On the wrong side of the tax?

If so, it's all aboard the amnesty plan in pinched Colorado

By John J. Sanko, Rocky Mountain News
May 14, 2003

A one-month tax amnesty the state will announce next week could net cash-strapped Colorado $5 million to $145 million, with one tax-policy group estimating the haul at $69 million.

June will be Tax Amnesty Month in Colorado for residents who've "forgotten" something on their state tax reports in the past.

The campaign's slogan is "Pay the Tax or Pay the Max."

In other words, if the state catches you later, you've got to pay the full interest and penalties, not to mention potential criminal charges.

If you fess up voluntarily, there's no penalty, no criminal charge and only half the normal interest rate. But it's for one month only.

And if the state already has sent you a bill or knows about it, forget it. The amnesty is not for you.

M. Michael Cooke, the state's top tax collector as Department of Revenue director, says there will be a gala kickoff Monday, with Gov. Bill Owens formally announcing the plan.

She says people who take advantage of it may be those who, for whatever reason, haven't filed a tax return in the past but should, or those who have failed to put everything down.

"We don't even know who we have got out there," Cooke said. "It might be individuals who don't even realize they have a tax liability or who missed some reporting. It covers a broad range of things."

The bill creating the amnesty plan slipped quietly through the legislature this year - without nearly the attention as one that will slap the names of big-time tax scofflaws on the Internet if they don't pay up.

No one is sure how much will be collected, but at least one person is convinced he knows how the concept developed.

"Where do you suppose that idea came from?" asked Rollie Heath, the Democrat who battled unsuccessfully against incumbent Republican Gov. Bill Owens in the 2002 gubernatorial race.

During the campaign, Heath estimated the state was losing up to $500 million a year in unpaid taxes and suggested Colorado should adopt a 120-day amnesty program.

"It was pooh-poohed then, but we obviously got a few people listening," Heath said Tuesday. "I think it's good that they're beginning to look at all avenues, but it should have been done a lot earlier."

Nancy McCallin, the governor's chief economist, says Heath shouldn't be taking credit for an idea that actually came long ago from the Owens administration.

"We had proposed it a year ago, and nobody was interested in it then," McCallin said. "But with budget shortfalls, that changed, and we got them to run a bill."

The Revenue Department estimates the program will bring in $5 million, but everyone has their fingers crossed it will be more. "My gut instinct says it will be more," McCallin said.

Tax amnesties are nothing new. The Colorado Public Expenditure Council's Center for Tax Policy says 40 states and the District of Columbia have all tried similar programs during the past 20 years. Colorado tried it in 1985, with some success.

CTP noted that South Carolina, which was closest to Colorado in total population of all states holding recent amnesties, collected almost $33 million.

"Estimating off of the per-capita experience of a variety of state amnesty programs yields a range of estimates for Colorado, from a high of just over $145 million to a low of just under $9 million," according to research director Phyllis Resnick in a CTP report.

"Probably the best estimate for Colorado would be the one based upon the average collections from recent tax amnesties. Based on the average level of per-capita collections, the estimate for Colorado would be just over $69 million."

The program applies to most Colorado taxes, although not to sales taxes collected by home-rule cities - and not to property and unemployment taxes. And federal taxes aren't part of it, either.

And if the state Revenue Department has already come after you for being delinquent, forget it. No amnesty in that situation.

The amnesty program is for individuals and businesses. Taxes could be owed on anything from out-of-state purchases of arts, antiques and jewelry to business equipment such as computers and furniture.

Detailed information about the program is available at www.revenue.state.co.us/taxamnesty.html.

sankoj@rockymountainnews.com  or (303) 892-5404