Tax amnesty programs have been pretty good to the Commonwealth over the past 10 years.
When the state offered delinquent taxpayers the chance to pay up without risking prosecution or higher penalties and interest in 2002, $40 million was raised for the state’s coffers. So, when lawmakers were looking for ways to balance the state’s $19 billion biennial budget last spring, another tax amnesty program sprang to mind and was approved, without much ado.
The tax amnesty program that ended on Nov. 30 is expected to net the state at least $60 million, according to state officials who described the program as popular with taxpayers late on their payments to the state. Tens of thousands of those taxpayers rushed to apply for a break in penalties for taxes, penalties or fees accrued between Dec. 1, 2001 and Oct. 1, 2011 by the Nov. deadline, officials said. State lawmakers have already budgeted for the revenue, which could be greater than expected considering the number of calls fielded from the Department of Revenue over the past two months (up to 1,000 call a day in the program’s latter days, according to an Associated Press article that ran in the Nov. 28 Courier-Journal).
Taxpayers who applied and qualified for the program—including, but not limited to, taxpayers who didn’t file a tax return for the tax period covered by the amnesty program and taxpayers who omitted personal or public service property from their returns during the covered tax years—will pay only back taxes owed and half the interest owed while all penalties and fees and the remainder of the interest will be waived.
Those who didn’t apply will face stricter penalties, including higher penalties and interest.
If caught, those who didn’t take advantage of tax amnesty could face the following: 1. Payment of a collection fee of 25 percent on all taxes now due or becoming due and owed for any reporting period, regardless of when the taxes are due; 2. An assessment fee of 25 percent on taxes assessed and collected after tax amnesty ends for taxable periods ending, or transactions made, prior to Oct. 1, 2011; 3. An additional 50 percent fee for non-filed returned that were eligible for tax amnesty; 4. Additional two percent interest on all tax-amnesty eligible bills not paid during amnesty, and; 5. An additional 25 percent fee on amnesty eligible liabilities found by audit.
The state is hopeful, however, that the number of taxpayers who took advantage of its tax amnesty offer is large. Besides more than 25,000 calls fielded by the state about the program, “payments have come into the Department of Revenue from every county in Kentucky and from all states except Vermont and Montana,” according to the Nov. 28 AP article in the Courier-Journal.
Even though the chance to apply for Tax Amnesty 2012 in Kentucky has now passed, you can still catch up on what you owe if you have back taxes to pay, although tougher penalties now apply. For information on how to pay your back taxes to the state, call the Department of Revenue at 502-564-458, or visit revenue.ky.gov.
I will have more to share next week, in particular a list of issues facing the 2013 General Assembly which convenes on Jan. 8. Talk to you then, and have a good week ahead.