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Indiana tax amnesty begins, aims to collect at least $90M

September 15, 2015

Indiana's second tax amnesty period in the past decade began Tuesday, giving delinquent taxpayers a two-month window to pay off their tax debt without enforcing the penalties, interest and collection fees that have accumulated.

About 260,000 corporations, small businesses and individuals who owe the state more than $500 million are eligible for the program, which runs through Nov. 16, Indiana Department of Revenue Commissioner Andrew Kossack said.

The amnesty, which was authorized by state lawmakers as part of Indiana's two-year budget, is being counted on to collect $84 million for Gov. Mike Pence's new Regional Cities program that's aimed at encouraging counties and cities to collaborate on development projects. Another $6 million will go to the Indiana Department of Transportation to support Amtrak's Hoosier State line that runs four days a week between Indianapolis and Chicago.

Any money collected beyond the $90 million goal will go to the state's general fund, which is being tapped to pay student loan management firm Navient Corp., which is helping collect some of the outstanding tax debt.

Corporations, small businesses and individuals can make arrangements to pay the base tax liability they owe while freeing them of the penalties, interest and collection fees, but the amnesty is only for tax debts that accumulated through the end of 2012.

In most cases, the collections process for those taxpayers has been exhausted and tax warrants have been issued, Kossack said, and some have seen their property sold at sheriff's sales.

"The collection process is not a pleasant experience," he said.

Kossack said the revenue department has heard from some taxpayers whose tax debt started accumulating in 2008 and 2009, when businesses were hard-hit by the nation's financial crisis and resulting recession. "For those folks who through no fault of their own experienced hard times, this gives them a chance to catch up," he said.

The state's last tax amnesty came in 2005, when Indiana collected $244 million of some $1.3 billion in unpaid taxes; about two-thirds came from businesses. Any taxpayer who took part in the 2005 amnesty is ineligible for the current one.

And those who don't act this time will see their 10-percent tax penalty double to 20 percent, said Robert Dittmer, deputy commissioner of tax administration for the Department of Revenue.

The state agency has installed a dozen kiosks at its downtown Indianapolis offices for the amnesty program, but taxpayers can also go to one of the department's 12 statewide offices or take care of it online or by phone.

Among those who took advantage of the amnesty's start Tuesday was Verssa Hornbeak, a 59-year-old who once owned an Indianapolis child day-care center. Hornbeak made arrangements to pay off the more than $3,000 in taxes she owes on her former business.

She said the amnesty will allow her to avoid several hundred dollars in penalties, interest and collection fees.

"I'm saving quite a bit, so I'm happy about that," Hornbeak said.

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