It’s no secret, as a result of the economic downturn many states are facing severe budget deficits and are forced to make tough choices in order to balance their budgets.  One way to help fill gaps in the budget is to seek out delinquent taxpayers and collect unpaid or under-paid taxes.  A number of different approaches are being taken to identify and collect delinquent tax.

Several states have started cross checking taxpayer information, both with the IRS and with other states, in order to identify unpaid tax.  Ohio and other states have hired additional auditors to focus on nexus / discovery issues and to identify non-compliance.  Sales Tax and Consumer’s use tax are two areas of major focus.

Many states are enacting new legislation to extend the reach of nexus standards, thereby encompassing more taxpayers with filing requirements. Colorado, New York, and Washington have introduced revised nexus rules.  Tax Amnesty programs and Voluntary Disclosure programs have been enacted to produce a quick influx of cash.  We are currently working with taxpayers under Florida amnesty.  The State of Illinois recently announced their fall 2010 tax amnesty program.

If you need assistance in determining whether your business has exposure for non filed taxes, please contact your BC Engagement Executive or Theresa Mullen, State and Local Tax Leader at 330.266.4129.