The Arizona Department of Revenue has announced the start of a two-month amnesty period to encourage people who haven’t paid all of their taxes in the past few years to turn themselves in. The state typically does this during an economic downturn as a way to raise more money. Apparently, the weight of guilt and fear of the tax man or woman prompts many people to come forward when they are offered a chance to avoid some of the penalties and interest.

But for the first time, I really understand why some people get upset about tax amnesty programs. Recently, I was notified by a state tax auditor about a mistake in my 2004 income tax return which resulted in an unintentional underreporting of what I owed the state. No question the mistake was my fault and, under normal circumstances, the longer you wait to pay up, the more expensive it gets.

So earlier this month, I sent the state a check for nearly $500, ouch! You can imagine my angst when I learned today that if I had waited just a few weeks, I might have saved up to $100 in interest (the state already had waived the penalty).

Interestingly, state lawmakers seem to have undercut the effectiveness of the amnesty program before it even began. Revenue Department director Gale Garriott recently testified that budget cuts to his agency likely will cost the state $54 million in unpaid taxes this year and $125 million in the next budget. I guess fewer auditors means fewer opportunities to catch innocent mistakes that could bring in big bucks.