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ISSUE: Kentucky tax amnesty
OUR VIEW: It's a gift from the rest of us
Those who are in arrears on Kentucky state taxes have just one more day to qualify for a “get out of jail free” card.
In case you have not heard, the state is offering limited amnesty to those who qualify and file before the close of business Friday.
At least 25 percent of taxes due must be paid up front and the rest in installments before May 31, but the state is forgoing some fees, penalties and interest for people who come clean.
Kentucky has a list of nearly 170,000 people and businesses behind on tax payments, according to published reports.
Under the plan, filers could save as much as 30 percent on what they owe. The average debt for residents behind on state taxes is $5,000 and the average debt for businesses is $25,000.
One might wonder if this is an attempt to get blood from turnips. But the last time Kentucky offered amnesty, which was in 2001, the state collected roughly $40 million from 23,000 taxpayers.
It is impossible to know if the poor economy in recent years means fewer people have the means to pay what they owe. It also could be true that recent economic improvements mean more filers now can take care of their debts.
It is an incredibly good offer considering what awaits those who owe taxes but do not sign up for the program. In addition to “aggressive” collection efforts, all penalties and fees will be reinstated which may include a 25 percent cost-of-collection fee; a 25 percent assessment fee; a 50 percent fee for not filing a tax return; a 25 percent fee on liabilities discovered through an audit; and all interest previously owed and another 2 percent added to the interest rate.
Those measures could triple some tax bills. And, previous penalties and interest could be reapplied if participants fall behind again in the next three years.
Penalties also could include jail time.
We won’t know how much money the program will bring in until next May, when final installment payments are due, but thousands upon thousands of debtors have called inquiring about amnesty. And participation has been so high the Department of Revenue is extending its operating hours today and Friday.
The General Assembly passed the amnesty legislation at the request of Gov. Steve Beshear. The cost to the state is negligible compared to the money it will bring in. It is money the state should have had already, money desperately needed to balance the budget and continue to provide services for all Kentuckians.
Those who file and pay their taxes in a timely manner are justified in feeling a bit taken advantage of. Not everyone who falls behind on taxes does so purposefully, but some do. To those who fell behind because of unavoidable circumstances, we say take advantage of this “gift” from your neighbors.
To those who willingly did not pay what they owed, no matter how egregious they may consider a tax, we say go ahead and wait a few more days. They just may get what they deserve.
This editorial represents a consensus of The News-Enterprise editorial board.