Tax amnesty programs are when governments allow individuals and businesses the opportunity to declare unpaid back taxes and pay them off without paying the interests or penalties associated with them.
They are often highly popular initiatives because they benefit both parties. Governments have the opportunity to recover taxes that may have otherwise been rescinded. Taxpayers, on the other hand, are able to settle their debts without fear of reprisal or financial penalties.
Amnesties are usually only available for a set period of time, so it is important taxpayers capitalize on them when given the opportunity. For more information on streamlined tax amnesty filing and your unique circumstances, follow the link.
Below we explore some of the advantages and reasons to consider taking part in a tax amnesty program, both for businesses and individual taxpayers.
#1 Creates a good record for companies
If your business is behind on tax payments, that information will be visible across government boards and agencies. If you are looking to renew a license, extend employee visas, or need to carry out other bureaucratic tasks in the near future, unpaid taxes could throw a spanner into the works.
Taking part in a tax amnesty is an opportunity to show the government that your business is doing business legally and fairly in accordance with the law. This will reflect much better on the company and could facilitate the ease of undertaking bureaucratic actions.
#2 You pay fewer penalties than you would if the taxman catches up with you
If you come clean about previous unpaid taxes and make the necessary payments, while you will still have to pay the principal balance of unpaid taxes, you will be exempt from many of the penalties or interest payments added to the balance. This means participating in a tax amnesty program, as opposed to letting the IRS catch up with you, will be significantly cheaper.
#3 You might want to buy property down the road
Securing credit on a property purchase without a clean tax record can be very difficult or, in some cases, impossible. If you are thinking about buying property in the future, it always pays to ensure your taxes are up to date and paid in full. Tax amnesty programs are an opportunity to get squared away with the taxman before you invest in property.
#4 You can stop any investigative processes underway
If your tax evasion case is being brought to court or there is an investigation underway, coming clean about your unpaid taxes in a tax amnesty is a way to bring an end to legal proceedings.
#5 It is an opportunity to bring in assets and investments held abroad
If you have undeclared assets and investments in foreign countries, tax amnesty is a good way to bring them back to the US. You are required to declare foreign assets on form 8938. If you haven’t done so, tax amnesty is a good opportunity to declare them at a later date without paying any penalties. Once declared, they can be brought back to the US without reprisal.