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Indianas Tax Amnesty Under Reporting Letter

Published on 11/04/2015
Writtin by: Paul Bogdanoff, CPA and Tim Dages, CPA

Recently, a few of Bogdanoff Dages and Co., P. C.’s clients and countless other Indiana taxpayers have received a Tax Amnesty “Under Reporting” letter from the Indiana Department of Revenue, IDR. The IDR’s Tax Amnesty “Under Reporting” letter opens with the statement that the Indiana Department of Revenue has reviewed the taxpayer’s returns and “…believe that you may be under reporting taxable income for the state of Indiana.

This opening paragraph leads the taxpayer to believe that they owe additional taxes on unreported or under reported income and may lead to a few sleepless nights. The BD and Co., P. C. team has contacted the IDR and has determined that the “Under Reporting” letter is, in the words of the IDR representative, poorly worded. 

The Indiana Department of Revenue representative indicated that this is a courtesy letter and was intended to prompt the taxpayer to review their prior tax return filings, or lack of filings, and to take advantage of the Tax Amnesty program if there was a year that was not filed or a situation where the taxpayer may need to report additional income or taxes.  One example that may need to be reviewed is Use Tax.  Use Tax is the tax that an Indiana taxpayer may need to pay on purchases that were made outside the state of Indiana, including internet purchases, and sales taxes should have been remitted to the state of Indiana. It is important to note that the Indiana Department of Revenue does not have any information that would lead the IDR to audit the taxpayer’s return, and has not audited the taxpayer’s return.

The IDR’s Tax Amnesty program allows a taxpayer to just pay the tax and the penalty and interest will be forgiven, for returns that are for periods ended prior to January 1, 2013. Therefore, it would be beneficial for a taxpayer that has not filed returns for the 2012 or earlier, or has additional taxable income or taxes that needs to be reported for the tax years 2012 or earlier to file the returns, or amended returns, and only pay the tax. The IDR’s tax Amnesty program closes November 16, 2015.

If you have any questions or wish to discuss your tax situation, please do not hesitate to call Bogdanoff Dages and Co., P. C. and ask for Paul or Tim.