5/4/12

Client Alert: Ohio’s General Tax Amnesty Program Offers Tax Savings Opportunity

Related Practices

Attorneys & Professionals

Beginning May 1, 2012 and continuing through June 15, 2012, the State of Ohio is conducting a General Tax Amnesty Program that under the right set of circumstances could provide significant savings for businesses and individuals with Ohio tax concerns. The General Tax Amnesty Program is separate from the Consumer Use Tax Amnesty Program, which began October 1, 2011 and runs through May 1, 2013.  This bulletin briefly explains the procedures for participating in the General Tax Amnesty Program and the benefits to be gained.

General Tax Amnesty

When may taxpayers participate?

What taxes are covered under the program?

What tax periods are covered under the program?

Are there any restrictions?

What will I have to pay?

When must payment be made?

Are there any other advantages to participating?

How do I enroll in the program?

Consumer Use Tax Amnesty Program – Brief Summary

Although the seller's use tax is included in the general amnesty program, the consumer use tax (use tax on purchases made) is not.  Those who may have an outstanding consumer use tax liability, including holders of a direct pay permit, must participate in the "Consumer Use Tax Amnesty Program."  A consumer that successfully enrolls and participates in the program is responsible for any unpaid consumer use tax on transactions made from January 1, 2009 forward. In exchange for the payment of the tax, the tax commissioner will waive or abate the interest and penalties normally due on the unpaid tax, i.e., you pay tax only.  Any consumer use tax liability that exists for periods prior to January 1, 2009 is forgiven.  Generally, payment must be made during the amnesty period although a payment plan of up to seven years is possible based on individual circumstances.  A consumer who makes the required payments under the consumer use tax amnesty program is immune from criminal prosecution or civil actions with respect to the tax paid through the program. The program is not available to any consumer against whom the Tax Commissioner has issued a use tax assessment.

Conclusion

Ohio's tax amnesty programs create a rare opportunity for taxpayers to assess current tax risks, exposures and liabilities to determine whether amnesty is in their best interest. This requires a careful weighing of the advantages and disadvantages of entering into amnesty with Ohio. We recommend seeking the advice of experienced counsel before entering into any legally binding agreement or exposing potential liability to tax authorities. Taxpayers should be advised of and consider all options to legally minimize tax risks and liabilities.