The District of Columbia is providing a tax amnesty program between August 2, 2010 and September 30, 2010 for all taxes administered by the Office of Tax and Revenue (OTR) with the exception of real property related taxes and the ballpark fee. All tax periods prior to December 31, 2009 are covered by the amnesty program, which includes an abatement of taxpayer penalties and fees due and no imposition of criminal penalties.

Administration. During the 2-month amnesty period, penalties and fees will be waived upon the payment of the following overdue taxes: individual income, corporate and unincorporated franchise, withholding, sales and use, personal property, fiduciary income, motor fuel, special event taxes, gross receipts, estate, tobacco, and toll communication taxes. Real property taxes and the ball park fee are ineligible for the amnesty program. An amnesty application or payment of an amnesty bill must be filed or postmarked by September 30, 2010 to be eligible for the program.

Taxpayers who did not file returns that should have been filed prior to December 31, 2009 should complete those returns along with an amnesty application, together with full payment of the tax and interest due. If a taxpayer files less than all unfiled returns, the taxpayer will receive amnesty only on those returns actually filed with the tax and interest due paid in full.

The OTR has established a special website (http://www.dctaxamnesty.com/) to help tax delinquents expedite payment and resolve their tax liabilities, including the amount owed. The website provides an interest calculator to determine the tax and interest due. Application forms can be downloaded from the website. Taxpayers can also contact the Department for additional information.

If there is an error in the amnesty bill, the taxpayer should contact the OTR promptly. The OTR will provide the taxpayer with a revised amnesty. If the issue is not resolved before the end of the amnesty period, the affected taxpayer should pay the bill provided and seek a refund after the amnesty.

Payments. Payment may be made by attaching a check or money order to the amnesty application and return or with the amnesty bill stub or by e-Check or credit card through the official payments website (http://www.officialpayments.com). A convenience fee is imposed on credit card transactions through the official payments website. Amnesty returns and payments may be mailed to the OTR at Office of Tax and Revenue, P.O. Box 470, Washington, DC 20044. Payments may also be made in person at the Office of Tax and Revenue, 1101 4th Street, S.W., Suite W270, Washington, DC 20024. However, no payment arrangements are available; taxpayers must pay the full amount of taxes and interest due on amnesty bills filed with the amnesty application.

Deferred payment plan taxpayers. Taxpayers who are currently on a deferred payment plan may still apply for tax amnesty and such taxpayers should have received a notice of amnesty eligibility. Taxpayers under such plans (whether with the OTR or a private collection agency) may simply subtract any deferred payments made since the bill was produced and return the amnesty bill stub, together with the remaining payment due.

On June 30, Congress passed H.R. 5623, the Homebuyer Assistance Improvement Act of 2010. The Act, which is now cleared for the President's signature, provides first-time homebuyer credit relief to taxpayers who couldn't meet a key June 30, 2010, closing date.

Under prior law, both the regular Code 36 first-time homebuyer credit of $8,000 and the reduced credit of $6,500 for long-term residents generally expired for homes purchased after Apr. 30, 2010. However, if a written binding contract to purchase a principal residence was entered into before May 1, 2010, the credit could be claimed if the purchase closed before July 1, 2010.

The Act amends Code Sec. 36(h)(2) to provide that if a written binding contract to purchase a principal residence was entered into before May 1, 2010, the credit may be claimed if the purchase is closed before Oct. 1, 2010. Thus, this extension allows homebuyers who signed a contract no later than the April 30th deadline to complete their closing by the end of September.

The three-month extension of the closing date provides tax relief for those who couldn't close on time because of backlogs at lenders and federal programs involved in homebuyer loans. In the words of the Act's supporters, the three-month extension "will give time for all the new mortgages to be processed and not punish those homeowners who have been delayed through no fault of their own."

The cost of the three-month closing reprieve is fully offset with revenue raisers, including these tax changes: expanding the bad check penalty under Code Sec. 6657 to cover electronic payments, effective for instruments tendered after the enactment date; and providing for disclosure of prisoner return information under Code Sec. 6103(k)(10) to state prisons, effective for disclosures after the enactment date.

Every year, the dollar amounts allowed for various federal tax benefits are subject to change based on inflation adjustments and legislation. For 2010, many amounts will remain unchanged or change only slightly because inflation has been so low. 

Here are some important tax figures for the current year, including the Social Security wage base, qualified retirement plan and IRA contribution limits, driving deductions, allowable business write-off amounts and more: 

  As the end of the year approaches, this is a good time to think of planning moves that will help lower your tax bill this year and possibly the next.  It is even more important now than in recent years to take certain actions before the end of 2009, since Congress has put temporary measures in place to stimulate the economy which will not be available after the end of the year.

Click here to take a peek at our 2009 Year End Tax Letter and Checklist of actions to take this December for significant potential tax savings . 

  
The District of Columbia recently enacted emergency tax legislation, included as part of a larger fiscal year 2010 budget support act.  The legislation reenacts combined reporting, decoupling, the disallowance of certain related party transactions, tax amnesty, a reduction of the threshold for electronic payments, and a freeze on the standard deduction and personal exemption amounts until 2013.

 Tax Amnesty
The enactment provides the District may establish a tax amnesty program for taxpayers liable for the payment of corporation franchise and personal income taxes on returns or reports for tax periods ending prior to December 31, 2008. If the District establishes the tax amnesty program for a period ending after December 31, 2008, the program will apply to returns and reports for tax periods ending prior to December 31, 2009. Those eligible may receive amnesty from civil or criminal penalties for failure to file.  

Maryland business will pay at least three times the current rates for unemployment insurance taxes next year.

Department of Labor, Licensing and Regulation Secretary Thomas Perez said last week "a drastic drop in the state's unemployment fund means the amount employers pay will increase to the highest level allowed."

Nonprofits and companies that have not laid-off anyone in recent years will be billed $187 per employee in 2010, up from $51 per employee this year, said Liz Williams, a spokeswoman for DLLR. The tax could be much heftier for Maryland employers that have let workers go in the past three years, as mandated by state law.

The highest rate employers will pay is $1,147.50 per employee.

The fund's balance fell from nearly $900 million a year ago to $341 million last month, while the unemployment rate grew from 4.5 percent a year ago to 7.2 percent in August.

Maryland could be forced to borrow money from the federal government, as more than 20 other states have done to date, to refuel the fund before the tax increase takes effect.

Bottom Line:  Maryland business need to adjust their budgets to reflect the 2010 unemployment insurance rate change. The maximum rate employers will pay is $1,147.50 per employee.

Maryland Governor, Martin O'Malley has signed legislation that provides an amnesty period from September 1 through October 30, 2009, for taxpayers who failed to file a return or pay personal income, corporate income, withholding, sales and use, or admissions and amusement taxes. 

The comptroller will waive civil penalties (except previously assessed fraud penalties) and half the interest due if a taxpayer files all delinquent returns and pays all tax and half the interest due, or enters into an agreement with the comptroller, during the amnesty period.

Amnesty is not available to taxpayers who have more than 500 U.S. employees, who participated in the 2001 Maryland amnesty program, or who were eligible for the 2004 Delaware holding company settlement period.

Taxpayers cannot be charged with a criminal tax offense arising out of any return filed or tax paid during the amnesty period, but amnesty does not apply to criminal charges that are already pending or under investigation.