Session of 1999
SENATE BILL No. 47
An Act relating to taxation; concerning
collection procedures of the department of revenue;
amending K.S.A. 79-2971, 79-3233, 79-3233a,
79-3233b, 79-3233g, 79-3233h, 79-3233i,
79-3618 and 79-3643 and repealing the existing
sections; also repealing K.S.A. 75-5149,
75-5150, 79-3233d and 79-3233f.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 79-3233 is hereby
amended to read as follows: 79-
3233. (a) This act shall be administered by the secretary of
revenue or
the secretary's designee. For the purpose of
ascertaining the correctness
of any return or for the purpose of making an estimate of the
taxable
income of any taxpayer, the secretary or the secretary's
designee shall
have power to examine, or cause to be examined by any agent or
repre-
sentative designated by the secretary or the secretary's
designee for that
purpose, any books, papers, records or memoranda, bearing upon
the
matters required to be included in the return, and may require the
at-
tendance of the taxpayer in the county where the taxpayer resides,
or
where the source of the major portion of the taxpayer's income in
ques-
tion is derived, or of any person having knowledge in the premises,
and
may take testimony and require proof of such person or persons.
The secretary or the secretary's
designee may issue subpoenas to com-
pel access to or for the production of such books, papers, records
or
memoranda in the custody of or to which the taxpayer has access, or
to
compel the appearance of such persons, and may issue
interrogatories to
any such person to the same extent and subject to the same
limitations
as would apply if the subpoena or interrogatories were issued or
served
in aid of a civil action in the district court. The secretary
or the secretary's
designee or an agent or representative designated by the
secretary or the
secretary's designee for that purpose may
administer oaths and take dep-
ositions to the same extent and subject to the same limitations as
would
apply if the deposition was in aid of a civil action in the
district court. In
case of the refusal of any person to comply with any subpoena or
inter-
rogatory or to testify to any matter regarding which such person
may be
lawfully questioned, the district court of any county may, upon
application
of the secretary or the secretary's designee,
order such person to comply
with such subpoena or interrogatory or to testify. Failure to obey
the
court's order may be punished by the court as contempt. Subpoenas
or
interrogatories issued under the provisions of this section may be
served
upon individuals and corporations in the manner provided in K.S.A.
60-
304 and amendments thereto for the service of process by any
officer
authorized to serve subpoenas in civil actions or by the secretary
or the
secretary's designee.
(b) As used in this section and in
K.S.A. 79-3233a, 79-3233b, 79-
3233g, 79-3233h and 79-3233i, and amendments thereto,
``secretary''
means the secretary of revenue or the designee of such
secretary.
Sec. 2. K.S.A. 79-3233a is hereby
amended to read as follows: 79-
3233a. (a) (1) Any taxpayer, such taxpayer's heirs, or
legal representative
may petition the secretary or the secretary's designee to
compromise de-
linquent income taxes of the taxpayer, including the
penalties and interest
thereon, in the event of the insolvency of the taxpayer.
Such petition shall
set forth a sworn statement of the taxpayer's assets and
liabilities and the
secretary or the secretary's designee may examine the
petitioner under
oath concerning the matter. The secretary or the
secretary's designee shall
endorse on the petition the secretary or the secretary's
designee findings
and if the secretary or the secretary's designee finds that
the taxpayer is
insolvent the secretary or the secretary's designee shall
determine the
amount of the taxes, penalties, and interest the taxpayer
should reasonably
be required to pay and shall enter an order reducing such
taxes, penalties
and interest in accordance therewith. Such order shall
provide that such
compromise shall be effective only if paid within 10 days.
If at any time
within four years following the entry of such order the
secretary or the
secretary's designee finds that the petition is fraudulent,
the matter may
be reopened by the secretary or the secretary's designee,
and the taxpayer
shall be subject to liability for taxes, interest and
penalties to the same
extent as if such compromise had not been
made.
(b) For the purpose of this
section a taxpayer is insolvent when such
taxpayer's assets at a fair market value are not sufficient
to pay liabilities.
