I appreciated House leadership for their foresight in making sure all of us had an opportunity to leave for home before the storm hit. Before we adjourned, however, we did pass HB 55, the Tax Amnesty Bill. This legislation passed the House by a vote of 153 to 1.
The last time Missouri offered a major amnesty program was in 2002. This year’s program is similar. In 2002, the program brought in $74 million in delinquent tax monies to the state. The program was so successful that it was offered again the following year, at which time it brought in another $42 million.
The tax amnesty idea was revisited in the 2011 session. After having failed in 2011, it was once more proposed in 2012, only to fail again. Both years this legislation passed the House but was rejected in the Senate. This year, both the Missouri House Budget Committee and the governor’s budget proposal have factored into their perspective budgets some revenue from an amnesty program.
With a seemingly successful program bringing in much needed state revenue, one might wonder why some of Missouri’s senators are still opposed to a tax amnesty bill. These senators are calling this bill a “tax-cheating program,” because they maintain that Missouri’s delinquent taxpayers are just taking advantage of the system. They say these individuals need to pay their taxes on time, as does every other state taxpayer.
While I don’t disagree with this reasoning at all, I do believe that a tax amnesty program will accomplish two positive things: 1) It will bring in much needed revenue to the state. It is estimated that this program could produce from $55 to $70 million in additional tax revenue for Missouri. 2) I believe this to be a fair way to encourage a positive change in those individuals or businesses that owe back taxes. We have gone through some very challenging economic times with our national recession; our economy has suffered, and many individuals and businesses have experienced hardships. For whatever reasons the taxes were not paid, this program will give delinquent taxpayers an opportunity to make right on their back-tax obligations.
How will this tax amnesty program work? The legislation that just passed the House will also have to pass the Senate and then be signed by the governor to become law. Next, the Missouri Department of Revenue would begin to advertise and implement the necessary program requirements to offer the opportunity for amnesty to delinquent taxpayers and businesses. Finally, they would create an amnesty period— usually a period of three months, and most likely August 1 to October 31 of 2013—for those wishing to take advantage of the program. The ones owing back taxes will only be required to pay the tax. All accumulated interest and penalties will be waived.
Since the state is providing this amnesty program for delinquent taxpayers, it is expected that these individuals become current and then remain up-to-date on their tax obligations. Some safeguards have been put in place to encourage these taxpayers not only to pay their tax debt, but also to ensure they do not fall back into their previous delinquent status.
Those granted amnesty will be required to comply with all state taxing laws for the next eight years or risk having all previously waived interest and penalties re-applied to their accounts. Additionally, language has been added to ensure that a taxpayer who receives amnesty and doesn’t remain current will not be able to apply or participate in any future amnesty programs.
While this proposal provides a way for the state to collect tax money that it is owed, it will also help to increase amounts of much needed revenue without raising taxes on responsible citizens who meet their obligations on time.
Nationwide, state tax amnesty programs have gained popularity in recent years, with twenty-three states offering amnesty programs in just the past three years. The largest year for multiple state programs was in 2002, when ten states—including Missouri—offered it to delinquent taxpayers. Today, most states that have been successful in offering the program are offering it again. In Missouri the time may be right to once more offer an amnesty program in order to recover delinquent revenue.