News and Insights

Arizona Offers Tax Amnesty Program

Tax Development Apr 02, 2009

From May 1 through June 1, 2009, the Arizona Department of Revenue (“Department”) is offering a Tax Amnesty Program (“Program”) for those who live, work, and conduct business in Arizona to pay any back taxes owed to the state, without penalty or criminal prosecution, at a reduced interest rate for those who qualify. The Program includes individual and corporate income tax, transaction privilege (sales tax), use tax, withholding tax, partnership tax, fiduciary tax, and luxury tax (tobacco and liquor). The Program does not include tax liabilities that are the result of a previously filed return or an expired audit protest period.

For taxes filed on an annual basis, such as income tax, amnesty is available for years beginning on or after January 1, 2002 and ending before January 1, 2008. This Program does not apply to 2008 Arizona income tax that was due April 15, 2009. Taxpayers who file taxes such as transaction privilege or withholding tax on a monthly or quarterly basis are eligible for tax periods beginning on or after January 1, 2003 and ending before January 1, 2008. Amnesty tax returns must be accompanied by the Amnesty Application form, and must be filed or postmarked and paid in full by June 1, 2009 to qualify for the Program. Failure to pay the full amount will result in the loss of amnesty benefits.

Individuals and businesses that owe back taxes may apply for tax amnesty. This includes non-resident and part-year resident individuals, as well as out-of-state businesses. Tax amnesty is available to taxpayers who failed to file a tax return; failed to report all income or all tax, interest, and penalties that were due; claimed incorrect credits or deductions; or misrepresented and omitted any taxes due. Out-of-state and multistate businesses, non-residents, or part-year residents who received income that may be taxable in Arizona and taxpayers who are under audit are also eligible for the Program.

You are ineligible for the Program if the Department has audited the tax period for which you are seeking amnesty and that audit has become final. Additionally, persons who are a party to any criminal proceeding with respect to any tax imposed by any law of Arizona that requires collection and is pending on May 1, 2009 for failure to file, failure to pay, or for fraud may not participate in the Program. If you are under criminal investigation, you are also ineligible for the Program.

Ryan can assist clients with eligibility requirements and filing for tax amnesty in Arizona, and will continue to monitor any developments to the Program as they occur.