Tax amnesty brings in $5M, and counting, for Virginia

Almost halfway through its tax-amnesty program, Virginia's Department of Taxation said it has collected about 12 percent of its $48 million goal.

The two-month amnesty, which began Oct. 7, allows individuals and businesses to pay delinquent taxes with reduced interest and without being penalized.

The department said it had collected $5.7 million through Monday and expressed confidence that participation in its "Get Square VA" program will accelerate.

"We expect that the majority of amnesty revenue will come in during the last two weeks of the program," said spokeswoman Virginia Slaughter.

The department said it sent out more than 500,000 notices to households and businesses eligible for the program. More than $1.2 billion of back taxes are owed to the state, most of it in individual income taxes, the department said.

Participants who pay up by the Dec. 5 deadline are required to pay only half the interest they owe on these taxes. Individuals and businesses that have delinquent taxes and don't participate will have to pay the full interest on what they owe and a penalty. The penalty is 6 percent a month with a cap of 30 percent.

For most who owe back taxes, the amnesty program is attractive, said Todd Rothlisberger, a Virginia Beach lawyer who specializes in tax matters. Even if they cannot pay the entire amount right away, "it's a good idea to apply what they have to part of what they owe," he said.

However, a weak economy apparently makes it difficult for some with overdue taxes to participate in amnesty programs in Virginia and elsewhere.

"There are many who would love to take advantage of it but don't have the funds," Rothlisberger said, adding that several clients have asked him about Virginia's amnesty program.

A handful of other states, including Maryland, Louisiana and Oregon, have been conducting similar programs this year as a way to round up tax revenue quickly.

Maryland expected to generate between $5 million and $10 million and had collected $7.2 million by Friday, the last day of its two-month program, said Caron Brace, a spokeswoman for Maryland's Office of the Comptroller.

Of that total, $1 million arrived Thursday from an individual who had been delinquent, she said.

Maryland scaled back its goal from the $39 million it collected in a tax amnesty program eight years ago, Brace said, because "we're in a recession, and some who would like to participate are out of work."

  Tom Shean, (757) 446-2379, tom.shean@pilotonline.com