Does One Apply?

The Virginia Tax Commissioner and lawmakers are currently developing guidelines and procedures for the Tax Amnesty Program, which will be announced soon. The commonwealth is still accepting public comment in regards to the program. Comments can be sent to TAX-Guidelines@tax.virginia.gov on or before April 10, 2017.

Why Offer Tax Amnesty?

Virginia lawmakers have said they are trying to stretch Virginia’s budget as far as it will go. With millions in back taxes owed to the commonwealth, lawmakers hope the amnesty program will encourage more taxpayers to pay off their balances and take advantage of the savings the program will offer them.

This is not the first time Virginia has done this. A similar amnesty period was enacted in 2003, when the state had an estimated $180 million in outstanding taxes on the books. The commonwealth was able to collect around one-third of that during the period. Similarly, in 1990, the commonwealth was able to collect around $32 million in back taxes during an amnesty period.

Many states in the U.S. have offered Tax Amnesty Programs in the past as a way to try and boost revenue or stretch a thin budget. Pennsylvania has already announced it will offer a Tax Amnesty Program, to take place between April 21 and June 19 of this year.

The last time Virginia offered a Tax Amnesty Program was in 2009.

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