Nys Franchise Tax Amnesty by ert41610


More Info
									                        2004 INNOVATIONS AWARDS PROGRAM
                                          Application Form
  (INSTRUCTIONS: Please comp lete and submit this document electronically if possible, e.g. a Word
document. The application fo rm is availab le online at our web site, www.csg.org, in the Programs section.
    Please determine the appropriate Program Category fro m the enclosed Program Categories sheet,
                  and list the category under the Category section below on the right .)

                                                                                  ID #: 04-W-02AZ
                                                                     Category: Gov. Ops - Revenue_
                                                                     State: Arizona______________

1. Program Name
   Arizona Tax Amnesty

2. Administering Agency
   Arizona Department of Revenue

   Contact Person (Name and Title)
   Leigh Cheatham, Assistant Director

3. Address
   1600 W. Monroe, Phoenix Arizona, 85007

4. Telephone Number
   (602) 716-6918

5. FAX Number
   (602) 542-4772

6. E- mail Address

7. Web site Address

8. Please provide a two-sentence description of the program.

   Amnesty was a program intended to respond to the current fiscal crisis and accelerate
   revenues into the fiscal year. The second goal was to bring taxpayers back on to the
   tax roles for future tax periods.

9. How long has this program been operational (month and year)? Note: the program
   must be between 9 months and 5 years old on May 1, 2004 to be considered.

   September 1, 2003 to May 1, 2004

                                                                                                      - - 1
10. Why was the program created? (What problem[s] or issue[s] was it designed to

   Arizona had the first amnesty program in 1982. That program brought 10,000
   taxpayers and $6,000,000 into tax compliance. Twenty years later the fiscal crisis
   had Arizona looking into innovative solutions. Governor Napolitano signed urged an
   amnesty program. Faced with limited resources many businesses and ind ividuals had
   not filed all or part of their tax obligations. The Legislature supported the Governor
   and passed enabling legislation. The Department. of Revenue hoped to efficiently
   utilize a variety of resources to obtain amnesty filing compliance from Arizona
   taxpayers. Additionally, the new enhanced technology would provide the impetus for
   stepped up compliance efforts by the State for those non-filers or under filers. After
   amnesty the imposition of higher interest rates and penalties will make non-
   compliance extremely expensive.

11. Describe the specific activities and operations of the program in chronological order.

   4/14/03 Amnesty Steering Committee formed and coordinator appointed.
   4/15/03 Amnesty Sub Committees formed. First draft of project plan reviewed.
   5/30/03 Reviewed first draft of system overview for programming.
   6/30/03 Legislation passed to allow Tax Amnesty in Arizona.
   6/30/03 First media coverage announcing Tax Amnesty.
   7/15/03 Special Call Center for Tax Amnesty goes live.
   7/15/03 Special Web site WWW.Taxamnesty.az.gov operational.
   8/1/03 Marketing Intern hired and full marketing plan put in place
   8/6/03 Ordered Amnesty polo shirts for team members and buttons
   8/15/03 System Testing of Tax Amnesty
   8/16/03 Twenty years of paper tax returns are scanned and converted to electronic
   PDF’s for taxpayers to download.
   8/30/03 Media kickoff of Tax Amnesty
   9/1/03 Tax Amnesty Program opens, Call Center fully operational, Web site has all
   forms, FAQs, legislation, rules, interest calculator.
   9/1/03 Taxpayer customer service site opens to assist in the preparation of forms.
   9/1/03-10-31/03 Marketing and outreach seminars, press conferences, printed media
   coverage, radio and television interviews and public service announcements.
   9/1/03 Marketing materials provided to school districts, libraries, businesses,
   government agencies. Material consisted of bookmarks, business cards, posters,
   brochures in English and Spanish.
   9/1/03 Tax amnesty web site links established on all State of Arizona websites, local
   business and broad casting web sites.
   9/1/03-10/31/03 Processing of Tax Amnesty applications, tax returns and payments.
   1/15/04 Reminder notices sent to taxpayers of the May 1, 04 deadline.
   10/31/03 -5/1/04 Processing payments.
   5/2/04 Tax Amnesty program over, balancing and distribution of funds to the state

                                                                                       - - 2
12. Why is the program a new and creative approach or method?

