The majority of states during the first 5 months of 2009 have experienced the harsh realities of the economic downturn, just like so many companies and individuals have. In response to that reality, they have focused on enacting amnesty programs, expanding "nexus" boundaries/limits, increasing tax rates or the tax base (depending on the tax type), instituting or proposing combined reporting, disallowing NOLs, not conforming to federal bonus depreciation, etc.
The amnesty programs, specifically, are often viewed as a "carrot" to get taxpayers to come forward and clean-up past liabilities while paying less interest and/or penalties, etc.
However, moving forward to the back-half of 2009, I believe the states will do the following:
- Increase enforcement efforts via Notices and Audits
- Assess Penalties on taxpayers who should have taken advantage of the Amnesty program and didn't
- Continue to expand the application of Nexus (nexus questionnaires are coming)
- Decrease time periods for taxpayers to file refund claims
- OTHER (the other category includes anything and everything that will raise revenue but not appear as though it is raising taxes, at least on in-state taxpayers).
As companies downsize or right-size due to the "great recession," the burden of state and local tax compliance will only get worse, not better. Meaning, more to do, more difficult to resolve, with less resources to get it done. But remember, you are not alone.
And by the way, have a great Memorial Day Weekend!