Amnesties for State Tax Evaders: The Nature of and Response to Recent Programs

Since 1981, twenty-five states have conducted or have authorized formal amnesties under which businesses and individuals could pay prior tax liabilities without the penalties normally associated with tax evasion or nonobservance. Structural features of the programs have varied widely, however, as have the results in yields and impact on equity. This paper examines the structural components of each program and compiles yield data for the programs. Analysis shows that whether accounts receivable are eligible for amnesty is particularly important for yield. Revenue effects, long term as well as short term, and effects on fundamental equity and compliance incentives suggest that some amnesties may have been too broad, but that a number had made a clearly positive effect on tax administration and compliance.