2012 Kentucky Tax Amnesty Program
The State of Kentucky has recently joined Ohio and Texas as the latest state to offer a tax amnesty program as a way to reduce the state’s budgetary gap. Kentucky imposes many taxes as well as harsh interest and penalty provisions applicable to failure to file and/or late payment of tax. The state’s tax amnesty program will waive civil penalties and one-half of the interest on certain delinquent tax debts arising between December 1, 2001, and October 1, 2011.
Below are the highlights of the Kentucky amnesty program:
- It is scheduled to run 60-90 days during the fiscal period ending June 13, 2013. Dates are to be determined.
- The state will waive penalties and one half of the interest on delinquent tax debts arising between December 1, 2001, and October 1, 2011.
- Qualified taxes under the amnesty program include, but are not limited to: sales and use taxes, limited liability entity taxes, income taxes, as well as admission and cover charges.
- The amnesty program does not cover property taxes or penalties related to cigarettes or fuel licenses. Additionally, tax liabilities established by audit do not qualify for the benefits of amnesty.
The program will not be available to any taxpayer who is:
- On notice, written or otherwise, of a criminal investigation being conducted by an agency of the state or any political subdivision thereof or the United States, or
- The subject of any criminal litigation that is pending on the date of the taxpayer's application in any Kentucky court or court of the United States for nonpayment, delinquency, evasion or fraud in relation to any federal taxes or to any of the taxes to which the amnesty program is applicable.
To qualify for amnesty, taxpayers must:
- File an amnesty application;
- File completed tax returns for all years or tax reporting periods as stated on the application for which returns have not previously been filed and;
- Pay in full the taxes due for the periods and taxes applied for at the time of the application. In addition, taxpayers must pay any additional tax owed within 30 days of notification by the Department of Revenue (DOR). The taxpayer must also pay in full, within the amnesty period, all taxes previously assessed by DOR that are due and owed at the time of application.
Failure to participate in amnesty can result in assessment of additional collection fees ranging from 25% to 50% of the tax due, plus an additional 2% above the normal interest rate to be applied to a tax assessed for the amnesty period.
In addition to the amnesty program, the DOR also offers a voluntary disclosure agreement (VDA) program that is open to non-filing taxpayers who have initiated contact with the Kentucky DOR. The program offers a three-year look-back period and, as for the amnesty, the DOR will waive all civil penalties and fees associated with this period. Taxes paid under the VDA program will bear interest at one-half the tax interest rate established by Kentucky statute. The voluntary disclosure program may be more advisable in situations where a taxpayer may have Kentucky liabilities related to periods older than three years.
WTAS professionals can assist Kentucky taxpayers in many ways during the amnesty period including, but not limited to, preparing the relevant amnesty applications, quantifying exposures, preparing tax returns, and in some cases even attempting to settle issues directly with the DOR. Likewise, our professionals can assist taxpayers with participation in a VDA program if deemed more beneficial.