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Kentucky General Assembly Passes Limited Tax Amnesty

06.02.2010

With the Commonwealth facing serious budget concerns, the state budget has been a primary focus for lawmakers and Kentucky taxpayers.  So much, that the debate surrounding a state budget continued for six months before the General Assembly, as recently as last week, finally passed the state budget.

The General Assembly convened its Regular Session on January 5, 2010.  During the Regular Session, House Bill 290 (the “Budget Bill”), which consisted of 205 pages of text of proposed financing for the operation of state government through the fiscal year ending June 30, 2012, was introduced.  The Budget Bill contained a procedure described as an “Expedited Protest Resolution” that is in effect, a limited tax amnesty.  However, by the end of the Regular Session on April 15, 2010, the General Assembly had not passed the Budget Bill.

On May 20, 2010, Governor Steve Beshear called a Special Session to convene on May 24, 2010.  During the Special Session, two bills (House Bills 1 and 2) were introduced and passed, which collectively, contained the language of the original Budget Bill.  House Bill 1 contained the funding and appropriations from the original Budget Bill and House Bill 2 contained all other fiscal matters, including the Expedited Protest Resolution provisions.

The Expedited Protest Resolution provisions apply to any tax assessment that as of January 19, 2010 has been protested and is not the subject of a Final Ruling letter issued by the Kentucky Department of Revenue.  A taxpayer now has the opportunity to satisfy a qualifying assessment in full by paying the tax only, with waiver of interest and penalties, on or before July 31, 2010.  Any payment of tax made pursuant to this “tax amnesty” is final and cannot be the subject of a refund.

Also noteworthy is that a provision from the original Budget Bill which would have eliminated net operating loss tax benefits was excluded from the newly introduced House Bills 1 and 2 of the Special Session.

If you have questions about this topic or any other legal issue, please contact any member of the firm's State and Local Tax Team.

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