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Time for Illinois to make a deal with tax scofflaws?

by Diana Zoga

KMOV.com

Posted on May 6, 2010 at 9:28 PM

Updated Thursday, May 6 at 11:09 PM

The clock is ticking for Illinois lawmakers to find solutions to the state's budget crisis. This Friday, lawmakers are set to adjourn for the summer. They're considering several measures to keep the state afloat - including borrowing another nearly $4 billion, increasing the cigarette tax, and offering a tax amnesty program.

Read HB 4622:  www.ilga.gov/legislation/BillStatus.asp

There is a proposal - written as an amendment to SB 0377.  Read it here: ilga.gov/legislation/billstatus.asp

The amnesty period (detailed in SB377) would begin October 1, 2010 and end November 15, 2010 to allow those who have not paid their state taxes from June 30, 2002 to July 1, 2010 to settle their debts with the state - without paying penalties.

If the taxpayer does not pay during the amnesty period, then extra penalties and interests would be tacked onto the tax bill (200% of the penalty and interest amounts already due).

The IL Department of Revenue projects that $100 million would be collected during the amnesty period.  Though, the department estimates that $90 million would be available for the state budget that would otherwise be collected through ongoing collection processes.  The department also projects that it will give up between $10 -15 million in interest and penalties that would be waived for the amnesty period. 

The last time Illinois offered tax amnesty was in 2003 - when the state collected $593 million dollars (for unpaid taxes over a nearly 20 year period).

Critics say amnesties like this could encourage bad behavior.  Tax payers may start relying on amnesties and habitually hold off paying their taxes - believing there's another amnesty program around the corner.  That concern is part of the reason a tax amnesty proposal did not pass the Illinois Legislature last year.

Other states used similar programs to raise funds in crunch times. California and New Jersey collected millions in 2009.  New York and New Mexico are looking at amnesty programs this year.  Pennsylvania is offering a tax period right now and is spreading the word through this commercial: www.youtube.com/watch

Illinois lawmakers are still considering the idea.  For the last two days, I've attempted to reach Governor Pat Quinn's office to learn whether he would support the proposal.  No one called back on Wednesday.  I reached one of his press aides, Marlena Jentz, by cell phone Thursday afternoon.  She told me that she'd have someone e-mail me back - but no one did.

The State Journal Register in Springfield, Illinois wrote that Gov. Quinn is now expressing support for the idea: www.sj-r.com/top-stories/x1920408071/House-advances-pension-borrowing-but-fate-unclear

Missouri does not seem to be considering a tax amnesty program this year.  Although, it did offer amnesties back in 2002 and in 2003.

Diana Zoga is a general assignment reporter for News4. E-mail her at dzoga@kmov.com or follow her on Twitter: www.twitter.com/DIANAZOGA

 

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