This memorandum provides a summary of the tax amnesty legislation passed by the 2015 Legislature that allowed individuals who were delinquent on their taxes on or before December 31, 2013, to have penalties and interest waived on all delinquent payments during a prescribed window of time in 2015. This program was similar to one enacted by the Legislature in 2010.
2015 Tax Amnesty Program
As part of Senate Sub. for HB 2109, the 2015 Legislature authorized a tax amnesty program, which allowed for penalties and interest to be waived if the underlying delinquent tax liabilities are paid in full from September 1, 2015, to October 15, 2015. The tax amnesty covered privilege tax, estate tax, income taxes, withholding and estimated taxes, cigarette and tobacco products taxes, state and local retail sales and compensating use taxes, liquor enforcement taxes, and mineral severance taxes.
The program applied only to penalties and interest on final liabilities, not those matters on appeal, for tax periods ending on or before December 31, 2013. The amnesty did not apply to any matter for which, on or after September 1, 2015, taxpayers would have received notices of assessment or for which an audit had previously been initiated. Any fraud or intentional misrepresentation in connection with an amnesty application would void the application and any penalties and interest that otherwise would be waived.
Taxpayers who submit an application for the program were permitted to pay their outstanding debts in full with their application or may include at least 10 percent of their tax liability amount owed with their application and set up a payment in which they pay the full amount of their approved amnesty amount by October 15, 2015. The program was expected to generate $30.0 million for the State General Fund (SGF). At the conclusion of the amnesty period, the program had generated roughly $23.1 million for the SGF. A breakdown of the source of the revenue is provided in the appendix .
Tax Amnesty History in Kansas
The 2010 Legislature passed a tax amnesty program that closely resembled the 2015 program. The amnesty applied to penalties and interest for unpaid tax liabilities for tax periods ending on or before December 31, 2008. The program was offered on the same types of taxes that are covered by the 2015 program, and the amnesty period ran from September 1, 2010, to October 15, 2010. That program generated approximately $30.0 million in revenue for the SGF.
Tax Amnesty Programs in Other States
In 2015, six other states offered a tax amnesty program that included a majority of the state taxes levied. Each of these respective programs differed in what tax periods were eligible for amnesty and the length of the time the amnesty program was administered, but all of the programs were offered for approximately two months and required taxes to be paid in full by the conclusion of the program.
Appendix
Fiscal Year 2016 Tax Amnesty Revenue
| Kansas Department of Revenue SGF Amnesty Collections Fiscal Year 2016 | ||
| Tax Type | Collections | |
| Cigarette and Tobacco | $ | 0 |
| Consumers Use | 85,411 | |
| Corporate Income | 17,509,861 | |
| Fiduciary | 1,245 | |
| Individual Income | 4,241,809 | |
| Liquor Enforcement | 2,610 | |
| Privilege Tax | 52,599 | |
| Retail Liquor | 7,843 | |
| Retailer’s Use | 103,165 | |
| Sales Tax | 890,768 | |
| Withholding | 221,160 | |
| Total SGF | $ | 23,116,471 |
by Matthew Willis
Senior Research Analyst
785-296-4443