United States: Missouri Enacts Tax Amnesty Program To Begin September 1, 2015

On April 27, Missouri enacted legislation authorizing the Missouri Department of Revenue to administer a tax amnesty program from September 1 to November 30, 2015.¹ The tax amnesty program applies to taxes administered under Chapter 32 (creation and powers of the Department), Chapter 143 (corporate and personal income taxes), Chapter 144 (sales and use taxes) and Chapter 147 (corporate franchise tax).² If the taxpayer complies with the amnesty program requirements, the Department will waive all penalties, additions to tax and interest for tax liabilities due or due but unpaid on or before December 31, 2014.³

Operation of Program

The amnesty program legislation provides the following:

• All taxpayers who apply for amnesty must:
• 1. Pay all of their unpaid taxes in full during the amnesty period (September 1 to November 30, 2015), regardless of whether such taxes were previously assessed, except for penalties, additions to tax, and interest paid before September 1, 2015,⁴ and
  2. In good faith, agree to comply with state tax laws for the next eight years starting from the date of the agreement.⁵
• If the taxpayer fails to comply with all of the state's tax laws at any time during the eight years following the date of the amnesty agreement, all penalties, additions to tax, and interest that were waived under the amnesty agreement will be due immediately.⁶
• Upon election of participation in the amnesty program, the taxpayer agrees to an express and absolute relinquishment of all administrative and judicial rights of appeal. No tax payment received under the election is eligible for refund or credit.⁷
• The amnesty program will not extend to any taxpayer who at the time of payment is a party to any civil or criminal litigation pending in any federal or Missouri court for nonpayment, delinquency or fraud in relation to any tax imposed by Missouri.⁸
• If a taxpayer is granted amnesty, the taxpayer will not be eligible to participate in any future amnesty program for the same type of tax.⁹
• The amnesty program does not prevent the Department from adjusting a taxpayer's tax return as a result of a state or federal audit.¹⁰
• The Department is authorized to enter into an agreement with a third-party vendor to provide collection services and to assist with the administration of the amnesty program.¹¹
• Given the eight-year post-amnesty good-faith provision, the amnesty legislation is scheduled to expire on December 31, 2023.¹²

Benefits of Participating in Program

Perhaps the most significant benefit for taxpayers who qualify for the new amnesty program is that unlike many other state tax amnesty programs, they will not be subject to any interest accrued throughout the applicable tax period(s). Additionally, taxpayers not located in Missouri previously may have been required to use the Multistate Tax Commission (MTC) National Nexus Program in order to resolve their sales and use tax issues. Under the amnesty program, taxpayers may forgo the MTC program and resolve all of their Missouri sales and use tax liabilities. Finally, the Department may not seek civil or criminal prosecution of any taxpayer for the taxable period for which the amnesty has been granted, provided a subsequent investigation does not show that the taxpayer engaged in fraudulent or criminal conduct applying for amnesty.¹³

Commentary

Taxpayers who believe they owe any Missouri taxes administered by the Department should consider participating in the amnesty program as a means to avoid penalties, additions to tax and interest. The Department is expected to provide guidance to taxpayers concerning administration of the program.¹⁴ Previously, by electing to enter into the Missouri Voluntary Disclosure Agreement (VDA) program, taxpayers may have similarly avoided some liabilities. However, unlike the Missouri VDA program, taxpayers qualifying for the new amnesty program will not be subject to any interest accrued throughout the applicable tax periods.¹⁵

Unlike the tax amnesty programs being conducted in other states, participants in the Missouri tax amnesty program must agree (in good faith) to comply with all of the state's tax laws for the following eight years. Also, no payment made under the amnesty program will be eligible for a future refund or credit. Taxpayers contemplating participation in the amnesty program should consider these factors.

Footnotes

^{1 H.B. 384, Laws 2015.}

^{2 MO. REV. STAT. § 32.383.1.}

^{3 MO. REV. STAT. § 32.383.2.}

^{4 MO. REV. STAT. § 32.383.1.}

^{5 MO. REV. STAT. §§ 32.383.3; 32.383.4.}

^{6 MO. REV. STAT. § 32.383.4.}

^{7 MO. REV. STAT. § 32.383.6. Apparently, this is in respect to any refunds or credits in relation to the tax paid under the election to participate in the amnesty program. Any additional assessments resulting from a later state or federal tax audit presumably would be appealable.}

^{8 MO. REV. STAT. § 32.383.1.}

^{9 MO. REV. STAT. § 32.383.5.}

^{10 MO. REV. STAT. § 32.383.7.}

^{11 MO. REV. STAT. § 32.383.10.}

^{12 MO. REV. STAT. § 32.383.12.}

^{13 MO. REV. STAT. § 32.383.2.}

^{14 The Department is authorized to promulgate rules or issue administrative guidelines that are necessary to implement the amnesty program. MO. REV. STAT. § 32.383.11.}

^{15 MO. REV. STAT. § 32.383.1.}

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