Oregon Public Broadcasting

Oregon is telling its delinquent taxpayers to let bygones be bygones.  The state is rolling out its first ever tax amnesty program starting October first. 

Lawmakers approved the program earlier this year hoping to bring in more money to state coffers. 

As Salem Correspondent Chris Lehman reports, the tax amnesty is another sign of the tough economic times.

Meet Greg Heffner.  Or maybe, you've been unlucky enough to have already met him. 

He's the guy whose job it is to track down people who haven't paid their taxes.  First, he sends you a letter.  Then, he tries calling.  And if that doesn't work....

Greg Heffner:  "None of my letters tell them that I'm going to come to their place of business.  So when I walk in and I say 'Hi, I'm Greg from the Oregon Department of Revenue.  Did you receive my letters?', then it's a little bit uncomfortable for the taxpayer at first."

Heffner says he's not there to make threats.  He simply wants delinquent taxpayers to come clean.  It's not the kind of message everyone likes to hear.

Greg Heffner:  "I've been asked to leave. I had one person just turn around and walk away and walk into her office and just close the door and not come out."

But people like that can't hide forever.  Eventually the state has the option of garnishing wages and seizing assets.  But these days, Department of Revenue tax auditors like Heffner have another tool in their arsenal: an olive branch.

For the first time ever, the state of Oregon is offering a tax amnesty program.  This television ad by the Oregon Department of Revenue shows a man literally digging himself into a hole.

Voice on ad:  "Getting deeper and deeper in back taxes wasn't your original plan.  We know.  That's why we're giving you a chance to climb out of the hole."

The ad goes on to explain that for a seven week period this fall, people who've fallen behind on paying state income taxes can apply for a break.

In exchange for coming forward, the state will waive all penalties and half of the interest owed on the outstanding taxes. But if that's the carrot, the amnesty program also comes with a hefty stick.

If you could file for amnesty but don't, your penalties will go up 25 percent.

Portland-area CPA Matt Green-Hite says that could put some people thousands of dollars more in debt to the state.

Matt Green-Hite:  "There should be a stick.  But the 25 percent penalty seems really extreme."

The extra penalty notwithstanding, Green-Hite thinks the amnesty program is a good idea.  But he says it won't work unless people hear about it:

Matt Green-Hite:  "There's going to be a lot of people who don't find out about this in time.  There's just no way.  They do seem to have a good advertising program right now, but remember an awful large percentage of tax offices are closed during this amnesty period."

Until now, Oregon was one of the only states that hadn't offered an amnesty program on income taxes.

Washington doesn't have an income tax so it's never done it.  Idaho did it in the 80's.  According to the Federation of Tax Administrators, nationwide, amnesties have brought in more than $5 billion in unpaid taxes over the past 30 years. 

The Federation's Verenda Smith says they became popular during the 1980's.

Verenda Smith:  "At the time everybody said this is a once in a lifetime opportunity.  The next time a recession rolled around, they said okay, it's a second in a lifetime opportunity."

Some states have tried amnesty three or four times over the past three decades.  Smith says it's a strategy that works best in moderation.

Verenda Smith:  "Nobody knows exactly how often is too often, but if you have them on a routine basis, every four, five, six years, even, taxpayers learn that they don't have to pay their delinquencies, that they can just wait for a better deal."

Oregon is one of a dozen states using a tax amnesty program this year. 

Connecticut had one in the spring but fell well short of its goal of raising $40 million.  On the other hand, New Jersey was shooting for $100 million but preliminary estimates show the state brought in more than seven times that much.  Oregon's goal is more modest. $17 million.

Online:

Oregon Tax Amnesty Program