Amnesty Revenue Estimate [46 Pa.B. 5861]
[Saturday, September 10, 2016]The act of July 13, 2016 (P.L. 526, No. 84) (Act 84) established the Tax Amnesty Program (Program) for Fiscal Year (FY) 2016-2017. Per section 2912-G(b) of Act 84, the Department of Revenue (Department) was responsible to submit for publication a separate amnesty revenue estimate for revenue generated by this Program from the following sources:
(i) The General Fund.
(ii) The Motor License Fund.
(iii) The Liquid Fuels Tax Fund.
(iv) The Methodology Used to Develop the Estimate.
The revenue estimates and methodology for those estimates are as follows:
Fiscal Impact of Tax Amnesty Program
FY 2016-2017
($ Millions)Payments General Fund $149.7 Motor License Fund Nominal Liquid Fuels Tax Fund Nominal Decline in Delinquent Collections ($28.6) Administrative Costs ($21.1) Net Amnesty Collections: $100.0 The Department estimated that a total of $149.7 million will be collected through the proposed tax amnesty period with net collections of $100.0 million during FY 2016-2017. The estimate was based on the following parameters:
1. Eligibility of known and unknown liabilities delinquent as of December 31, 2015.
2. Per statute, the ineligibility of liabilities owed by taxpayers who participated in the FY 2009-2010 Program.
3. The same parameters as the FY 2009-2010 Program: abatement of 100% of penalty and 50% of interest and a limited lookback for unknown taxpayers.
The estimate was calculated by querying known accounts receivable for the largest eligible tax types, which represented more than 99% of collections during the FY 2009-2010 Program. The accounts receivable were adjusted for balances that were ineligible, uncollectable or unlikely to be collected.
The estimate then compared collections from the FY 2009-2010 Program, which included collections from both known and unknown taxpayers, with the eligible accounts receivable for that program. The ratio of collections to accounts receivable by tax type was applied to currently eligible accounts receivable. This amount, presumed to account for over 99% of expected collections, was grown to account for the remaining less than 1% of expected collections, to arrive at expected amnesty collections of $149.7 million.
It is estimated that payments attributable to the Motor License Fund and Liquid Fuels Tax Fund will be nominal. During the FY 2009-2010 Program, payments to those funds accounted for less than 1% of collections.
The estimate also expects decreased collections by the Department's Delinquent Collections and Voluntary Disclosure Programs. Taxpayers with known, past-due liabilities who would have normally made payment through the Department's typical delinquent collections process are expected to make payment during the amnesty period. Many individuals and entities with unknown liabilities, who would have normally come forward and paid tax due through the Department's Voluntary Disclosure Program, are expected to participate in the Program to take advantage of the Program's more generous interest abatement. After examining the drops in delinquent collections and voluntary disclosure payments following the Department's last two Programs and attempting to eliminate nonamnesty effects on collections, the decrease was estimated at approximately $28.6 million.
This estimate also acknowledges that there will be administrative costs of approximately $21.1 million associated with the Program. Costs include additional equipment and staffing, reimbursement of collection agency and lien fees, advertising and contracted system development.
EILEEN H. McNULTY,
Secretary[Pa.B. Doc. No. 16-1565. Filed for public inspection September 9, 2016, 9:00 a.m.]
