Shortfalls trigger forgiveness plans

TRENTON, N.J. New Jersey has become the latest state to adopt a general tax amnesty program for businesses and individuals that didnt pay their taxes earlier in this decade.

Alabama and Massachusetts currently have tax amnesty programs under way and Connecticut begins one on the first of next month.

State tax amnesty programs have been around for years, but more states have begun using them recently due to shrinking state tax collections.

Under legislation signed into law by New Jersey Gov. Jon Corzine last month, the Garden state will be conducting a tax amnesty from May 4 through June 15, for all state tax liabilities due from January 2002 through January 2009.

Delinquents who file tax returns covering such liabilities and who pay all the tax owed and half the interest before the end of the amnesty will have all penalties, state referral fees and the other half of the interest waived.

Following the amnesty, additional penalties will go into effect on tax delinquencies not paid during the forgiveness period.

The state hopes to collect $100 million from the program.

The offer may be of special interest to bus and truck operators, which New Jersey has singled out for special attention if they are not registered to pay the states corporate income tax. The amnesty applies to those carriers that failed to pay the New Jersey tax.

One trucking industry attorney said it seems probable that state agents will again be out in force following the amnesty looking for unregistered motor carriers.

Alabama officials report that that states reprieve for tax dodgers is producing lots of calls from people interested in paying up without penalty, including one with a tax debt of about $400,000.

State Revenue Commissioner Tim Russell said several hundred people have called since Operation Clean Slate started Feb. 1. Generally, they have been anonymous taxpayers or accountants representing anonymous businesses that have posed hypothetical situations about how much they might owe under certain conditions.

Under the Alabama program, the state will waive penalties and not seek criminal charges against people and businesses that voluntarily file past-due returns by May 15. The program also applies to people and businesses that amend their tax returns to properly report their tax liabilities.

A fiscal analyst with the National Conference of State Legislatures reports that amnesty programs in recent years have usually met or exceeded state officials' revenue expectations. But he notes it's too early in the recession to tell whether that trend will continue.

Oklahoma reported taking in $115 million last fall. Virginia took in $98 million last year and Nevada nearly $41 million - with all three exceeding expectations.

The Connecticut amnesty will run from May 1 through June 25. It will cover nearly all tax programs administered by the Connecticut Department of Revenue Services. The program features a reduction in interest due and the waiver of all penalties.