Ohio Tax Amnesty
OHIO TAX AMNESTY 2006
AMNESTY BASICS
WHEN: Tax amnesty in Ohio begins January 1st and ends February 15th.
WHO: Any person or business with a previously unreported Ohio tax liability can take advantage of Ohio’s program.
WHAT: Tax amnesty applies to the following taxes: personal property, corporate franchise, sales & use, pass-through entity, employer withholding, school district withholding, personal income, school district income and public utility excise.
WHY: During tax amnesty, if a person pays their taxes in-full and one-half of any accrued interest, then the State of Ohio will waive any penalties, half of any interest owed and the possibility of criminal prosecution.
Q&A WITH OHIO TAX COMMISSIONER WILLIAM W. WILKINS
Question: Taxes and tax reform have been at the forefront of Ohio’s legislative agenda this year. Tell us what has come about from those efforts?
Answer: On June 30th, with the signing of House Bill 66 by Governor Bob Taft, Ohio passed the most sweeping reform of its tax code in the state’s history. The measure will significantly reduce or completely phase out many complex and burdensome taxes. With the elimination of taxes on capital investments and the elimination and significant cut to the corporate and personal income taxes, this reform will help usher in a new era of economic expansion in Ohio. It is estimated that the recently passed package of reforms will stimulate the creation of 50,000 jobs and add more than $2 billion to Ohio’s gross state product.
Question: What is Tax Amnesty and how does it fit in with tax reform?
Answer: As a part of the reform legislation, the Legislature directed me to establish and administer a tax amnesty program that will allow entities with unreported tax liabilities to get a “fresh start”, and take full advantage of the changes to Ohio’s tax code.
Question: When will you conduct this amnesty period?
Answer: The program will begin on Sunday, January 1, 2006 and end at 11:59 pm on Wednesday, February 15, 2006; a 46-day period with Monday, January 23 the mid-way point.
Question: What is the benefit of tax amnesty? Why would a business want to tell the Tax Department about a tax liability that heretofore, the state is unaware of?
Answer: During the program, if a person or business pays the full amount of any delinquent taxes owed and one-half of any interest that has accrued as a result of failing to pay those taxes, all applicable penalties and one-half of any interest that accrued will be waived. In addition, any entity that takes full advantage of the amnesty program will be safe from future criminal prosecution or civil action with respect to the tax they report.
Question: What taxes are eligible for amnesty? Is it only for businesses, or can individuals also take advantage of the program?
Answer: Amnesty will apply to nearly all Ohio tax liabilities including personal property taxes, corporate franchise tax and personal income tax. However, and here’s the catch, it only applies to "qualifying delinquent taxes" which do not include any tax for which a notice of assessment or audit has been issued. In short, it applies to any tax liability that is currently unknown to the Department of Taxation.
Question: How will you inform the public about tax amnesty?
Answer: In addition to some traditional marketing efforts, the key to success of our amnesty program will be in the creation of a broad based coalition of what we like to call our business partners. Already we have engaged the largest statewide business groups in Ohio and have more than 20 organizations prepared to join in our marketing effort to inform the business community about amnesty. Also very important to these efforts will be the professional associations whose members are on the front-lines when it comes to taxes and that is why we are happy to be joined in this effort by the several bar association and the society of CPAs.
Question: Why are you focusing on the business community?
Answer: We will be focusing our efforts on the business community not because they are more likely to have unreported taxes, but because they stand the most to gain and previous amnesty programs have shown that more than 80% of the revenue generated came from business taxpayers. In addition, when Ohio conducted its first amnesty program, the business community was disengaged because it was primarily a revenue enhancing effort for state coffers. In 2005, business organizations have been engaged in tax reform efforts to encourage growth and investment. And they are getting engaged in the amnesty program to ensure that their members can truly take advantage of the revolution coming before them. What better time to “clear your conscience” of past inventory tax or corporate franchise tax debt then during a period of complete phase-out of these and several other taxes.