Action Item: Pennsylvania has announced the details of its new tax amnesty program. It will run from April 21 to June 19, 2017. Significant penalty and interest relief is available to all who participate, and taxpayers not known to the taxing authority can avoid all taxes, penalties, and interest for tax periods prior to 2010.

The Amnesty Period

The Pennsylvania Department of Revenue (“the Department”) has announced the details of the 60-day tax amnesty program enacted as part of Pennsylvania’s 2016–2017 revenue budget bill. The Amnesty Period will run from April 21 through June 19, 2017.

The Carrot

Any tax administered by the Department of Revenue that is delinquent as of December 31, 2015, is eligible for tax amnesty. Under the program announced on September 9, 2016, one-half of all interest and 100 percent of all penalties on eligible taxes that are delinquent as of December 31, 2015, will be waived for taxpayers who file tax amnesty returns and pay delinquent taxes and one-half the interest that is due within the amnesty period.

How to Participate

Delinquent taxpayers known to the Department should expect to receive notices inviting them to participate in the program by filing an online Amnesty Return and making payment. Taxpayers not receiving notices will be required to register and complete an online Amnesty Return which will include a line item summarizing tax owed for each newly-reported or amended period. In both cases, all missing or amended tax returns must be filed electronically (e.g., sales tax and employer withholding) or on paper no later than June 19, 2017. While returns due after December 31, 2015, are not eligible for amnesty, they must be filed and all taxes paid by June 19, 2017, in order to participate in the program.

A taxpayer with “unknown” liabilities who participates in the program and complies with all of its requirements will not be liable for any taxes of the same type that were due prior to January 1, 2011. “Unknown” means either no return has been filed, no payment has been made, and the taxpayer has not been contacted by the Revenue Department concerning the unfiled returns or unpaid tax, or, if a return has been filed, the tax was underreported, and the taxpayer has not been contacted by the Revenue Department concerning the underreported tax.

A taxpayer with liabilities known to the Revenue Department may participate in the program and get the benefit of the waiver of all penalties and half the interest, but must file or amend all unfiled or deficient tax returns. Taxpayers with pending administrative or judicial appeals may withdraw those appeals and participate in the program, and taxpayers with current deferred payment plans may participate but relief is limited to the penalties and half the interest remaining on their payment plan balances, and all payments must be made by June 19, 2017. A taxpayer who participates in the program agrees that amnesty taxes cannot be appealed or refunded.

Ineligible Taxpayers

A taxpayer under criminal investigation or the subject of a criminal complaint or pending criminal action for an alleged violation of any law imposing an eligible tax may not participate; nor may a taxpayer with a signed voluntary disclosure agreement for any period covered by the amnesty program or a taxpayer that participated in Pennsylvania’s 2010 amnesty program. A taxpayer who participates in the program is not eligible to participate in any future amnesty program.

No Early Birds—No Late Comers

Payments and delinquent tax returns must not be received electronically or postmarked prior to April 21, 2017, and pre-payment of half the interest prior to April 21 will not meet program requirements. Additional details will be provided prior to the start of the program. No extensions will be granted; all returns and payments must be in by June 19, 2017.

The Stick

If within two years after the end of the program a taxpayer that is granted amnesty becomes delinquent for certain periods in payment of any taxes that are due or in the filing of any required returns, the Department may assess and collect all penalties and interest waived through the amnesty program.

Finally, the Department may audit or investigate tax delinquencies reported or paid during the Amnesty Period, and when the program concludes a five percent non-participation penalty will be imposed on all eligible tax, penalty, and interest unpaid during the Amnesty Period.