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Kentucky Offering Tax Amnesty in October and November 2012


In a recent announcement, the Kentucky Department of Revenue (Department) released the details of its upcoming Tax Amnesty Program (Amnesty Program).

The Amnesty Program will run for sixty-one (61) days, beginning October 1, 2012 and ending November 30, 2012.  Individuals and businesses who owe back taxes, penalties, fees, and interest to the Commonwealth of Kentucky for taxable periods ending or transactions occurring after December 1, 2001, and prior to October 1, 2011, may be able to resolve their issues by taking advantage of this opportunity.

The main benefit of the Amnesty Program is that delinquent taxpayers who qualify will pay only half the interest due on their unpaid tax liabilities and all penalties, fees, and threats of prosecution will be waived. 

Many delinquent taxpayers are eligible to take advantage of the Amnesty Program.  The Amnesty Program is available to any taxpayer owing taxes, penalties, fees, or interest for most Kentucky taxes, except for certain ad valorem taxes on real property, personal property, motor vehicles and motor boats, and penalties related to certain cigarette tax-related violations.  Amnesty is also available to any taxpayer who, during the Amnesty eligible tax periods, did not file a required return or who is amending the tax liability on a previously filed return.

A taxpayer is eligible for the Amnesty Program despite being under audit by the Department, or having been issued an assessment, notice, or demand for payment.  The Amnesty Program, however, is not available to a taxpayer under criminal investigation or involved in criminal litigation with the Kentucky or federal government that is pending on the day of the taxpayer’s application for tax amnesty.

But, the Amnesty Program contains more than just “carrots.”  There are “sticks” too.  The program permits the Department to impose additional interest, penalties, and “cost-of-collection fees” (of up to 50 percent) if a taxpayer does not disclose an amnesty-eligible tax liability during the amnesty period.  So, taxpayers may want to act quickly in order to avoid facing harsh tax-related penalties after the amnesty window closes.

In the case of severe hardship, the Amnesty Program offers an option for a short-term payment agreement – though all tax must be paid by May 31, 2013.  In order to be considered, the taxpayer must attach a letter describing his or her financial circumstances and immediately pay 25 percent of the tax liability due.  Interest will accrue on these tax liabilities until they are paid in full.

The Department may invalidate any amnesty received by the taxpayer for failure to:  (1) timely file any tax return or pay any tax and interest due for any period between December 31, 2001, and October 1, 2011; or, (2) timely file any tax return or pay any tax for up to three years following the date amnesty was granted to the taxpayer.  If a taxpayer fails to fulfill any of these obligations, then any civil penalties, fees, and interest that were waived through the Amnesty Program will be reinstated, subject to immediate collection by the Department, and not subject to protest.

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