If you have tuned into TV or listened to your radio lately, you have probably heard a spot or two about the state’s current tax amnesty program that allows those who owe certain back taxes to pay their debt at reduced penalties, fees and interest for a limited time.
The tax amnesty program runs Oct. 1 through Nov. 30, 2012 and is aimed at nearly 170,000 citizens and businesses that owe back taxes to the Commonwealth. Each of these taxpayers has received or will be receiving a packet from the state Revenue Department individualized to that taxpayer’s situation. The program does not apply to property taxes or penalties related to cigarette or fuels licenses.
The 2012 state tax amnesty program is the state’s first amnesty program in over 10 years. It was in 2002—under then Gov. Paul Patton—when Kentucky’s last tax amnesty period was held, netting $40 million in revenue for the Commonwealth. State budget officials estimate that under the current program, the Commonwealth will net $56.5 million in fiscal year 2013 and $2.4 million in fiscal year 2014 — much needed revenue for a state that is bridging a $742 million spending gap both this fiscal year and next.
State lawmakers balanced the current state budget with anticipated revenue from the amnesty program which we authorized with the passage of House Bill 499 during the 2012 regular legislative session. That legislation thoroughly details how the program is to be conducted, and who is eligible for it.
So, just who is eligible for tax amnesty under the current program?
• Taxpayers who owe taxes for tax periods ending after Dec. 1, 2001 but before Oct. 1, 2011;
• Taxpayers who did not file a required tax return to amnesty eligible tax periods;
• Taxpayers who are amending the tax liability on a previously filed tax return for amnesty eligible tax periods, and;
• Taxpayers who have omitted personal or public service property for amnesty eligible tax periods.
If a taxpayer chooses to take advantage of the program, he or she must agree to pay all of the tax and half of the interest due for all eligible liabilities. Half of the interest and all penalties and fees will be waived as a result. The taxpayer must also agree to file all tax returns and pay all tax bills when due for three years following the date that amnesty is granted.
If someone has concerns about paying his or her tax bill in full, the state will consider short-term payment agreements for those who demonstrate financial hardship. Installment payment agreements are allowed in the amnesty amount is paid in full by May 31, 2013.
Any Kentucky citizen who has questions about the tax amnesty program can easily find answers online at www.amnesty.ky.gov, which is accessible by a smart phone or computer and provides plenty of information about amnesty and how to file.
If someone is operating an unregistered business and thinks that he or she may qualify for tax amnesty, that person is encouraged to register with the state Revenue Department and the Secretary of State’s Office via the state’s “One Stop Business Portal” at www.onestop.ky.gov. This is a convenient one stop shop designed to make business filing in Kentucky easy and efficient.
As I mentioned earlier, certain taxes and taxpayers are not eligible for amnesty. Much more can be discovered at www.amnesty.ky.gov, where taxpayers interested in the program can download and amnesty application.
If a taxpayer has questions beyond that, or wishes to talk to someone at the Revenue Department directly, tax professionals are available to answer questions weekdays Eastern time at 1-855-KYTAXES (1-855-598-2937).
But, keep in mind: If you need a “fresh start” with the state Revenue Department, the current tax amnesty period may be the time.
Have a good week.