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Tax amnesties in California and Cook County, Ill., winding down; Denver and L.A. tax debtors have more amnesty time

California's statewide tax amnesty for owners of offshore accounts closes Oct. 31.

That Halloween date also is the deadline for Cook County, Ill., which includes most of the city of Chicago and many of its nearby suburbs.

But taxpayers who owe in Denver and Los Angeles have a bit more time to pay up and avoid many of the usual associated penalties.


California's offshore voluntary compliance initiative:
Encouraged by the Internal Revenue Service's success in collecting taxes from hidden offshore accounts, California tax collectors decided to get in on the act.

Through Oct. 31, the Golden State is now allowing state taxpayers who participated in the IRS Offshore Disclosure Initiative to file amended California returns reflecting that income and avoid most penalties as long as they pay all state tax due along with interest.

Filers during the amnesty period also will then protect themselves against criminal prosecution.

But, notes the California Franchise Tax Board, state tax officials cannot waive the Large Corporate Understatement Penalty and the Amnesty Penalty.

And if the state's lawmen already have caught your attempt to avoid paying California taxes by using "abusive tax avoidance transactions," you're out of luck. You can't 'fess up now to get off the legal hook.

So hurry up. After Oct. 31 the California officials say they will add a variety of penalties to any amended return or state assessment made in connection with offshore financial arrangements or abusive tax avoidance transactions.

Oh, and by the way, California says that "to assist in the identification of reporting differences, the IRS shares information with us."

Taxpayer who enter the California amnesty program will benefit in that they can avoid penalties, criminal and civil if they enter the program by filing amended returns for all years in which there is unreported income, reporting all income and paying in full all taxes and interest due.

Cook County, Ill., amnesty: Some taxpayers in the greater Chicago area also can take advantage of the tax amnesty there, but the opportunity ends on Oct. 31.

The Cook County Department of Revenue's voluntary disclosure program is open to individual and business taxpayers that are not currently registered with the county. These taxpayers can register and pay their delinquent taxes by Oct. 31 and avoid "significant fines and penalties."

Specifically, the Country tax office is offering extra incentives by abating the interest charges on the tax owed in addition to the penalties for unregistered taxpayers that do register and pay by next Monday.

The taxes that are eligible for the amnesty include:

  • Alcoholic beverages tax,
  • Amusement tax,
  • Gas tax,
  • Use tax,
  • Sales of new motor vehicles tax, and
  • Parking garage tax.

The periods covered by the Cook County amnesty are for taxes owed from Sept. 1, 2007, through Oct. 31, 2011.

Taxpayers who register by the amnesty deadline won't have to pay the 10 percent late payment penalty, the 25 percent failure to pay penalty or the standard 15 percent annual percentage rate interest.

Denver tax amnesty: Taxpayers who owe the City and/or County of Denver can catch a break by participating in that Rocky Mountain region's tax amnesty program that runs through Dec. 30.

The amnesty covers the principal excise taxes administered and collected by Denver. These include sales tax, retailer's use tax, consumer's use tax and occupational privilege tax.

All other taxes, including property tax, are not eligible for amnesty.

Program participants are required to pay any unreported back taxes, but will not have to pay penalties. Interest charges on delinquent taxes also are cut in half.

And even better, the possibility of criminal prosecution is taken off the table.

Tax liabilities incurred on or before June 30, 2011, are eligible for the Denver amnesty.

Los Angeles tax amnesty: The City of Los Angeles requires that every person who operates a business within its boundaries obtain a business tax registration certificate and pay relevant business taxes.

For those that haven't complied, the City of Angels on Oct. 4 kicked off its voluntary disclosure program for business taxpayers. The amnesty runs for a year, through Oct. 3, 2012.

Under the program, city tax penalties will be waived for taxpayers who failed to register or pay if their failure was due to reasonable cause and was not an intentional attempt to evade Los Angeles taxes or tax fraud. Interest on the overdue taxes, however, still must be paid.

But taxpayers who enter into a voluntary disclosure agreement will not have the L.A. tax collector looking over their shoulders for as long a time as non-participants.

The statute of limitations period for looking back at a business' taxes is limited to three years with the voluntary disclosure, as compared to the usual eight years after the date that the tax was due.

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