Governor signs tax amnesty legislation

Governor Nixon has signed legislation that allows a one-time opportunity for delinquent taxpayers to pay all back taxes without penalty in Fiscal Year 2016.

House Bill 384, sponsored by House Budget Committee Chairman Rep. Tom Flanigan, is expected to bring in about $25 million in additional tax revenues that would not otherwise be collected. It would allow any taxpayer to pay delinquent taxes due on or prior to December 31, 2014 without penalty or interest, if they are paid between September 1 and November 30, 2015.

During the legislative process, the bill picked up several amendments in the Senate, that were accepted by Flanigan. Among the changes, language that mandates that any funds brought in by the amnesty program go to fund some Medicaid programs, such as dental care.

Additional items added to the bill are taxpayer friendly, including adding a provision to the Taxpayer Bill of Rights that states taxpayers have a right to fair and consistent application of the tax laws, the creation of a Study Commission on Tax Policy to examine sales tax law thoroughly and make recommendations for changes to modernize the tax code, and creation of an Office of Taxpayer Advocate in the Department of Revenue (DOR). The current Office of Taxpayer Ombudsman would be eliminated.

Another change in the legislation’s language that AIM does not support is a provision to allow the DOR to use a third party collection vendor to collect amounts determined by the DOR to be due under the voluntary disclosure amnesty program. Of course, because the amnesty program is a voluntary program, no such use is necessary and we are assured by the DOR that no such use is anticipated, nor was such authority requested by the DOR.

AIM objects to any third party determination of tax liability, especially when the vendor is paid through a percentage of findings and worked to remove the amendment, but because of the quickness with which this bill was rushed through the system, the amendment was included in the final bill.  Bottom line: the use of the third party vendor is unnecessary, DOR says they will not use them, and they appear to only be used for amounts determined by DOR to be due (not for the determination of tax liability). We will keep a close eye on this situation.

The bill passed the Senate with a 26-7 majority…and a 150-4 margin in the House. The bill takes effect on August 28.