House GOP hopes timing is right for tax amnesty program
Delinquent Massachusetts taxpayers who cough up back taxes would get a break from paying penalties, under a Republican amendment set to receive consideration during House budget debate next week.
Although the proposal has surfaced frequently over the years, Republican leaders think the plan has a good shot of passing the Democrat-controlled House this year because it has been a few years since the state attempted to collect outstanding taxes with an amnesty program. House Minority Leader Bradley Jones (R-North Reading) said it's time to cash in on uncollected revenue from individuals and businesses.
As of early March, approximately $3.1 billion was outstanding in unpaid state taxes from individuals and corporations. Of this amount, $1.5 billion is in litigation or bankruptcy and therefore unavailable for amnesty, according to a Department of Revenue spokeswoman.
Republicans contend that foregoing penalties is a way to entice people and businesses to pay, and it is a better option than never collecting the outstanding taxes. Tax disputes can be tied up in the courts for years, according to proponents of tax amnesty.
"You don't know how fast you are going to get this money. You don't know if you are ever going to get this money," Jones said. "It worked successfully on three previous occasions."
The last time delinquent Massachusetts taxpayers were offered an incentive to pay up was in fiscal year 2010, when the state pulled in $32.6 million in unpaid taxes from an amnesty program. Prior to that, the state collected $32 million in back taxes in fiscal year 2009, and $102.8 million in fiscal year 2003.
Timing has to be right to offer breaks for unpaid taxes, Jones and other advocates of the idea said. If amnesty is given too often, it loses effectiveness because it becomes part of people's tax planning. Opponents of tax amnesty argue it encourages individuals and businesses not to pay their taxes on time.
A handful of other states looking to boost revenues offered amnesty programs last year, generating a windfall in some cases. Louisiana's tax amnesty program brought in roughly $435 million. Other states that saw back taxes flow in were Connecticut, Arkansas, Iowa and Delaware.
Jones said he broached the subject with House Ways and Means Chairman Brian Dempsey, the Haverhill Democrat charged with crafting the House budget. Jones said Dempsey indicated it was something he would be willing to look at. A similar proposal filed last year failed to win support, and Dempsey could not be reached for comment.
Under the pending proposal, taxpayers who owe would have a two-month grace period to pay taxes and interest without incurring penalties. Under Jones’ amendment, up to $20 million of the taxes collected would be earmarked for opioid addiction programs, and the rest would be steered into the general fund.
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