States Offering Tax Amnesty Programs

Source: Bureau of National Affairs
Amnesty Programs Proliferate

Most state governments are facing record revenue shortfalls, and tax amnesty is in vogue. Seven states are currently offering either amnesty or voluntary disclosure programs for taxpayers. Under these programs, taxpayers disclose any taxes they owe, and part or all of the penalties are waived. Interest payments may be reduced under the programs as well. Amnesty generally does not apply for taxpayers already being investigated or participating in a payment program.

Arizona: The amnesty, effective May 1, 2009, through June 1, 2009, applies to taxes due on or after Jan. 1, 2002, but ending before Jan. 1, 2008. Withholding taxes are included. Taxpayers must pay the total due for all amnesty periods by June 1, 2009. Civil penalties will be waived and interest reduced to 3 percent per year.

Connecticut: The amnesty is effective May 1, 2009, through June 25, 2009, and applies to taxes owed for any taxable period ending on or before Nov. 30, 2008. Withholding taxes are included. Taxpayers must pay all taxes due, and penalties will be waived and interest reduced.

New Jersey: The amnesty is effective from May 4, 2009, through June 15, 2009, and applies to tax liabilities for returns due on or after Jan. 1, 2002, and before Feb. 1, 2009. Withholding taxes are included. All penalties will be waived and one-half the interest due, provided all tax and one-half the interest is paid during the amnesty period.

Virginia: The state legislature has passed a bill authorizing a tax amnesty lasting from 60 days to 75 days sometime during the fiscal year (July 1, 2009, through June 30, 2010), although the Tax Department has yet to announce details. Withholding taxes will be included. Under the amnesty, all penalties and one-half of the interest will be waived if the taxpayer pays the tax and half the interest due.

Both the District of Columbia and New York state have programs under which taxpayers can voluntarily disclose unpaid taxes and receive waivers of penalties. In the District, the Voluntary Compliance Program waives penalties if all taxes and interest owed are paid in full. The program also limits the lookback period to the lesser of three years or the date when the taxpayer established business in the District. New York's Voluntary Disclosure and Compliance program applies to all taxpayers. Taxpayers tell the department what taxes they owe, pay the taxes, and enter an agreement to pay all future taxes. In return, penalties are waived and criminal charges not pursued.

In Massachusetts, the amnesty applies only to individual taxpayers who receive a special amnesty tax bill. The program runs from March 1, 2009, through April 30, 2009, and applies to tax liabilities for tax years ending on or before Dec. 31, 2007.

California & Arizona Income Tax Changes

The 4nannytaxes.com online tax calculators have been updated to reflect the recent increases in the state income tax rates in California and Arizona.

The Arizona Senate Bill 1185 requires that employers begin withholding at the new rates no later than the first payroll issued in May 2009. Be forewarned - these rates will change again January 1 2010.

Important: Arizona Tax Amnesty Program will run from May 1 - June 1, 2009. This is an opportunity for those who live, work, or do business in Arizona, including the employment of nannies, housekeepers, and other domestic workers, to pay back or underreported taxes to the state of Arizona with a reduced rate of interest and no penalties. More information is available at http://www.azdor.gov/taxamnesty.

California advises employers to immediately begin using the new tax withholding schedules to help minimize any potential tax liability their employees may face when they file their state personal income tax returns next year. Employees will find answers to their questions about the new personal income tax rates at the state Franchise Tax Board Web site (www.ftb.ca.gov)

Where is the outrage?

Moving a little off topic today...

I am sincerely wondering "What was Apple Computer thinking?" Presumably iPhone apps are developed by intelligent people? Who in their right mind develops, and then who reviews a program and approves for sale, an application that suggests that violently shaking a baby is a solution to a crying baby? This is beyond stupid!

I challenge Apple to fund an educational PR campaign to teach our young parents the appropriate responses to a crying baby. They have the reach and resources to dovetail off this terrible marketing faux pas and actually do some good - do they have the will and the conscience to do so?

Workers Eligible for TREBLE Damages for Minimum Wage & Overtime Violations

New Mexico Governor Bill Richardson recently signed a wage enforcement bill (H 489) to allow underpaid workers to collect their back wages plus twice that amount in damages. These workers are suing for under-compensation due to either minimum wage or overtime violations, or both. New Mexico is the 8th state to recently enact this type of legislation. We previously noted that federal priorities under the Obama administration are moving towards increased wage and hour enforcement.

Nannies and other household workers (domestics) are covered by the Fair Labor Standards Act. The FLSA mandates that the nanny or housekeeper be paid at least the minimum wage, and the nanny or housekeeper who does not live with their employer is entitled to overtime (time and one half, calculated as 150% of the regular hourly wage) for hours worked over 40 in a week. Families can protect themselves by stating the nanny's hourly wage in a written work agreement, maintaining accurate and contemporaneous time tracking records, and always paying the overtime rate for hours worked in excess of 40 in a week.

Legislatures in California, Iowa, Maryland and North Carolina have similar legislation under consideration.

Another Nanny Overtime Lawsuit

Actor Robert DeNiro and his wife Grace Hightower are the players in the most recent high-profile lawsuit by a former nanny alleging that she was not properly compensated for overtime while in their employ.

Nanny compensation is covered by the Fair Labor Standards Act. The FLSA governs such items as minimum wage and overtime payment rules. These rules apply to any domestic - whether working as a nanny, housekeeper, maid, butler, or personal assistant. Any nanny who does not reside with her employer is entitled under law for compensation at the rate of 150% of the regular hourly wage for hours worked over 40 in a week. The Washington Redskins' Daniel Snyder lost a similar suit in March 2007 and was ordered to pay $44K in back unpaid wages.

How can a nanny employer protect themselves from this type of suit?

1. Always spell out the nanny compensation agreement in hourly wage terms in a written work agreement.
   
2. Keep accurate and contemporaneous time tracking records.
   
3. Always pay your live out* nanny 150% of her hourly wage (time and one half) for hours worked over 40 in a week.

The free Hourly Pay Rate Calculator at HomeWork Solutions' 4nannytaxes.com website will translate the desired weekly payment into appropriate hourly rate terms compliant with Federal and State law - an invaluable tool for hiring families.


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* Some states extend the Federal overtime rules to live in domestics.

"Making Work Pay" Tax Credit Concerns for Married Workers

Two-income and married workers, as well as pension recipients, may be underwithheld on income tax in 2009 because of the withholding tax table changes made for the Making Work Pay Credit, reports National Taxpayer Advocate Nina Olson.

A sample "Notice to Employees" provided in Publication 15-T said the new tables will reduce withholding and that those employees can modify withheld amounts by filing a new Form W-4. While the W-4 itself has not changed, Publication 919, How Do I Adjust My Withholding?, has been re-released electronically by IRS with a new worksheet for the Making Work Pay Credit.

Nanny employers are instructed to apply the new federal income tax withholding tables released in late February no later than April 1.