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State to waive penalties for clearing up taxes

MONTGOMERY — Hard times may be good times for tax dodgers in Alabama to pay up without penalty.

Gov. Bob Riley and state Revenue Commissioner Tim Russell announced Thursday that Alabama will conduct Operation Clean Slate from Feb. 1 to May 15. During those 3½ months, the department will waive penalties and not seek criminal prosecutions against people or businesses that voluntarily file past-due returns. The program also applies to people and businesses that amend their tax returns to properly report their tax liabilities.

Revenue Department: http://www.revenue.alabama.gov

“This is a brief window of opportunity for those who aren’t paying their taxes to get right with the law,” Riley said.

Some people can’t participate, including those who are already under investigation or who have already been contacted by the state about their proper tax liabilities.

Riley and Russell hope the program will generate revenue at a time when state tax collections are dwindling and state worker layoffs have begun.

Several states have begun tax amnesty programs in recent months. Russell said Alabama’s is patterned after Oklahoma’s “Clean State ’08,” which produced $82 million — more than twice as much as expected.

“We would hope we could top that,” Russell said.

Deputy Revenue Commissioner Mike Mason said Alabama had a similar program 25 years ago that produced $3 million. In today’s dollars, that figure would be much higher, he said.

State officials are using a carrot and stick approach with the program.

They say people who have found it easy to get away with shorting the state on taxes in the past will soon see a change. The state Revenue Department is about to start using a $26 million computer system that can compare financial records from a variety of sources and use that information to find tax cheats.

“The likelihood they will get caught is about to increase tremendously,” Riley said.

In addition, the governor said he will likely ask the Legislature next month to increase the penalties for tax cheats.

The statute of limitations for most tax violations in Alabama is three years. Penalties for not paying taxes can range as high as 50 percent of the amount owed, Mason said.

People seeking information about the Clean Slate program can call (334) 242-1055 or e-mail cleanslate@revenue.alabama.gov.