Tax Amnesty program unveils website

Posted on July 12, 2007 in Politics by DM

It seems pretty simple to me: if you pay your taxes on time, you only owe the tax. If you fail to pay them on time, there’s a consequence: you have to pay the tax plus penalty fees and interest.

Our Legislature, though, has gotten impatient with the Iowans who have not paid their state taxes on time. So impatient that they’ve decided to reward those folks by offering a two-month Iowa tax amnesty period. That’s right: if you pay your back taxes in full between September 4 and October 31, they’ll forgive all of the penalties and half the interest. The state has unveiled its new Iowa Tax Amnesty website to assist people through the amnesty process.

The goal of the program is to quickly recover a large chunk of the $250 million that Iowans owe in back state taxes. Perhaps I’m just being cynical, but aren’t there payment plans for this type of thing? Shouldn’t the punishment for committing a tax crime be incentive enough to find a way to pay up?

The Register noted that while the vote in the House on the Tax Amnesty Bill was “largely divided along party lines,” it did get plenty of bi-partisan support in the Senate - passing on a 46-4 vote. Obviously, Senators from both parties thought this was a good idea.

House Majority Leader Kevin McCarthy justified the program by pointing out that only the penalties and interest would be reduced - the actual amount of taxes owed to the State would remain unchanged. He’s trying to make the case that because the penalties and interest aren’t technically taxes, the State isn’t actually losing revenue by giving amnesty.

This doesn’t wash. We have laws which dictate that you will be penalized monetarily if you don’t pay your taxes on time. Therefore, if you don’t pay on time, the penalties and interest charges become part of what you owe - they are revenue owed to the state, just like the taxes. McCarthy’s argument is just political word-play (”it depends on what the meaning of the word ‘revenue’ is”) - kind of like department heads who ask for a ten percent budget increase, and when they only get six percent they cry that their budget was “cut” - even though it’s six percent higher than last year.

If the Legislature cared about making the tax amnesty program fair, they would have taken a cue from businesses that offer a discount for invoices paid on time. That’s usually only 1 percent, but at least it rewards the good behavior. They didn’t do that, of course, so this is just another one of those situations where those who play by the rules get slapped in the face while those who don’t are given a break.

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