Anyone who wants to settle tax debts with the State of Iowa should take advantage of a special incentive being offered during September 2007 to October 2007. The Iowa Tax Amnesty bill passed by the 2007 Legislature waives 100 percent of penalties and one-half of interest accrued on unpaid taxes administered by the Iowa Department of Revenue. It applies to all returns originally due on or before December 31, 2006.
 
“Taxpayers who participate in this program will benefit in a number of ways,” said Mark Schuling, Director of the Department. “In addition to saving money, this is a chance to clear up tax debts without legal action.” At the same time, Schuling said, the State benefits by collecting an anticipated $54 million in the two-month period.

Eligible taxpayers include those who did not file a required return, those who made mistakes on a previously-filed return and those who may simply have tax debt with the Department, including taxpayers who agreed to a payment plan before the beginning of the Tax Amnesty period.

Some taxpayers, however, do not qualify for Tax Amnesty. The program does not apply to taxpayers currently under active criminal investigation, to taxpayers who are part of a criminal proceeding pending in the Iowa court system or to those with settlement agreements. Amnesty will also not apply if you have a settlement agreement with the department.

All state taxes administered by the Department are eligible for the Tax Amnesty program. These taxes include individual income tax; withholding tax; fiduciary income tax; corporation income tax; franchise tax; sales and use tax; local option sales taxes (regular local option and school local option); hotel and motel taxes; inheritance tax; motor fuel and special fuel taxes; environmental protection charge (EPC); cigarette and tobacco taxes; motor vehicle lease tax and drug stamp tax.

Property tax and motor vehicle use tax do not qualify for Tax Amnesty.

There is no limit to the total amount that can be waived, but to be eligible for Tax Amnesty, taxpayers must pay in full all taxes due and one-half of the accrued interest due by October 31, 2007. Installment or payment plans are not available under the Iowa Tax Amnesty program. The waiver of penalty also applies to the special penalties known as the 2210 and 2220 penalty for underpayment of estimated individual and corporation income taxes.

Steps to apply for amnesty:

1. Find out how much you owe by reviewing your records and tax responsibilities. If you need help determining what you owe, call 1-877-422-5829 toll free (1-877-4BAKTAX).
   
2. Obtain the Tax Amnesty application and returns you need online at www.IowaTaxAmnesty.gov or call 1-877-422-5829 toll free (1-877-4BAKTAX).
   
3. If you under-reported your taxes on a prior return, file an amended return.
   
4. Complete and submit the Tax Amnesty application with your return and payment.
   
5. Write “Tax Amnesty” on any check, money order, return or amended return.
   
6. Postmark the information on or before October 31, 2007, to Iowa Tax Amnesty, PO Box 1792, Des Moines IA 50306.

Iowa Tax Amnesty Program

Overdue tax returns? Unreported or under-reported income? Delinquent taxes?

From September 4 through October 31, 2007, the State of Iowa is offering waiver of penalties and one-half the interest to taxpayers who have failed to pay or have under-reported their Iowa taxes. If you do not take advantage of this opportunity, you will be responsible for all taxes, penalties and interest. Penalties can be as high as 75 percent of tax due, plus interest.

The Tax Amnesty Program is available for all state taxes administered by the Iowa Department of Revenue.

Returns originally due on or before December 31, 2006, are eligible for this limited-time Tax Amnesty Program. It does not, however, apply to active criminal cases or criminal cases still in the Iowa court system. Amnesty will also not be available to a person who has a settlement agreement with the department.

Did you:

• Make an error on a previously-filed return that resulted in underpaid taxes or additional tax due?
• Fail to pay the full amount due for all returns or amendments filed?
  
• Not file a tax return because you did not have the funds to pay the amounts due?

Now is the time to begin preparing for Tax Amnesty so that your returns and payments will be ready to file between September 4 and October 31.