   Arizona was the first state to create and implement a tax amnesty program over
   twenty years ago in 1982. This was Arizona’s second full amnesty program. The
   Department did not receive any additional budget to implement amnesty and was
   limited to $75,000 pulled from the general department funding. By focusing on in-
   house experience, public service announcements, low cost advertising and electronic
   format, the total expenses were less than $50,000. This includes printing, postage,
   temporary employees and administrative costs.

13. What were the program’s start-up costs? (Provide details about specific purchases for
    this program, staffing needs and other financial expenditures, as well as existing
    materials, technology and staff already in place.)

  Temporary Staff July 1 to Sept 30 $10,500.00
                          Brochure $1,600.00
                            Buttons    $203.33
             Mainframe May, June        $30.00
       Web charges Counter Setup       $625.00
   Call Center setup 602-364-3550      $300.00
                 Envelopes #9 75k $1,000.00

                 Total as of 7/29/03 $14,258.33
Allocated 7/1/03                     $10,500.00

           Ope rations

    Temporary Staff TIA July 1 to $10,500.00
                           Sept 30
    Mainframe charges May, June       $30.00
                Web Charges setup    $625.00
   Call Center Setup 602 364-3550    $300.00

                              Total $11,455.00

                         Allocated $25,000.00

                                                                                     - - 3

                  State Fair Sign       $1,000.00
Total Traffic Network (Phoenix)         $4,250.00
      Metro Networks (Phoenix)          $5,355.00
      Metro Networks (Tucson)           $2,835.00
         view Satellite Networks        $5,000.00
        Clear Channel (Tucson)          $2,780.00
  Arizona Republic (Statewide)          $6,816.00
             East Valley Tribune          $840.00
    Arizona Daily Star (Tucson)         $2,760.00
  Arizona Daily Star (Flagstaff)          $881.00
        Daily Courier (Prescott)          $624.00
                Yuma Daily Sun            $830.00




             Brochures     $2,140.00
                Buttons      $213.93
        Envelopes 75k        $935.61
            CD Labels
           File Folders      $31.31
      Amnesty Stamps         $17.95
       Business Cards       $250.00
    Education Stuffers      $300.00
  Amnesty Bookmarks         $575.40
Batch Cards Processing      $468.00



                                                    - - 4
          14. What are the program’s annual operational costs?


          15. How is the program funded?

             The funding was allocated from the Department’s general operating fund

          16. Did this program require the passage of legislation, executive order or regulations? If
              YES, please indicate the citation number.

             Yes. In accordance with H.B. 2533, Chapter 263, Section 85
             As well as in rule under Title 15, Chapter 10, Article 6

          17. What equipment, technology and software are used to operate and administer this

             IBM mainframe, CICS online system, Cobol programs, Microsoft Xp desktops and
             laptops. An in- house online system was developed for all employees to access. This
             was the first application in the department to accommodate all tax types within one
             system and to pass information to the appropriate mainframe systems to update each
             individual tax system by taxpayer, tax period, liability and status.

          18. To the best of your knowledge, did this program originate in your state? If YES,
              please indicate the innovator’s name, present address, telephone number and e- mail

             Yes. J. Elliott Hibbs, Director, Arizona Department of Revenue, 1600 West Monroe,
             Phoenix, AZ 85007, (602) 716-6916, HibbsE@revenue.state.az.us.

          19. Are you aware of similar programs in other states? If YES, which ones and how does
              this program differ?

