By Simon Eskow

NEW YORK—A long-anticipated tax amnesty written into law last spring began on Nov. 18, with the New York State Department of Taxation and Finance hoping to collect as much as $175 million from delinquent taxpayers and nonfilers.

The amnesty will run through Jan. 31, 2003. All payments are due no later than March 31.

“I urge everyone with tax liabilities to catch up before we catch them,” department Commissioner Arthur J. Roth said in a press conference on Nov. 18. “The program will…encourage voluntary compliance in the future by bringing nonfilers onto the tax rolls.”

The amnesty applies to all state taxes and surcharges in delinquency or dispute for tax periods ending prior to Jan. 1, 2001. The department will abate penalties, and charge interest rates at two percentage points below the rate for the tax in question. On April 1, 2003, interest rates will increase by an additional two percent. Other benefits include immunity from all administrative, civil and criminal prosecution for tax amnesty–granted periods.

The department already has sent forms to eligible taxpayers, though others may apply with a separate form.

Mark H. Levin, chairman of the New York State Society of CPAs’ New York State, Municipal and Local Tax Committee, characterized the amnesty as a “win-win” situation for taxpayers and the state, similar to past amnesties with one exception.

“This is the first time (the state) cut the interest,” Levin said. “It’s a way for the state to get delinquent taxpayers on the tax rolls,… (and) for people who have assessments, it’s a quick opportunity to settle.”

Levin said the amnesty will save the state administrative costs in pursuing settlements with taxpayers and bring in a quicker infusion of cash. Some taxpayers, he added, may decide not to take advantage of the amnesty and continue to pursue administrative or judicial remedies.

But, because settlements like offers-in-compromise, which allow individuals to pay a reasonable amount of their tax liability, are time-consuming and costly, clients will use the amnesty to avoid lengthy negotiations with the state, he said.

“I’m going to take advantage of it because it’s there for my client,” Dan Martin, a CPA from Long Island, said. “If it benefits my clients, that’s great. And it makes my job easier: I don’t have to go to mediation or offers-in-compromise. Thank God (Roth) started it now, because January is our busy season.”

Eligible taxpayers who have not received form AM-1 from the state can still apply for amnesty with form AM-2 and file it along with full payment of any tax due, plus 50 percent of the interest. The department will then compute the remainder of the interest due and bill the taxpayer.

The amnesty applies to the bulk of state taxes for periods ending on or before Dec. 31, 2000, including personal income tax, withholding tax, corporation and franchise taxes, sales and use taxes, and some local taxes administered by the state.

The following individuals are ineligible for the amnesty program:

• taxpayers who received any benefit under the 1994 or 1996-97 amnesty programs for those taxes for which tax amnesty was previously granted,
• taxpayers under criminal investigation,
• taxpayers who have been convicted of a tax-related crime,
• taxpayers who are parties to administrative proceedings within the New York State Department of Taxation and Finance (unless the taxpayer withdraws from such proceedings), or
• taxpayers with more than 500 employees.

For more information regarding the program, go to www.nystaxamnesty.com. The site contains forms, Publication AM-101, and a declaration for e-filing amnesty income tax returns.