Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 18, 1990 TAG: 9003182320
SECTION: VIRGINIA PAGE: C4 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
"We've heard from a whole lot of people, more than in other states," said Gerry Turner, coordinator of the program that began Feb. 1 and ends March 31.
More than 30,450 people have called the state's toll-free hot line to get information on the program and about 11,230 people have returned amnesty applications. More than 120,000 forms were mailed to individuals and businesses that owe the state in excess of $69 million.
Turner said the state has collected $3.8 million and expects to reach its goal of $35.4 million because most people will wait until the deadline to pay the taxes.
"We do expect long lines on the last day," she said.
Tax amnesty also has been successful in other states that have tried the program since Arizona started the trend in 1982.
But the Internal Revenue Service isn't jumping on the bandwagon.
"Our position has always been that we were not in favor of tax amnesty," said Steven Pyrek, an IRS spokesman in Washington. "The fact that it works for states doesn't necessarily mean that it's going to work in the same way for federal taxes."
The IRS does a better job of collecting delinquent taxes than states do, he said, even though the agency estimates that individuals owe the federal government about $64.3 billion in back taxes.
"There's a lot of money in that tax gap but we are not convinced that amnesty is a good way to go get it," he said.
An amnesty program might weaken voluntary compliance and could lead to widespread complaints from law-abiding taxpayers, he said.
That hasn't happened in Virginia, Turner said.
"In general, the taxpayers who call say that they can understand," she said. "We also say we're only waiving the penalty, we're not waiving the interest and that seems to make them a little happier as well."
Taxpayers will benefit in the long run because the state will increase the number of names on its tax rolls and will crack down on delinquents who miss the amnesty deadline, she said.
Michigan found an even better way to keep its taxpayers happy. The $110 million that it collected from an amnesty program in 1986 went toward reducing the state's income tax rate, said Robert Kolt, a spokesman for the Michigan Treasury Department.
"It was a very easy sell," he said.
Kolt said the state got more than twice as much money as it expected, with checks coming from as far away as West Africa and the Philippines.
Michigan collected a penny owed by a dead person's estate and was offered a cow by one delinquent taxpayer who didn't have the cash. The state refused the cow, Kolt said.
North Carolina, however, did accept a radar detector for a tax bill during its 1989 amnesty program, said Michael Hodges, assistant secretary for revenue. The state collected $38.4 million, nearly twice what it expected, he said.
Turner said one-time Virginia taxpayers from as far away as Jamaica and Italy have inquired about the amnesty program. One person paid taxes owed from 1946. The smallest payment was a cent and the largest was more than $300,000 from a business, she said.
Although most of the amnesty applicants are individuals, Turner said the state expects to get the most money from businesses.
The state hasn't gone after many of the delinquents because they had moved or they couldn't afford to pay their taxes on time, Turner said.
"They're guilty about it even if they only owe a dollar," she said.
A survey of tax amnesty participants in New York found that they all had an excuse, said Claiborne Mason, an account executive for a Richmond advertising firm that publicized the Virginia program.
"Someone got sick and they couldn't pay their taxes or they had a bad year in their business," she said. "Tax delinquents really come from all walks of life and types of circumstances."
Kolt said Michigan identified the typical tax cheat as a single man who is self-employed or works in sales with an annual income of $56,000.
He agreed with Turner that most of the delinquents will wait until just before the amnesty deadline to pay their taxes.
"People who are delinquent taxpayers are generally procrastinators," he said.
by CNB