Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart A - General Provisions › Chapter 9 - REVENUE PRONOUNCEMENTS-STATEMENTS OF POLICY › Section 9.15 - Tax amnesty administration and implementation issues

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
Definitions.
The
				  following words and terms, when used in this section, have the following
				  meanings, unless the context clearly indicates otherwise:
Amnesty period
-The time period of 90
					 consecutive days beginning on Friday, October 13, 1995, and ending on
					 Wednesday, January 10, 1996.
Eligible liability
-An eligible tax
					 liability, eligible interest liability and an eligible penalty
					 liability.
Program
-Tax Amnesty
					 Program.
(b)
Nonparticipation penalty.
(1)
Scope.
The
				  nonparticipation penalty applies to those eligible taxpayers that fail to
				  participate in the Program. Section
				  6.21(b) (relating
				  to nonparticipation penalty) addresses three general circumstances under which
				  the Department will not impose the nonparticipation penalty. However, many
				  specific questions have been received concerning what effect, if any, the
				  timing of assessments or appeals would have on the application of the
				  nonparticipation penalty. Paragraphs (2)-(6), inclusive, address concerns
				  taxpayers have raised.
(2)
Ineligible taxpayers.
The nonparticipation penalty will not be
				  imposed upon a taxpayer that is not eligible to participate in the Program
				  under §
											6.3(b)  (relating
				  to eligible taxpayers).
Example:
Prior to the amnesty period,
					 Taxpayer became the subject of a criminal investigation for failing to file and
					 pay sales and use tax. Taxpayer is not eligible to participate in the Program
					 and, thus, the nonparticipation penalty will not apply to this taxpayer.
(3)
Corporation tax
				  accounts.
Payment of eligible liabilities may be made by the use of
				  any available credit that a taxpayer may have in its corporation tax account.
				  The Department will give a taxpayer the opportunity to request that an eligible
				  liability be offset by such a credit before the nonparticipation penalty is
				  imposed.
Example:
Taxpayer has a settled 1990
					 Capital Stock Tax credit of $10,000 and an unpaid settled 1991 Capital Stock
					 Tax liability of $600. Taxpayer may use its settled credit to pay its 1991
					 Capital Stock Tax liability under the Program and avoid the imposition of the
					 nonparticipation penalty.
(4)
Effect of successful appeal of
				  eligible liability.
An administrative or judicial decision that
				  reduces or refunds an eligible liability that was not the subject of a valid
				  appeal under paragraph (6) or was not paid on or before the last day of the
				  amnesty period does not automatically relieve the taxpayer of liability for a
				  nonparticipation penalty. A separate petition to appeal the imposition of the
				  nonparticipation penalty shall be filed.
Example:
Taxpayer does not pay an eligible
					 liability during the amnesty period. The nonparticipation penalty is imposed.
					 Subsequently, Taxpayer pays the eligible liability and files a Petition for
					 Refund for the eligible liability. The refund of the eligible liability is
					 granted. The nonparticipation penalty, however, will not be abated
					 automatically.
(5)
Post amnesty period increase in eligible liability.
Except in
				  cases where there is evidence of fraud or the appeal is not valid under
				  paragraph (6), the nonparticipation penalty will not be imposed upon a taxpayer
				  in any of the following situations:
(i) After
				  the amnesty period, the taxpayer receives an assessment, a determination of
				  additional tax, a settlement notice or resettlement notice establishing an
				  eligible liability, based on an audit, or otherwise, and one of the following
				  occurs:
(A) The tax return or tax report for
				  the eligible liability was timely filed and payment of the reported eligible
				  liability was made on or before January 10, 1996.
(B) The eligible liability was timely
				  reported on a tax amnesty return and payment was timely made. See §§
													6.1,
				  6.5 and
				  6.6 (relating to definitions; tax
				  amnesty return; and payment).
(ii) After the amnesty period, the taxpayer
				  receives a Federal Report of Change that increases its taxable income and,
				  consequently, its liability for an eligible tax. See section 406 of the TRC
				  (72
				  P. S. §
													7406).
(iii) During the amnesty period, the taxpayer
				  receives an assessment, determination of additional tax due, a settlement
				  notice, or a resettlement notice for an eligible liability, but is not required
				  to file an appeal of the assessment, determination, settlement or resettlement
				  until after the amnesty period, if one of the following conditions are met:
(A) The taxpayer subsequently files a timely
				  and valid administrative or judicial appeal for that particular eligible
				  liability.
(B) The taxpayer
				  subsequently pays the eligible liability on or before the date when an appeal
				  of the assessment, determination, settlement notice or resettlement notice is
				  required to be filed.
(6)
Timely and valid
				  appeals.
(i) The nonparticipation
				  penalty will not be imposed upon a taxpayer that on or before the last day of
				  the amnesty period, files a timely and valid administrative or judicial appeal
				  contesting an eligible liability. An appeal is not valid if the Department
				  determines that the appeal is filed in bad faith. An appeal is filed in bad
				  faith when, the appeal has no basis in law or fact, or was undertaken solely to
				  delay the collection of a tax. An appeal is presumptively in bad faith if it is
				  barred by res judicata or time, or was filed with a tribunal that did not have
				  proper jurisdiction to hear the appeal.
(ii) The nonparticipation penalty will not be
				  imposed upon a taxpayer in either of the following situations:
(A) Before the end of the amnesty period, the
				  taxpayer receives an adverse decision in a valid administrative or judicial
				  appeal of an eligible liability, but is not required to file a further appeal
				  of the adverse decision until after the amnesty period.
(B) On or before the last day of the amnesty
				  period, the taxpayer files a timely and valid administrative or judicial appeal
				  contesting an eligible liability and subsequently either withdraws the appeal
				  or does not further appeal an adverse decision.