             Yes, see below.
                                    State Tax Amnesty Programs
                                      November 22, 1982 -- Present

                                                   MAJOR ACCOUNTS                                  INSTALLMENT
STATE      AMNESTY P ERIOD                         TAX ES RECEIVABLE Collections ($ Millions) (a) ARRANGEMENTS
                                 AUTHORI ZATION
                                                  COV ERED INCLUDED                                PERMITTED (b)
ALABAMA    1/20/84 - 4/1/84            No (c)        All      No                    3.2                 No
ARIZONA    11/22/ 82 - 1/20/83         No (c)        All      No                    6.0                 Yes
            1/1/02 - 2/28/02          Yes                         No                                    No
            9/1/03 - 10/31/ 03        Yes           All (t)                            73.0             Yes

                                                                                                - - 5
ARKANSAS          9/1/87 - 11/30/ 87    Yes           All        No        1.7                Yes
                  7/1/04 - 12/31/ 04    Yes           All
CALIFORNIA       12/10/ 84 - 3/15/85    Yes                      Yes     154.0                Yes
                                        Yes         Sales        No       43.0                Yes
COLORA DO        9/16/85 - 11/15/ 85    Yes           All        No         6.4               Yes
                  6/1/03   6/30/03                    All                 18.4                Yes
CONNE CTICUT      9/1/90 - 11/30/ 90    Yes           All        Yes       54.0               Yes
                  9/1/95 - 11/30/ 95    Yes           All        Yes       46.2               Yes
                  9/1/02 - 12/2/02                    All                109.0
FLORIDA           1/1/87 - 6/30/87      Yes       Intangibles    No        13.0                No
                  1/1/88 - 6/30/88      Yes (d)       All        No        8.4 (d)             No
                  7/1/03 - 10/31/ 03    Yes           All                 80.0
GEORGIA          10/1/92 - 12/5/92      Yes           All        Yes      51.3                 No
IDA HO           5/20/83 - 8/30/83       No (c)                  No        0.3                 No
ILLINOIS         10/1/84 - 11/30/ 84    Yes         All(u)       Yes     160.5                 No
                  10/1/03 - 11/17/ 03   Yes           All                532.0
IOWA              9/2/86 - 10/31/ 86    Yes           All        Yes      35.1
KANSAS            7/1/84 - 9/30/84      Yes           All        No        0.6                 No
                 10/1/03 - 11/30/ 03    Yes           All        Yes      53.7
KENTUCKY         9/15/88 - 9/30/88      Yes (c)       All        No      100.0                 No
                  8/1/02 - 9/30/02      Yes (c)       All        No      100.0                 No
LOUIS IANA       10/1/85 - 12/31/ 85    Yes           All        No        1.2               Yes (f)
                 10/1/87 - 12/15/ 87    Yes           All        No        0.3               Yes (f)
                 10/1/98 - 12-31-98     Yes           All       No (q)     1.3                No
                  9/1/01 - 10/30/ 01    Yes           All        Yes     173.1                No
MAINE            11/1/90 - 12/31/ 90    Yes           All        Yes      29.0                Yes
                  9/1/03   11/30/ 03    Yes           All                 34.7
MARYLAND        9/1/87 - 11/2/87        Yes           All        Yes      34.6 (g)             No
                9/1/01 - 10/31/ 01      Yes           All        Yes      39.2                 No
MASSACHUSE TTS 10/17/ 83 - 1/17/84      Yes           All        Yes      86.5               Yes (h)
                 10/1/02 - 11/30/ 02    Yes           All        Yes      96.1                Yes
                  1/1/03   2/28/03      Yes           All        Yes
MICHIGA N        5/12/86 - 6/30/86      Yes           All        Yes     109.8                 No
                 5/15/02 - 6/30/02      Yes           All        Yes
MINNESOTA         8/1/84 - 10/31/ 84    Yes           All        Yes      12.1                 No
MISSISS IPPI      9/1/86 - 11/30/ 86    Yes           All        No        1.0                 No

MISSOURI          9/1/83 - 10/31/ 83     No (c)       All        No         0.9                No
                  8/1/02 - 10/31/ 02    Yes           All        Yes      76.4
               8/1/03 - 10/31/ 03       Yes           All        Yes       20
NEVADA         2/1/02 - 6/30/02                       All                  7.3
NEW HAMPSHIRE 12/1/97 - 2/17/98         Yes           All        Yes      13.5                 No
                 12/1/01    2/15/02     Yes           All        Yes      13.5

