State’s tax amnesty below projections

Posted Dec. 09, 2010, at 8:08 p.m.

AUGUSTA, Maine — The state’s limited tax amnesty program that ended Nov. 30 has brought in $8.1 million, below the $10 million that was booked as part of this budget year.

“The goal was to try and clean up some of the debts that are owed the state,” said Jerome Gerard, the acting executive director of Maine Revenue Services. “It did not work as well as we had hoped.”

This program, the 2010 Tax Receivables Reduction Initiative, was aimed at both relatively recent tax bills owed the state and much older bills.

Those owing the state recent tax debts — less than 5 years old — got 95 percent of the penalties waived for paying up during the program. Those with older debts — more than 5 years old — that took advantage of the limited time program got 95 percent of the penalties and 95 percent of the interest waived.

“That was a significant incentive,” Gerard said.

The plan was put in the budget last spring over the objections of some Taxation Committee members that it was too soon to use the tax amnesty approach after its last use in 2009.

The program was aimed at the growing amount of uncollected taxes during this recession which lawmakers acknowledge is making it difficult for businesses and individuals to pay what they owe on time. At its greatest level, unpaid taxes of all types owed the state hit $276 million.

“We are responsible for 40-something different tax regimes,” Gerard said, “from the blueberry tax to a cigarette tax to the corporate income tax and payroll taxes. Just a variety of taxes and this program was for all taxes, it was a universal program.”

Gerard said it would take several weeks to complete the analysis of the payments and figure out which tax types were paid and what tax year they date from. He said one business tax payment for past due taxes was nearly a quarter of the total raised by the program.

“I can’t tell you more than that about it,” he said.

Sen. Richard Rosen, R-Bucksport, the chairman of the Appropriations Committee, said he is not surprised the effort fell short. He said members of both parties on the committee expressed concern whether the program would be successful because the state ran a similar amnesty program in 2009.

“We have to be very careful not to overutilize that approach,” he said. “If you go back to that well too many times, it just won’t produce.”

Last year’s tax amnesty program brought in $16.2 million, well above the projected $9 million. In 2003, a tax amnesty program brought in $37.6 million, well above the $19 million estimate.

“It does mean we now have a hole that will need to be filled,” Rosen said, “I expect we will have a lot of these, some above and some below estimates and we will just have to see how it all ends up.”

He said revenue over all is up by about $111 million, with the corporate income tax providing most of the new revenue. He says that is good news as lawmakers start looking at a supplemental budget to get through the current budget year.

“I am disappointed that it has fallen short, but this number is small compared to other holes in the budget facing us,” said Rep. Emily Cain, D-Orono, the House minority leader.

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