If you’re a taxpayer who owes the State of Illinois money, listen up.
Every time Illinois gets down in the dumps financially, it starts rattling a tin cup in the hope that donors will fill it up.
Yes, it’s tax amnesty time again. The state has such a dire need for cash that it’s willing to discount debts for those who owe back taxes to the state.
The program, which was included in legislation passed earlier this year, starts Oct. 1. and runs until Nov. 15.
Revenue Director David Harris urged those who are behind in their tax payments to the state to take advantage of what he describes as an “excellent opportunity.”
“By taking advantage of this amnesty program, taxpayers can eliminate any eligible tax debts owed without penalty or interest. This allows them to have a clean slate with the state of Illinois,” he said.
If, in fact, that is the case, he’s right. That’s because the state’s charges for interest and penalties on unpaid taxes border on the usurious. But the language the state is using regarding waiving interest and penalties is carefully written, suggesting taxpayers’ savings might not be as much as they hope.
“The Illinois Tax Delinquency Amnesty Act provides the opportunity for taxpayers to pay outstanding eligible tax liabilities and to have eligible penalties and interest forgiven on taxes paid in full during the amnesty period,” the revenue department states.
What, exactly, are the “eligible penalties and interest” to be forgiven?
Despite that caveat, the state is still offering a better deal than taxpayers would otherwise get, and it extends beyond mere non-payment or under-payment of money owed.
“If you failed to file a tax return or incorrectly reported the liability due on a previously filed return for these tax periods, now is the time to file returns, make corrections, and pay the tax. You must file an original return for non-filed periods or file an amended return to make corrections,” the revenue department states.
Taxpayers can get themselves in all kinds of trouble for failing to file returns, and that’s a problem that only grows worse over time. It’s best to deal with that up-front. But the second-best opportunity is to do so during a tax amnesty.
State officials estimate that they will collect $175 million in amnesty money. That’s pocket change in the context of the state’s nearly $40 billion state budget, but still decidedly better than nothing.
The state last offered a tax amnesty in 2010, when it collected $717 million.
It applies to taxes owed between July 1, 2011, and June 20, 2018.
Only those taxes collected by the revenue department are covered by the amnesty. Most tax delinquents know who they are, but the state is mailing notices to them, outlining what they owe and instructing them on how to pay.
As almost everyone who has ever prepared tax returns — either federal or state — knows, they can become a complex morass.
Those who have questions can go to tax.illinois.gov to find the answers they need. Or, even better, they can consult a tax professional to get caught up or, if that is not possible, to establish a payment schedule both the taxpayer and the revenue department can accept.
But whatever an individual’s financial situation is, it’s best to work things out with the revenue department because the people who work there will eventually track the scofflaws down and make them pay even more.
Remember, the state is not offering this opportunity out of kindness. It’s doing so out of financial desperation. Those who can benefit from it should do the smart thing and accept this gift-horse.