Pa. launching state tax amnesty

HARRISBURG, Pa. (AP) - April 26, 2010

RELATED LINK: Pennsylvania tax-amnesty program

"Nice car, Tom. Nice house. What's not so nice is you owe Pennsylvania $4,212 in back taxes," she says, advising the taxpayers that he "can make this easy" by paying up by June 18.

"We do know who you are," the narrator says ominously as the commercial ends.

The 30-second spot is part of a $3 million multimedia promotion of the initiative, which allows tax dodgers to pay off tax debts accrued through June 2009 with no penalty and half the normal interest during the 54-day amnesty period.

Those who ignore the program will see a special 5 percent "nonparticipation" penalty tacked onto what they owe.

"No one in this tax-amnesty program is going to get away with not paying their taxes. Everyone will pay more than they would have, had they paid their taxes on time," Gov. Ed Rendell said at the first of three news conferences in as many cities as the amnesty period commenced Monday.

The program is modeled after New Jersey's hugely successful 2009 amnesty program, which pulled in $725 million in six weeks.

The online-only program is expected to generate an additional $190 million for the cash-strapped state treasury. It was part of a deal that ended a four-month state budget stalemate last year.

"Once this word gets out, we believe that the commonwealth will exceed the $190 million estimate," said Drew Crompton, lawyer and spokesman for Senate President Joe Scarnati, R-Jefferson.

Ongoing efforts to collect overdue taxes generate several times that much, reaching a record $900 million in 2007-08.

Critics say such programs can undermine tax compliance if used too often, although many states rely on them to generate cash. Pennsylvania's last program, in 1995-96, waived penalties but required full payment of taxes and interest.

Besides the waived penalties and reduced interest, the program provides an extra incentive for taxpayers previously unknown to state officials. If they come forward and supply the state Revenue Department with the information it needs to tax them in the future, they will not be held responsible for taxes due before July 2004.

"Find us before we find you," Rendell said.

Of the $2.1 billion owed in back taxes, about 62 percent is owed by corporations and 33 percent by individual taxpayers, which may include some small businesses, the governor said.

Philadelphia has the most tax delinquents - nearly 146,000 - while Forest County in northwestern Pennsylvania has the fewest - 222.

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