Massachusetts tax amnesty underway

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Attention delinquent Massachusetts taxpayers: You have until Oct. 31 to get right with the state tax collector.

A two-month tax amnesty began in the Bay State on Sept. 1. During the amnesty period, state officials are hoping that around 300,000 individuals and businesses who owe a combined total of $1.44 billion in taxes will pay what they owe.

Amnesties are used by states and even the IRS in some cases to encourage taxpayers to pay their bills and interest on the overdue taxes. In return, they typically face no penalties, or lower penalties, for not paying on time.

It’s unlikely that all the Massachusetts tax debtors will pay up by Oct. 31. Still, the state will take any unpaid amounts it can get.

Millions expected to be paid

The state legislature, in creating this latest tax amnesty, estimated that Massachusetts’ coffer would be around $35 million richer by the end of October.

Such estimates tend to be low, so Massachusetts officials are hopeful. Previous Massachusetts tax amnesties brought in a collective $167.4 million.

Folks who owe should receive a tax amnesty notice from the Massachusetts Department of Revenue. The document lets them know they are eligible for the program and details their tax balance and the penalty amount to be waived if the amnesty balance is paid in full by the due date.

Both personal income and personal use taxes due from individuals are covered under the amnesty. On the business side, the amnesty is available for unpaid sales and use tax, meals tax, income withholding, sales tax on telecommunications services, room occupancy excise tax and gasoline excise tax.

The Massachusetts revenue office will accept amnesty tax payments by credit card, personal check or online electronic payment from your checking or savings account using the Department of Revenue website.

Fair or foul?

Every time a state offers an amnesty, we get an outcry from law-abiding taxpayers.

“I’ve been paying my hard-earned dollars to the state,” goes the argument, “and now they are letting off people who haven’t paid their taxes.”

Essentially, say anti-amnesty folks, tax scofflaws are rewarded for their negligence.

Technically, that’s true. But it’s also true that there are many reasons for not paying taxes. When given another chance to do so with minimal punishment, many folks will pay their overdue tax bills and interest.

Plus, the state gets an infusion of tax cash, which could help stem, or at least slow, the need to raise taxes.

The larger problem with tax amnesties comes when states offer too many of them. That gives folks the impression that they can neglect their tax responsibilities and then square their accounts at minimal cost later. That’s why many states wait many years between amnesties.

Would a tax amnesty get you to pay an overdue tax bill? Or do you think that amnesties reward dishonest taxpayers and shouldn’t be used?

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Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and co-author of the e-book “Future Millionaires’ Guidebook.”