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Tax Amnesty - What Is It?

While not exactly amnesty for your taxes (that would be too good to be true), this program does waive penalties and some interest for ANY kind of state taxes. A very short window of opportunity.

Per Rhode Island’s Division of Taxation: “A unique opportunity for you to get a fresh start.  Pay what you owe in delinquent state taxes—no matter the type of tax.    In exchange, we waive penalties and reduce the amount of interest we’d normally charge.”

Translation: You will pay less in total than you otherwise would and – this is starting to affect a lot of people – your driver’s license renewal will not be held up while you repay.  (The Division of Taxation now has the authority to deny your registration until delinquent taxes are taken care of. And they have been doing this.)

That’s the good news.

The challenge is that you have to come up with the cash you owe and make payment in full by Dec. 14, 2012 (and you must apply by Nov. 15).  You can make periodic payments but must be paid up by that date.  While this may be hard for many people who recognize the savings but would need more time to pay it off, well – this is the price we pay for not staying on top of it.  

They are giving you a carrot, can you be resourceful enough to take advantage? And, in my experience, the issues are not always purely financial.  So, if you are have fallen behind because you are disorganized or just plain angry and that’s why you haven’t filed or paid – well, you are getting a bit of a reprieve.

After Nov. 15, it's back to full interest and penalties and driver's license at risk.

The specific details:

  1. Penalties and interest be quite significant, especially for taxes several years overdue. Usually the Division is restricted in the amount of penalties and interest that can be waived.
  2. Applies to personal, corporate, unemployment, sales, estate – any type of (state) tax.
  3. For any tax years you owe/have not filed for, including 2011.
  4. You must apply between Sept. 2 and Nov. 15, 2012.
  5. You can pay in installments but must pay in full by Dec. 14, 2012.
  6. You can apply even if you are in a payment plan right now (but #5 applies).
  7. Your driver’s license and registration, and any professional licenses, will not be blocked.
  8. The applications are on the division's website.
  9. The Division of Taxation is anticipating a substantial rush, and encourages taxpayers to apply as early as possible.

NOTE: Every situation is different, and federal and state tax and business laws are subject to change. This article is presented exclusively for informational purposes and is not intended to substitute for obtaining tax, financial or legal advice from an accountant, lawyer or other business professional.

Rich Streitfeld is a CPA and partner with Aaronson Lavoie Streitfeld Diaz and Company in Cranston, Rhode Island (www.alscpa.com). Rich can be reached at 401-223-0205, rich@alscpa.com or via his blog at www.peaceloveandbusinessplanning.com , where this article originally appeared.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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