This fall, the Arizona Department of Revenue (ADOR) and the City of Tucson (Tucson) are offering tax amnesty programs that can help taxpayers resolve their outstanding tax liabilities from unreported or underreported income. Taxpayers wishing to participate must take note of the limited window of opportunity and eligibility requirements, which are summarized below.

ADOR “Tax Recovery” Program

• Applications accepted from September 1 through October 31, 2015 (must be filed or postmarked by Monday, November 2, 2015)
• Includes state individual income and corporate income taxes and state, county and “program city” transaction privilege and use taxes:
  • A “program city” is a city or town that used ADOR for tax administration purposes for the time period at issue
  • Currently, all cities and towns in Arizona are program cities, except Apache Junction, Avondale, Chandler, Douglas, Flagstaff, Glendale, Mesa, Nogales, Peoria, Phoenix, Prescott, Scottsdale, Sedona, Tempe and Tucson
• Applies to the following periods:
  • Any tax period before January 1, 2014 for annual filers
  • Any tax period before February 1, 2015 for all taxpayers filing more frequently than annually
• For the covered periods, amnesty provides:
  • Abatement/waiver of all civil penalties and interest
  • Protection from any administrative, civil or criminal action arising from noncompliance with tax provisions
• Most individual and business taxpayers may apply, including nonresidents, seasonal residents, out-of-state businesses, unlicensed businesses (required to become licensed), and taxpayers undergoing an audit that has not yet been finalized
• To qualify, payment of all taxes due must be remitted with a completed amnesty application or by November 2, 2015, if the application was previously filed (i.e., no payment plan)
• Taxpayers granted amnesty:
  • Waive all appeal rights for the covered periods
  • Will not be entitled to any refunds or credits for the covered periods
• Excluded from the program are:
  • Taxpayers who are currently parties to a tax-related criminal proceeding or who have been convicted of or pled guilty to tax-related crimes
  • Taxpayers in closing agreements with ADOR for the covered periods

Tucson “Tax Amnesty” Program

• Applications accepted from September 1 to October 30, 2015
• Includes Tucson business privilege tax, business license fees and tax license fees
• Applies to all enumerated taxes or license fees due on or before September 1, 2015
• For the covered periods, amnesty provides waiver of penalties and a 50% reduction of interest charges
• Both licensed and unlicensed businesses may apply (required to become licensed, albeit without penalty)
• Payment of all amounts and reduced interest due must be made by October 30, 2015
• Taxpayers granted amnesty will not be entitled to any refunds or credits for the covered periods
• Taxpayers who are under audit or who have already filed and paid delinquent returns or amounts owed are excluded from the program

Note that participating in either program does not protect taxpayers from audits for the covered periods by ADOR or Tucson.