                                                                                     - - 6
NEW ME XICO      8/16/99 - 11/12/ 99          Yes               All          Yes                        45                Yes
NEW JERSEY       9/10/87 - 12/8/87            Yes               All          Yes                     186.5                Yes
                 3/15/96 - 6/1/96             Yes              All           Yes                     359.0                 No
                 4/15/02 - 6/10/02            Yes              All           Yes                     276.9
NEW ME XICO      8/15/85 - 11/13/ 85          Yes             All (i)        No                       13.6                Yes
NEW YORK         11/1/85 - 1/31/86            Yes             All (j)        Yes                     401.3                Yes
                 11/1/96 - 1/31/97            Yes              All           Yes                     253.4               Yes (o)
                 11/18/ 02 1/31/03            Yes              All           Yes                     520.0               Yes (s)
NEW YORK CITY    10/20/ 03 - 1/23/04          Yes             All (v)      Yes (w)                                         No
                  9/1/89 - 12/1/89            Yes             All (k)        Yes                      37.6                 No

NORTH DAKOTA      9/1/83 - 11/30/ 83           No (c)           All          No                        0.2                Yes
                 10/1/03 - 1/31/04            Yes                                                      6.9
OHIO             10/15/ 01 - 1/15/02          Yes               All          No                       48.5                 No
OKLAHOMA          7/1/84 - 12/31/ 84          Yes                            Yes                      13.9               No (l)
                 8/15/02 - 11/15/ 02                          All (r)        Yes
PENNSYLVA NIA    10/13/ 95 - 1/10/96          Yes              All           Yes                       n.a.               No
RHODE ISLAND     10/15/ 86 - 1/12/87          Yes              All           No                        0.7                Yes
                4/15/96 - 6/28/96             Yes               All          Yes                       7.9                Yes
SOUTH CA ROLINA 9/1/85 - 11/30/ 85            Yes               All          Yes                       7.1                Yes

                 10/15/ 02 - 12/2/02          Yes              All           Yes                     66.2
SOUTH DAKOTA      4/1/99 - 5/15/99            Yes              All           Yes                       0.5
TE XAS            2/1/84 - 2/29/84             No (c)        All (m)         No                        0.5                 No
                 3/11/04 - 3/31/04             No (c)        All (m)         No                                            No
VERMONT          5/15/90 - 6/25/90            Yes              All           Yes                       1.0 (e)             No
VIRGINIA          2/1/90 - 3/31/90            Yes              All           Yes                      32.2                 No
                  9/2/03 - 11/3/03            Yes              All           Yes                      98.3
WEST VIRGINIA    10/1/86 - 12/31/ 86          Yes              All           Yes                      15.9                Yes
                  ?/?/04 - ?/?/04             Yes
WISCONSIN        9/15/85 - 11/22/ 85          Yes               All        Yes (n)                    27.3                Yes

                 6/15/98 - 8/14/98            Yes               All          Yes                      30.9
                  7/1/87 - 9/30/87            Yes               All          Yes                      24.3                Yes
                 7/10/95 - 8/31/95            Yes             All (p)        Yes                      19.5               Yes (p)

                Source: The Federation of Tax Administrators.

                (a) Where applicable, figure includes local portions of certain taxes collected under the state tax
                amnesty program.
                (b) "No" indicates requirement of full payment by the expiration of the amnesty period. "Yes"
                indicates allowance of full payment after the expiration of the amnesty period.

