Missouri Tax Amnesty combined with an Offer in Compromise to the IRS can change lives

Missouri recently adopted a tax amnesty program that runs from September 1, 2015 to November 30, 2015. The program offers relief from the assessment or payment of all penalties, additions to tax, and interest with respect to unpaid Missouri taxes.  The amnesty applies only to tax liabilities due but unpaid on or before December 31, 2014. Missouri taxpayers under civil or criminal investigation for tax-related reasons are not eligible. To take advantage of the amnesty program, taxpayers must apply for amnesty, pay the taxes in full within the amnesty period, and agree to comply with Missouri tax laws for the next eight years from the date of the agreement.

Although the Missouri Department of Revenue has an offer in compromise program, the offer program has not been effectively administered to resolve Missouri tax liabilities based upon a hardship or inability to pay the full amount of the taxes, interest and penalties.  The tax amnesty program creates a small window of opportunity to compromise Missouri delinquencies for the payment of tax only.

Combining the Missouri amnesty program with the IRS “Fresh Start” initiatives and more favorable financial analysis in the IRS offer in compromise program can turn an otherwise hopeless situation of threatened and actual tax enforcement by both the State and the IRS into bright light at the end of the tunnel.  When the IRS grants an offer in compromise and the payments due under the offer are paid, the IRS releases any federal tax liens and the taxpayer must stay compliant for 5 years.  On March 25, 2015, the IRS Acting Director of Collection Policy issued interim guidance that notices of federal tax lien can actually be withdrawn, not just released, after payment of the accepted offer amount.  Withdrawal of the notice of federal tax lien removes it from public record and has the impact of restoring much of the damage the notice of federal tax lien did to a taxpayer’s credit rating.  Participation in the Missouri amnesty program will result in releases of the state tax liens, even though not as effective as a withdrawal, will improve the credit rating especially if combined with the withdrawal of the notice of federal tax lien.