TAX AMNESTY: THE FEDERAL PERSPECTIVE.

Tax amnesty; Taxation; Tax laws; Criminal law; Taxpayer compliance

This article discusses the factors that should be considered in evaluating the wisdom of a Federal tax amnesty in the U.S. Under a tax amnesty, civil and criminal penalties are waived for taxpayers or for those who should have been taxpayers who voluntarily admit that they have not paid the correct amount of tax for some prior period and who pay the full amount of their unpaid tax. A tax amnesty is a one-time program that lasts for a relatively short, fixed period of time and is not expected to he repeated. The arguments for and against amnesty must be based on equity and on long-run compliance effects. If an amnesty does permanently return people to the tax system and does raise revenue for an extended period of time, the equity argument could tilt in favor of amnesty. Thus, the wisdom of tax amnesties cannot be determined until more is known about their long-run compliance effects. Regardless of whether a Federal tax amnesty is ultimately approved, current discussions of amnesty have served an important public purpose by focusing attention on the problems of poor tax compliance and the relative decline in resources devoted to Federal tax enforcement efforts. For the first time in a decade, there is public discussion about the need for more tax enforcement resources. There is also widespread awareness that additional tax enforcement can improve the equity of the Federal tax system while having a salutary effect on the Federal budget deficit.