Tax Amnesties Offered as Solution to Major State Tax Increases
A 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.
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Tags: budget cuts, IRS audits, Penalty Abatement, state budets, state taxes, tax amnesties, tax audits, tax debt, tax help, Tax Increases, tax penalties, tax relief