                                                                                                                 - - 7
(c) Authority for amnesty derived from pre -existing statutory powers permitting the waiver of tax
(d) Does not include int angibles tax and drug taxes. Gross collections t otaled $22.1 million, with
$13.7 million in penalties wit hdrawn.
(e) Preliminary figure.
(f) Amnesty taxpayers were billed for the interest owed, with payment due within 30 days of
(g) Figure includes $1.1 million for the separate program con ducted by the Department of Nat ural
Resources for the boat excise tax.
(h) The amnesty statute was construed to extend the amnesty to those who applied to the
department before the end of the amnesty period, and permitted them to file overdue returns and
pay back taxes and interest at a later date.
(i) The severance taxes, including the six oil and gas severance taxes, the resources excise tax,
the corporat e franchise tax, and the special fuels tax was not subject to amnesty.
(j) A vailability of amnesty for the corporation tax, the oil company taxes, the transportation and
transmissions companies’ tax, the gross receipts oil tax and the unincorporated business tax
restricted to entities with 500 or fewer employees in the United States on the date of applicat ion.
In addition, a taxpayer principally engaged in aviation, or a utility subject to the supervision of the
State Department of Public Service was also ineligible.
(k) Local taxes and real property taxes were not included.
(l) Full payment of tax liability required before the end of the amnesty period to avoid civil
(m) Texas does not impose a corporate or individual income tax. In practical effect, the amnesty
was limited to the sales tax and ot her excises.
(n) Waiver terms varied depending upon the date of tax liability was accessed.
(o) Installment arrangements were permitted if applicant demonstrated that payment would
present a server financial hards hip.
(p) Does not include real property taxes. All interest was waived on tax payments made before
July 31, 1995. After this date, only 50% of the interest was waived.
(q) Exception for individuals who owed $500 or less.
(r) Except for property and motor fuel taxes.
(s) Multiple payments can be made so long as the required balance is paid in full no later than
March 15, 2003.
(t) All taxes except property, estate and unclaimed property.
(u) Does not include the motor fuel use tax.
(v) All NYC taxes administered by the NYC Dept. of Finance are covered except for Real Estate
Tax. NYC Sales & Use Tax & NYC Resident Personal Income Tax also are not covered because
they are administered by the NYS Dept. of Taxation & Financ e.
(w) Tax payers under audit as of 3/ 10/03 are ineligible; Taxpayers with an existing installment
agreement are ineligible; Taxpayers under criminal investigation are ineligible; Tax payers party
to an administrative or court proceeding must withdraw as a condition of amnesty.

Last Updated: March 2004

20. Has the program been fully implemented? If NO, what actions remain to be take n?

    Yes, the program ran from September 1, 2003 to May 1, 2004. The Department will
    maintain taxpayer information to monitor future compliance with taxes. Those
    taxpayers who did not fully pay their amnesty liability have been moved into
    Collections for payment of taxes, full interest and suitable penalties.

                                                                                                  - - 8
21. Briefly evaluate (pro and con) the program’s effectiveness in addressing the defined
    problem[s] or issue[s]. Provide tangible examples.

    1863 taxpayers became compliant.445 in TPT (Use), 173 corporate,1193
        individual income tax, 46 withholding and 6 luxury taxes.
    The State’s general fund, the cities and counties received over $73 million in
        accelerated tax revenues and interest during the current fiscal year.
    Taxpayers voluntarily participating in Amnesty received a reduced interest rate
        and abated penalties. In some cases, these savings would have added over 50%
        to their total liability.
    Taxpayers should now continue to file and pay their tax liabilities.
    Audit resolutions were expedited and auditors freed up to focus on new audits.

    No special funding.
    Without supplemental funding in the department’s budget, marketing and
       outreach were more limited than ideally planned.
    Outreach on Individual personal income tax projections resulted in low responses.
    Internal resources were diverted to amnesty.
    The department was undergoing a major change to all systems and applications.
    Reduced audit collections. Taxpayers that were under audit were allowed to
       participate and the original interest and penalty was waived. Tax amnesty interest
       was applied only to the tax due.

22. How has the program grown and/or changed since its inception?

23. What limitations or obstacles might other states expect to encounter if they attempt to
    adopt this program?

   Budget issues
   Staffing and resources
   Public awareness and outreach
   Marketing issues with cost of media, print and television
   Legislative changes

Add space as appropriate to this form. When complete, return to:
CSG Innovations Awards 2004
The Council of State Governments
2760 Research Park Drive, P.O. Box 11910
Lexington, KY 40578-1910

                                                                                       - - 9
DEADLINE: All original applications must be received by April 20, 2004, to be
considered for an Innovations Award for 2004.

                                                                                - -10

To top