New Hampshire taxpayers may have an opportunity to become current on their tax obligations, avoid penalties and pay 50% of outstanding interest on past-due amounts through a New Hampshire tax amnesty program that is running from now until February 15, 2016. The tax amnesty program is available to both individuals and businesses that have any of the following taxes due and unpaid: Business Enterprise Taxes and Business Profits Taxes, Interest & Dividends Taxes, Meals & Rooms Taxes, Communications Services Taxes, Electricity Consumption Taxes, Real Estate Transfer Taxes, Tobacco Tax and Smokeless Tobacco Taxes, Utility Property Taxes, Railroad Tax and Private Car Taxes, Nursing Facility Quality Assessments, and Medicaid Enhancement Taxes.
Under this tax amnesty program, if the past-due taxes are reported and paid in full by February 15, 2016, along with 50% of any interest calculated on the taxes, the New Hampshire Department of Revenue Administrations (the “DRA”) will waive 100% of any assessed penalties and the remaining 50% of any interest due. The waiver of penalties could represent a substantial savings for taxpayers. The penalty for failure to file a tax return in New Hampshire is 5% of the amount of the tax due for each month such return remains unfiled, and for the failure to pay taxes by the due date the penalty is equal to 10% of the amount of tax due (or 50% if such underpayment was due to fraud).
Failure to take advantage of the amnesty program may limit a taxpayer’s ability to contest penalties on any taxes due prior to February 15, 2016. Under a provision of the statute authorizing the tax amnesty program, “beginning March 1, 2016, the DRA and any administrative tribunal or court with jurisdiction are statutorily prohibited from waiving, abating, reducing or remitting, for good cause or any other reason, any penalties assessed with respect to taxes administered by the DRA and due before December 1, 2015. This mandatory penalty provision prohibits the DRA or court from reversing a penalty when the appeal period has expired or the penalty is determined to have been properly assessed.”
The DRA has stated that this “mandatory penalty” provision does not preclude a taxpayer from disputing the application of penalties, in accordance with the applicable statute, as part of a timely appeal. Nevertheless, uncertainty exists regarding the applicability of the mandatory penalty provision as it relates to unknown tax liabilities. Taxpayers who are audited by the DRA after February 15, 2016, are not eligible for this tax amnesty program but may be able to contest the application of penalties as part of a timely appeal of any assessment for additional taxes and penalties.
This amnesty program is not only available to taxpayers who have outstanding assessments with the DRA, but also for taxpayers who are currently under a DRA audit as well as taxpayers who have not filed tax returns and taxpayers who have filed an inaccurate tax return and have not yet corrected such return. Taxpayers currently under audit or who are aware of issues in previously filed tax returns that could lead to potential tax liabilities may want to consider the tax amnesty program as a way to minimize penalties on such taxes. It may be prudent for taxpayers currently under DRA audit to have a discussion with the auditor about the applicability of the tax amnesty program to their situation.
Taxpayers interested in taking advantage of this program do not need to file any specific form or application; they just have to file any outstanding tax returns, pay any outstanding taxes, and pay 50% of the applicable per annum interest. The DRA’s website includes an online interest calculator to assist with the calculation at http://revenue.nh.gov/amnesty/tax-calculator.htm.
Eligibility to participate in the tax amnesty program expires on February 15, 2016. To be eligible to participate in the program the tax returns have to be filed and tax payments made in full, including 50% of the calculated interest, by February 15, 2016. If you would like additional information on this and other available tax amnesty programs, please contact Sheehan Phinney Attorneys Peter Beach or Russell Stein.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.
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