Michigan Enacts Amnesty Program, While Oregon Allows for Discretion in Extending Payment of Amnesty Related Installment Plans

  by Stewart Weintraub and Jennifer Weidler

Oregon Allows Department Discretion in Extending Time of Payment Under Installment Plans Created Pursuant to 2009 Tax Amnesty Program

Pursuant to L. 2011, S305, effective 09/29/2011, Oregon permitted its Department of Revenue (“Department”) to grant extensions beyond a previously mandated date of May 31, 2011 for tax amnesty program participants utilizing an installment plan. The extension may be granted for good cause.

During 2009, Oregon conducted its first ever tax amnesty program, whereby the state attempted to encourage taxpayers to file overdue or amended returns by waiving any applicable penalties and half of the interest.  Pursuant to the program, taxpayers unable to pay the full amount owed were eligible to apply for an installment payment plan. However, a stringent deadline of May 31, 2011 was enacted, by which time all payments required by the amnesty program’s installment plans were due.  Failure to abide by the terms of the legislation and complete the payment plan by May 31, 2011 would require payment of all unpaid tax and reinstatement of full penalties and interest. Since a number of taxpayers were failing to maintain the payment schedules established during the 2009 amnesty program, the current amendment was enacted.

The intent of the amendment is to allow the Department discretion and leeway to extend payment schedules set by the 2009 amnesty program where good cause is shown for not making payments.

Michigan Enacts 2011 Amnesty Program, Slated to Begin on May 15

On October 5, 2010, Michigan Governor Jennifer Granholm signed into law a tax amnesty program, slated to begin May 15, 2011 and end June 30, 2011.  The program waives all civil and criminal penalties for participating taxpayers. Amnesty eligible taxpayers who fail to do so remain liable for any tax, accumulated interest and penalty due.  Furthermore, for such taxpayer, civil and criminal penalties will not be waived. However, unlike under most amnesty programs, there is no additional penalty for a taxpayer’s failure to participate in the amnesty program.

Earlier this month, the Michigan Department of Treasury issued details regarding the 2011 tax amnesty program. The program is available to individuals or business taxpayers who have tax liabilities for eligible taxes for periods ending on or before December 31, 2009. However, certain taxpayers are ineligible to participate in the program, namely: (1) those individuals and businesses who are the subject of a current tax-related Court of Claims case or criminal investigation; or (2) those individuals and businesses who are eligible to enter into a Voluntary Disclosure agreement with the state.

The program applies to all state taxes administered under the Revenue Act, which includes the following:

  • Income tax
  • Sales and Use Taxes
  • Single Business Tax
  • Tobacco Equity Assessments
  • Estate Tax
  • Inheritance Tax
  • Intangibles Tax
  • Severance Tax
  • Michigan Business Tax
  • Fuel and Motor Carrier Taxes
  • IFTA Fuel Tax
  • Airport Parking Tax
  • Convention Facilities Tax
  • Cigarette and Tobacco Taxes
  • Retaliatory Tax
  • Real Estate Transfer Tax

Notably, however, local taxes – including property taxes – are ineligible for the program.

To take advantage of the program, a complete amnesty application and full payment, including interest, must be postmarked by June 30, 2011. However, taxpayers aware of an outstanding tax liability and hoping to take advantage of the program should apply as early as possible in order to avoid the accrual of additional interest.

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