Do you owe back taxes to Kansas City? This Voluntary Disclosure Program may be your relief
Posted On: 6-30-2016 | Posted By: Katie Barthel, CPA
In February 2016, the City of Kansas City, Missouri, rolled out its Voluntary Disclosure Program. This program is intended to promote taxpayer compliance within the jurisdiction by giving penalty relief to taxpayers who voluntarily come forward to pay taxes they owe from prior years.
Many other states and local jurisdictions have similar programs or have had similar programs in the past, and they have proven to be effective vehicles for taxing jurisdictions to collect back taxes.
Who is eligible?
Any taxpayer, business or individual, is eligible to apply for the program if all of the following criteria are met:
- The taxpayer has not previously been contacted by the Kansas City, Missouri, Revenue Division regarding the tax year(s) in question.
- The taxpayer is not currently under audit.
- The taxpayer has not previously filed a tax return with underreported tax.
What types of taxes are covered?
This program applies to any taxpayer who owes taxes that are administered by the Revenue Division. This includes taxpayers subject to Earnings or Profits Tax, Business License Tax, Utilities Tax, Arena Fees, or Convention & Tourism Tax.
What are the benefits?
One benefit of the program is that the Revenue Division promises to waive noncompliance and late filing penalties, including ones that would have otherwise been criminal.
The Revenue Division also promises to limit its lookback period. Generally, this lookback period is five years for Earnings or Profits Taxpayers, and three years for other taxpayers. This means that the City promises to only look into the most recent specified tax periods and will not now, or in the future, audit the taxpayer for a period prior to the lookback period. For taxpayers who have been noncompliant for years or decades, this is a way for them to come into compliance and begin filing tax returns as they should, without fear of being crippled with an insurmountable tax liability for doing so.
How do I apply?
If you determine you have a tax liability from a previous year that you wish to report, you must send a formal written request to the Revenue Division to be considered for this program. We recommend that you utilize your WK tax advisor to contact the Revenue Division on your behalf. It is completely acceptable to remain anonymous until the details of the agreement are finalized. In this written request, you will need to include: information about and the timeline of your business activities within Kansas City; your previous filing history with the Revenue Division, if any; an explanation of why you failed to file returns in the past; your proposed terms for the Voluntary Disclosure Agreement; and, an estimate of the taxes due for the proposed lookback period. If your terms are accepted, you will be expected to pay all taxes and accrued interest calculated during the lookback period, and you must remain in compliance with the City of Kansas City indefinitely.
If you think you or your company may be interested in entering into a Voluntary Disclosure Agreement with Kansas City, Missouri, contact your WK advisor at (573) 442-6171 or (573) 635-6196.