Scott E. Vincent
Shughart, Thomson & Kilroy
Kansas City

The Missouri General Assembly recently created a tax amnesty program. Senate Bill 1248 allows taxpayers who owe back taxes to the State of Missouri to pay the taxes owed and avoid all interest and penalties that may be assessed. This includes persons who owe back taxes, those facing tax assessments, as well as those who have not filed tax returns for periods prior to January 1, 2002. The amnesty program applies to aviation fuel tax, bank franchise tax, cigarette tax, corporation franchise tax, corporation income tax, credit institutions tax, credit union tax, employer withholding tax, estate tax, fiduciary tax, individual income tax, marine sales tax, motor fuel tax, motor vehicle sales tax, other tobacco products, property tax credit, sales tax, savings and loan tax and vendor's use tax. Taxpayers must be in compliance with all taxes administered by the Department of Revenue in order to qualify for tax amnesty.

The amnesty program ends October 31, 2002, so all tax returns and tax payments have to be made by that relatively short deadline. All taxes owed must be paid in full. The amnesty program does not apply to taxes, interest or penalties which are due after December 31, 2001, to matters involved in litigation, or to matters that are the subject of criminal proceedings at that time. A tax return may still be adjusted by the state if there is a federal audit that causes an adjustment to be made to the federal return. A taxpayer who seeks amnesty agrees to waive all other administrative and judicial rights of appeal available under law. The signing of the application for Missouri tax amnesty or an eligibility notice will also act as a waiver to request a refund for any amount paid as part of the tax amnesty program. The taxpayer has to also agree to remain in compliance for three years from the date of the tax amnesty agreement or the agreement is void. The three-year compliance condition may raise a statute of limitations issue if the amounts paid are additional amounts paid on periods previously filed and paid.

The amnesty program means that a taxpayer does not have to pay penalties, additions to tax or interest on back taxes. The full amount of taxes owed must be paid within 60 days after approval by the Department of Revenue, and the department has the right to audit the tax returns filed and assess additional taxes. However, it is unclear whether additional taxes assessed after an audit or review of the amnesty application will be eligible for amnesty if they are paid after the amnesty period has expired on October 31, 2002. The Department of Revenue has taken the position that additional taxes assessed and paid after the amnesty period are not entitled to amnesty. It is also unclear, at the time of publication, how thorough the Department of Revenue will be in reviewing or auditing tax returns received during the amnesty period and whether they will be able to do anything more than check for math or computation errors.

Instructions and the Missouri tax amnesty application form have been issued by the Department of Revenue and have been published on the department's web page at http://dor.state.mo.us/tax/amnesty/.

The tax amnesty program offers a unique opportunity to achieve compliance with the state tax laws and to save money on interest and penalties. However, as with any new tax legislation, the full impact and ramifications to the taxpayer need to be reviewed prior to the filing of an amnesty application.