UPDATE: Missouri lawmakers considering two tax amnesty proposals

Thursday, January 27, 2011 | 5:45 p.m. CST; updated 10:09 p.m. CST, Monday, February 28, 2011

JEFFERSON CITY — Missouri lawmakers looking to generate money for a cash-strapped budget are considering exactly how generous they should be in their efforts to entice delinquent taxpayers to pay up.

A tax amnesty proposal presented Thursday to a House committee by Rep. Tom Flanigan, R-Carthage, would waive all interest and penalties for delinquent taxpayers who pay their bills between Aug. 1 and Oct. 31.

A version backed by Gov. Jay Nixon would waive all penalties but only half the interest, and it would apply only to delinquent tax bills for which the Department of Revenue was not already aware. The governor's plan is sponsored by Rep. Chris Kelly, D-Columbia.

Nixon's plan is projected to bring in $31 million, of which about $20 million would go to the state's general revenue fund and the rest to other earmarked purposes such as the parks division or Conservation Department.

A financial estimate for Flanigan's bill figures that his broader amnesty plan could generate up to $70 million for Missouri during the 2012 fiscal year, which starts July 1. But the Revenue Department on Thursday suggested it could collect much of that money anyway by using existing enforcement measures, meaning Missouri would be needlessly waiving interest and penalties for some of those taxpayers.

If Missouri offers an amnesty period for individuals or businesses with unpaid taxes, it would mark the third time it has done so in a decade.

In the 2002 fiscal year, an amnesty program brought in $74 million in tax revenues. Missouri tried it again the next year and generated an additional $42 million. Both of those were broad amnesty programs similar to what Flanigan has proposed.

About $50 million of the 2002 collections were taxes the Department of Revenue already was aware of through audits or previous collection efforts, said department spokesman Ted Farnen.

Since Missouri's previous tax amnesty effort, Farnen said, the agency has improved its tax-collection abilities.

The state now uses an automated process to file liens and administrative tax judgments, something that previously was performed manually and not as consistently across counties, Farnen said. The department also has expanded its staff assigned to initiate and receive phone calls with delinquent taxpayers.

At least two laws enacted since the previous tax amnesty period also strengthened Missouri's tax-collection tools. One law requires a business to receive a "No Tax Due" letter from the Department of Revenue before it can get a business license. Another law requires people to pay their taxes before receiving a license for any of the various professions that the state regulates.

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