Session of 1998
                   
SENATE BILL No. 419
         
By Committee on Assessment and Taxation
         
1-13
            9             AN ACT relating to income taxation; concerning delinquent tax accounts;
10             amending K.S.A. 79-3228 and 79-3233i and repealing the existing
11             sections.
12            
13       Be it enacted by the Legislature of the State of Kansas:
14           Section 1. K.S.A. 79-3228 is hereby amended to read as follows:
15       79-3228. (a) For all taxable years ending prior to December 31, 1998, if
16       any taxpayer, without intent to evade the tax imposed by this act, shall
17       fail to file a return or pay the tax, if one is due, at the time required by
18       or under the provisions of this act, but shall voluntarily file a correct return
19       of income or pay the tax due within six months thereafter, there shall be
20       added to the tax an additional amount equal to 10% of the unpaid balance
21       of tax due plus interest at the rate prescribed by subsection (a) of K.S.A.
22       79-2968, and amendments thereto, from the date the tax was due until
23       paid.
24           (b) For all taxable years ending prior to December 31, 1998, if any
25       taxpayer fails voluntarily to file a return or pay the tax, if one is due, within
26       six months after the time required by or under the provisions of this act,
27       there shall be added to the tax an additional amount equal to 25% of the
28       unpaid balance of tax due plus interest at the rate prescribed by subsec-
29       tion (a) of K.S.A. 79-2968, and amendments thereto, from the date the
30       tax was due until paid. Notwithstanding the foregoing, in the event an
31       assessment is issued following a field audit for any period for which a
32       return was filed by the taxpayer and all of the tax was paid pursuant to
33       such return, a penalty shall be imposed for the period included in the
34       assessment in the amount of 10% of the unpaid balance of tax due shown
35       in the notice of assessment. If after review of a return for any period
36       included in the assessment, the secretary or secretary's designee deter-
37       mines that the underpayment of tax was due to the failure of the taxpayer
38       to make a reasonable attempt to comply with the provisions of this act,
39       such penalty shall be imposed for the period included in the assessment
40       in the amount of 25% of the unpaid balance of tax due.
41           (c) For all taxable years ending on or after December 31, 1998, if any
42       taxpayer fails to file a return or pay the tax if one is due, at the time
43       required by or under the provisions of this act; there shall be added to

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  1       the tax an additional amount equal to 1% of the unpaid balance of the
  2       tax due for each month or fraction thereof during which such failure
  3       continues, not exceeding 24% in the aggregate, plus interest at the rate
  4       prescribed by subsection (a) of K.S.A. 79-2968, and amendments thereto,
  5       from the date the tax was due until paid. Notwithstanding the foregoing,
  6       in the event an assessment is issued following a field audit for any period
  7       for which a return was filed by the taxpayer and all of the tax was paid
  8       pursuant to such return, a penalty shall be imposed for the period in-
  9       cluded in the assessment in an amount of 1% per month not exceeding
10       10% of the unpaid balance of tax due shown in the notice of assessment.
11       If after review of a return for any period included in the assessment, the
12       secretary or secretary's designee determines that the underpayment of tax
13       was due to the failure of the taxpayer to make a reasonable attempt to
14       comply with the provisions of this act, such penalty shall be imposed for
15       the period included in the assessment in the amount of 25% of the unpaid
16       balance of tax due.
17           (c) (d) If any taxpayer who has failed to file a return or has filed an
18       incorrect or insufficient return, and after notice from the director refuses
19       or neglects within 20 days to file a proper return, the director shall de-
20       termine the income of such taxpayer according to the best available in-
21       formation and assess the tax together with a penalty of 50% of the unpaid
22       balance of tax due plus interest at the rate prescribed by subsection (a)
23       of K.S.A. 79-2968, and amendments thereto, from the date the tax was
24       originally due to the date of payment.
25           (d) (e) Any person, who with fraudulent intent, fails to pay any tax or
26       to make, render or sign any return, or to supply any information, within
27       the time required by or under the provisions of this act, shall be assessed
28       a penalty equal to the amount of the unpaid balance of tax due plus
29       interest at the rate prescribed by subsection (a) of K.S.A. 79-2968, and
30       amendments thereto, from the date the tax was originally due to the date
31       of payment. Such person shall also be guilty of a misdemeanor and shall,
32       upon conviction, be fined not more than $1,000 or be imprisoned in the
33       county jail not less than 30 days nor more than one year, or both such
34       fine and imprisonment.
35           (e) (f) Any person who willfully signs a fraudulent return shall be
36       guilty of a felony, and upon conviction thereof shall be punished by im-
37       prisonment for a term not exceeding five years. The term ``person'' as
38       used in this section includes any agent of the taxpayer, and officer or
39       employee of a corporation or a member or employee of a partnership,
40       who as such officer, employee or member is under a duty to perform the
41       act in respect of which the violation occurs.
42           (f) (g) (1) Whenever the secretary or the secretary's designee deter-
43       mines that the failure of the taxpayer to comply with the provisions of

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  1       subsections (a), (b) and, (c) and (d) of this section was due to reasonable
  2       causes, the secretary or the secretary's designee may waive or reduce any
  3       of the penalties and may reduce the interest rate to the underpayment
  4       rate prescribed and determined for the applicable period under section
  5       6621 of the federal internal revenue code as in effect on January 1, 1994,
  6       upon making a record of the reasons therefor.
  7           (2) No penalty shall be assessed hereunder with respect to any un-
  8       derpayment of income tax liability reported on any amended return filed
  9       by any taxpayer who at the time of filing pays such underpayment and
10       whose return is not being examined at the time of filing.
11           (g) (h) In case of a nonresident or any officer or employee of a cor-
12       poration, the failure to do any act required by or under the provisions of
13       this act shall be deemed an act committed in part at the office of the
14       director.
15           (h) (i) In the case of a nonresident individual, partnership or corpo-
16       ration, the failure to do any act required by or under the provision of this
17       act shall prohibit such nonresident from being awarded any contract for
18       construction, reconstruction or maintenance or for the sale of materials
19       and supplies to the state of Kansas or any political subdivision thereof
20       until such time as such nonresident has fully complied with this act.
21           Sec. 2. K.S.A. 79-3233i is hereby amended to read as follows: 79-
22       3233i. Any individual and corporate tax indebtedness, including the pen-
23       alty and interest thereon which has (a) been delinquent for more than
24       seven (7) years, or (b) is in the amount of twenty-five dollars ($25) $100
25       or less, and is determined by the director of taxation to be an uncollectible
26       account after all reasonable efforts have been made to effect collection,
27       may be abated in the manner and subject to the limitations prescribed
28       by K.S.A. 79-3233g for any one of the following reasons:
29           (1) (a) The statute of limitations bars collection;
30           (2) (b) lack of jurisdiction;
31           (3) (c) the domicile of the taxpayer is located outside of the state, and
32       the taxpayer has no assets within the state of Kansas upon which the
33       division of taxation may levy;
34           (4) (d) insolvency of taxpayer;
35           (5) (e) the taxpayer cannot be located;
36           (6) (f) the taxpayer is receiving social security benefits, or social wel-
37       fare payments and the taxpayer has no other assets upon which the di-
38       vision of taxation may levy;
39           (7) (g) the taxpayer is mentally ill or physically incapacitated and cir-
40       cumstances indicate that the taxpayer will not be economically productive
41       in the foreseeable future; or
42           (8) (h) the administration and collection cost involved would not war-
43       rant collection of the amount due, and it will be to the advantage of the

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  1       state to grant abatement of taxpayer's indebtedness.
  2           Sec. 3. K.S.A. 79-3228 and 79-3233i are hereby repealed.
  3           Sec. 4. This act shall take effect and be in force from and after its
  4       publication in the statute book.
  5