Amnesty, but a real wallop if you don't come clean
I love the readers of this blog. When I don't know something that I'd like to know, I just ask, and a wealth of information usually comes my way in response.
Take for example yesterday's post on Oregon's upcoming tax amnesty program. I wondered aloud in the comments section whether this was the Legislature's idea, or instead was purely an initiative of the Department of Revenue. By the end of the day, an alert reader answered that question, and then some. The reader writes:
The legislature implemented this program in Senate Bill 880, which was signed into law by the governor on July 14. It becomes effective on September 28. The full text of the enrolled bill is here.Fascinating. First of all, what the heck is Sallie Mae, the firm spawned of the federal student loan administration (and now a private company officially called SLM Corporation), doing messing around running state tax amnesty programs? Is that mission creep, or what? And there they were lobbying in Salem to get one implemented in Oregon. Did they get a juicy contract to run the program? That would be an interesting followup fact to know.
The Department of Revenue was active in the design and support of this bill. However, officials from Sallie Mae also testified before the Oregon legislature on the design and implementation of the program, as apparently Sallie Mae is very active in implementing these programs in other states that have recently run tax amnesty programs. Oregon is actually in the minority, as most states have had tax amnesty programs at one point or another.
I think, perhaps, what is most important to know about Oregon's tax amnesty program is that it is a carrot-and-stick approach -- not just a carrot. Essentially, the program is designed to bring people into the system who are not currently filing or know that they have unreported tax liabilities. However, the legislation imposes a 25% post-amnesty penalty on those who could have used the program and did not. This penalty is on top of the other penalties such as substantial understatement and interest due. (See Section 4 of the bill.) Given the very short window of amnesty, it is very important to understand the penalties involved with not participating. The legislature made clear this penalty would not apply to those who made good faith errors on their tax returns, but discretion to assess the penalty remains with the DOR. If a taxpayer is assessed with an understatement by the IRS, the post-amnesty penalty does not attach unless the taxpayer has been assessed penalties by the IRS under sections 6662, 6662A, 6663 or 7201 of the [federal] Internal Revenue Code.
Hmmmm.... private corporation lobbying.... ties to Kulongoski.... bill carried by Ginny Burdick.... you know, I do believe I smell the Goldschmidt people in here. Just a crazy hunch. Meanwhile, old Sallie is fading fast...
But I digress. Even bigger news from our reader are the dire consequences for those who don't play along. Wow -- accept our mercy or else! Penalties go way, way up if you could come clean in the amnesty but don't! They're not mentioning that in the television ads. Maybe they'll run a followup spot or two featuring Samuel L. Jackson and John Travolta just before the November 19 deadline.
Another helpful reader sends along a number of related documents, including this one, which shows that the program is expected to net $16.2 million for the state after payment of expenses, which are required by the law to be capped at $1 million. Do Oregonian tax deadbeats really have $17 million lying around to send in at this point in the state's history? Time will tell, I guess.
The same reader makes a pitch for the amnesty program from the point of view of the harried business owner doing business in multiple states:
I have taken advantage of amnesty in my corporate life in the past. I always felt like what we owed was due to a blindside change of the rules. I felt that a little compassion was due, since I always tried hard to file according to law, but when you're dealing with large corporations it is almost impossible to get everything right. Then again, I took some of our audits to court and won a few over the years.... There are a bunch more out-of-state. I really miss the "thrill of the hunt" now that I'm retired.Food for thought there as well. There's compassion in the Oregon program, all right, but it seems that there's more than a little bit of vegeance in it as well.