Tax Amnesties: 10 Best Practices
Insights from Decades of Experience and Client Success
If your state faces a budget shortfall, a tax amnesty program can help, enabling taxpayers to meet their obligations without penalty and getting revenue flowing for your agency.
As a leading provider of end-to-end tax amnesty solutions, we suggest the following 10 best practices for your program.
Expedited procurement: Consider contracting with an experienced third party to design, execute, and optimize your program. If state law requires it, pass legislation that allows for an amnesty program and enables expedited procurement.
Administrative compliance: Ensure all parties administering the program are licensed to do so and compliant with all related laws and regulations.
Program funding: The tax collection authority may pay for program administration out of revenues generated by contracted third parties operating the program. This can provide more flexibility and avoid a hard-dollar appropriation and the need to secure budget dollars to pay for the program in advance.
Awareness campaigns: Customize constituent outreach before, during, and after the program to educate, answer questions, help with applications and payments, and promote results. Multichannel public visibility is critical, including frequent messages of support from senior state leaders.
Access: Offer extended hours of operation and the widest variety of payment channels.
Customization for the times: Ensure messaging is sensitive; emphasize that the program helps constituents avoid penalties; and show how program revenues provide funding for critical community resources.
Duration: A sixty-day window can give taxpayers enough time to learn about the program but still ensure urgency.
Eligibility: The more types of tax debt and constituents that are eligible for the program, the greater the potential revenue recovery.
Incentives: To maximize participation, consider waiving interest and penalties for participating constituents. Noncompliance penalties also may be used, for those who elect not to participate in the program.
Payment flexibility: For constituents unable to repay in full, offer installment plans and/or the option to pay off obligations from some but not all tax periods. Consider limiting installment periods to six months, and monitor adherence closely.