Tax Guru-Ker$tetter Letter

Tuesday, July 27, 2004

Arkansas Tax Amnesty Program - I just received a press release from the DFA reminding us that the amnesty program for people to come clean on pre-2003 taxes will be expiring on September 30, 2004. This is actually better than most other tax amnesty programs I have seen because, besides waiving all penalties, they are also forgiving interest charges. Since DFA charges ten percent (10%) interest on back taxes (much higher than the IRS's 4%), that could save quite a bit of money.

Having participated in the California amnesty program back in the mid-1980s, a word of warning is appropriate. Anyone considering catching up with previously unfiled State income tax returns should also be ready to do the same with IRS, which does not have an active amnesty program. Information sharing between State and Federal tax agencies is a two way exchange. DFA will be notifying IRS of back returns they receive and IRS will be expecting the same years to be cleaned up with them. Back in the 1980s, I knew of many people who refused to take part in the Calif. amnesty because they didn't want to tip off IRS.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 7/27/2004 11:34:00 AM Send this post: