Tax Amnesties Offered as Solution to Major State Tax Increases

Odds that your tax return was auditedA recent article in the Wall Street Journal looked at how the broad-based tax increases may be just around the corner in 2009 as many state budgets are being ravaged by the recession.  There may also be a push to boost personal income taxes as well as state sales taxes.

The article suggested a few revenue tricks for states to employ to stave off major tax increases including:

Dangling tax amnesties. Offering to waive penalties for those who voluntarily pay back taxes owed is a nearly surefire one-time revenue boost. Oklahoma, for example, says it collected $82 million from its amnesty program this fall, and Connecticut and Massachusetts have amnesty deals on tap for 2009.

This is interesting for a couple reasons. 1) The IRS can assess 148 different types of penalties and in 2006, the IRS issued over $20 billion in penalties! 2) Taxpayers should know that they can already request that penalties be abated, or completely or partially removed. In many cases where a taxpayer requests abatement, the IRS removes 100% of the penalty.

The WSJ article also included some interesting statistics on 2008 tax audits based on IRS data:

The odds that your individual tax return was audited by the IRS in 2008.

If your income is under $200,000    1 in 100

If your income is between $200,000 and $1 million    1 in 37

If your in come is over $1 million    1 in 18

Our team of expert tax attorneys, enrolled agents, and CPA’s can help you reduce your tax debt today. Call us at 866-IRS-Problems or visit our website for your free tax relief consultation.

More Tax Help, IRS News and Tax Relief Tips:

  1. How to Make Deals with the IRS on Taxes Owed – Reduce Tax Debt Including Interest and Penalties!
  2. IRS Imposes Tax Penalties on Individual Who Failed to Pay Taxes on Full Income
  3. Tax Help For UBS Account Holders Seeking IRS Tax Relief For Tax Evasion Charges
  4. IRS Debt Relief News: Resolve to Put Your IRS Problems Behind You in 2010

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