California’s Amnesty Program a Win-Win

As a firm that is often contacted when companies are faced with costly state tax, penalty, and interest assessments, MAXIMUS strongly advocates the use of state amnesty programs or Voluntary Disclosure Agreements (VDAs) when they are available and when it makes sense. Taking part in programs of this type represents a positive, pro-active step that companies can take if they find they have failed to properly collect state taxes. In many cases, states offering these programs will reduce or waive penalties and/or interest on delinquent taxes and may also reduce the length of the look-back period for the company in question. In return, states are able to collect delinquent taxes and bring companies into compliance, insuring future revenue.

According to Forbes’ Robert W. Wood, California’s VCI2 program has enjoyed exactly this type of success. The program allowed companies that had underreported income tax liabilities to amend their returns for 2010 and previous years in order to receive a penalty waiver. The program has raised a total of $350 million for the state of California and we assume that several companies in danger of receiving large penalty assessments are now in the clear and in compliance with their California state tax reporting.

Many states offer similar programs, for lots of different tax types. If you believe you may have unreported or underreported state tax liabilities, it may be time for you to look into such programs. MAXIMUS has assisted many clients with this process, in several different states. Please contact us if you’d like more information.

How much is a Fair Share?

We at MAXIMUS are always looking for interesting, well-researched perspectives on taxes and tax policy and often find great information on the blog of the Tax Foundation, a nonpartisan tax research group based in Washington, D.C.

Today’s post, which points out the invalidity of President Obama’s repeated claims that corporations and the wealthy are not paying their fair share in taxes, is no exception. We’d recommend reading the entire post, but a couple of important points are worth repeating: IRS data from 2009 quite clearly demonstrate that wealthy taxpayers earning more than $200,000 actually paid 50% of the total income taxes collected that year while earning only 25% of the adjusted gross income in the U.S. Similarly, in 2008, the 1,900 largest corporations paid 67% of the total corporate income taxes in the U.S.