SALT Alert: As the trend in State Tax Amnesties continues, we have yet another state that has instituted a tax amnesty program. In response to Florida H.B. 5301, the Florida Department of Revenue (“the Department”) has developed and implemented a one-time tax amnesty program which runs from July 1 through September 30, 2010. Florida’s amnesty applies to certain tax liabilities of “eligible” taxpayers that were due prior to July 1, 2010. As an incentive to report and pay tax liabilities that have been assessed, or that are currently unknown to the Department, the Florida amnesty program allows for a full penalty waiver and an interest waiver of up to 50%. Although the general provisions of the amnesty require that all amounts due be paid by the September 30th deadline, the amnesty includes a provision for an installment type plan for taxpayers that cannot pay their full amnesty balance by the close of the amnesty.
Taxes Covered and Eligible Taxpayers
Florida’s tax amnesty applies to virtually all state and local option taxes administered by the Department, with the most significant being the corporate income and emergency excise tax, sales and use tax, communications services tax, and intangibles tax.
Taxpayers who are currently under any phase of a criminal investigation, or who have entered a Florida correctional system program, including state prison, probation or other similar program, regarding a Florida revenue law are not eligible to participate in the amnesty. Additionally, the liability for which the taxpayer wishes to come forward must not already be covered by a settlement or installment payment agreement.
Taxpayers under a civil investigation, however, are eligible to participate in the amnesty, as are taxpayers who are under examination, inquiry or audit, regardless of whether the amount due to the Department has been issued as a proposed assessment, bill, notice or demand for payment.
Finally, taxpayers must complete a 2010 Tax Amnesty Agreement, Form DR-100000, to fully secure their eligibility and enable them to participate.
Interest Waiver Depends on Category of Eligibility
Taxpayers coming forward with liabilities which the Department has no knowledge of are entitled to a 50% waiver of interest. Taxpayers who are otherwise eligible as described above, but whose liabilities are known to the Department, as evidenced by a notice of examination, inquiry or audit, or by the issuance of a proposed assessment, bill, notice or demand for payment, are entitled to a 25% interest waiver.
A special provision applies to taxpayers who have received a notice of intent to audit where the audit has not yet commenced. Such taxpayers may apply to the have their audit converted to Florida’s certified audit program. Liabilities determined under this program are entitled to either the penalty OR 25% interest waiver, but not both.
Administrative Actions
As noted above, eligible taxpayer’s wishing to participate must complete a Tax Amnesty Agreement, Form 100000, by the amnesty deadline of September 30, 2010. Only one Tax Amnesty Agreement is required even if the taxpayer is coming forward for more than one type of tax. Although filing a paper form is acceptable, filing on-line via the Department’s website instantly provides the taxpayer with an amnesty agreement number confirming this required action. Agreements submitted by a taxpayer representative must be accompanied by a Florida Power of Attorney, Form DR-835. In general, all returns and payments must be filed and remitted before midnight on September 30, 2010. However, taxpayers who are not able to remit their full amnesty liability by the close of the amnesty period have the option of contacting their local service center to enter into a stipulated payment agreement. Under this agreement, a taxpayer must remit at least 12.5% of the total liability by the amnesty deadline with the remaining balance being paid in no more than seven monthly installments, during which time interest continues to accrue. A taxpayer who enters into a stipulated payment agreement must adhere to the provisions timely and completely, otherwise the agreement may be compromised and the taxpayer will owe the remaining amount due, any imposed fees, and the penalty and interest that had been waived or discounted under amnesty.
Taxpayers with assessments that are the subject of a pending informal protest, or whose judicial or administrative proceedings have yet to begin are required to formally withdraw their protest, or dismiss any administrative or judicial proceedings. Additionally, all participating taxpayers are required to expressly waive any right to claim a refund or to protest or initiate an administrative or judicial proceeding to review any denial of a refund claim for any refund of tax or interest paid under the amnesty program. Refunds or credits issued on amounts paid under amnesty will only occur in those instances where the Department determines that an amount has been paid in error.
Sylvia’s Summation
Once again, we have another state that has jumped on the amnesty bandwagon as a means to expeditiously raise revenues and bring taxpayers into compliance. Florida’s amnesty provides the typical amnesty benefits of a full penalty waiver and a waiver of a portion of the interest. Some distinguishing features of Florida’s amnesty include a reduced penalty waiver for taxpayers who have received assessments, been notified by the Department or are in controversy; the opportunity for taxpayers with pending audits to expedite the audit process through participation in Florida’s certified audit program; and a pro-taxpayer installment type plan for taxpayers unable to pay their full amnesty balance by the close of the amnesty.
The Department has created several excellent, comprehensive documents to fully explain the amnesty, including a Tax Information Publication, a Fact Sheet, a Frequently Asked Questions (FAQ) and a Press Release. Additionally, as Florida’s amnesty is in effect for a full three months, taxpayers should have sufficient time to evaluate the advantages, and for those in controversy, the potential disadvantages, of participating; as well as sufficient time to fulfill the amnesty requirements. Finally, although Florida does not impose an individual income tax, Florida’s amnesty documents clearly communicate that the amnesty applies to individuals, in particular, to individuals with unremitted use tax liabilities for purchases made through the internet.
