FEDERAL TAX AMNESTY: REFLECTING ON THE STATES' EXPERIENCES

The experiences of the 18 states that have undertaken a tax amnesty program are examined. These programs suggest that tax amnesty can be a successful means of creating short-term revenue windfalls, broadening the tax base to include previous nonfilers, and focusing public attention on programs to increase tax enforcement. The disadvantages of an amnesty program include its expense, the difficulties of administration, the uncertainty of success, and the unavoidable highlighting of the existence of a compliance problem. Despite these negative facets, a federal tax amnesty could be a useful tool in improving compliance. Based upon the states' experiences with such programs, there is every reason to believe that a one-time, short-term federal program would be a suitable component of a program to improve tax enforcement. Ideally, in addition to attracting otherwise lost revenue, a tax amnesty program would encourage delinquent taxpayers to rejoin the system.