The secretary of revenue shall adopt rules and regulations
to implement
the administration of this act to provide for
qualifications or tests to be
applied in determining the insolvency of a taxpayer. Such
qualifications
or tests shall be consistent with the definition in the
first sentence of this
subsection.
(c) This section shall apply to
income taxes which are delinquent at
the time this act takes effect and any penalties and
interest incidental
thereto as well as the income taxes which become delinquent
thereafter
and the penalties and interest incidental
thereto.
(d) to abate all or
part of any final income tax liability of the taxpayer.
As used in this section, ``tax liability,'' ``tax,'' or
``liability'' shall include
the amount of tax due and the penalties and interest thereon.
The petition
shall be in writing and shall set forth: (A) The reasons why all
or part of
the liability should be abated; (B) the facts that support such
an abate-
ment; and (C) a waiver of the taxpayer's right to
confidentiality under
the confidentiality provisions of chapter 79 of the Kansas
Statutes An-
notated, conditioned on the secretary's abatement of all or part
of the
liability. A petition shall be accompanied by a sworn statement
of the
taxpayer's assets and liabilities, whenever the petition is
based on insol-
vency or inability to pay. The petition shall be signed under
penalty of
perjury by the petitioner and by the taxpayer, if available. A
petition for
the abatement of a final liability shall not operate to stay the
collection of
any tax.
(2) The secretary shall review each
petition and may: (A) Issue a
determination that rejects the petition without further comment;
(B) re-
quire the petitioner to submit additional verified documentation
in sup-
port of the abatement; or (C) require the petitioner and the
taxpayer to
appear and testify under oath concerning the abatement. If the
secretary
finds that there is serious doubt as to the either the
collectability of the
tax due or the taxpayer's liability, the secretary may abate all
or part of
the tax liability. If the secretary abates any tax liability,
the secretary shall
make a written finding that determines the tax amount the
taxpayer
should reasonably be required to pay, and sets forth the reasons
for the
abatement being made. Such a finding may require payment to be
made
as directed within 30 days as a condition for the abatement. If
at any time
within four years following the entry of such a finding, the
secretary finds
that the petition is fraudulent, the matter may be reopened by
the sec-
retary and the taxpayer shall be subject to the tax liability to
the same
extent as if such abatement had not been made.
(3) No taxpayer shall have a right to
the abatement of any tax liability
under this section. Any decision by the secretary regarding the
abatement
of a final tax liability shall be discretionary and may only be
made upon
finding there is serious doubt either as to the collectability
of the tax due
or the taxpayer's liability. Any order or finding shall be final
and conclu-
sive and shall not be subject to review under K.S.A. 74-2438,
K.S.A. 77-
501, et seq., or K.S.A. 79-3226, and amendments
thereto.
(b) This section shall be
construed as a part of and supplemental to
the Kansas income tax act.
Sec. 3. K.S.A. 79-3233b is hereby
amended to read as follows: 79-
3233b. (a) The secretary shall maintain a record of each
abatement that
reduces a final tax liability by $5,000 or more. Such record
shall contain:
(1) The name and address of the taxpayer, and the petitioner, if
different;
(2) the disputed tax liability including penalty and interest;
(3) the tax-
payer's grounds for contesting the liability together with all
supporting
evidence; (4) all staff recommendations, reports and audits; (5)
the reasons
for, conditions to, and the amount of the abatement; and (6) the
payment
made, if any. Such records shall be maintained by the department
for nine
years.
(b) The director of
taxation secretary shall make an annual report
of
all compromises made pursuant to this section, which report
shall be filed
with the secretary of state on or before January 10 of each
year that
identifies the taxpayer, summarizes the issues and the reasons
for abate-
ment, and states the amount of liability that was abated
pursuant to this
section for each abatement that reduced a final tax liability by
$5,000 or
more. The secretary shall file the report with the secretary of
state, the
division of post audit of the legislature and the attorney
general on or
before September 30 of each year. The division of post audit of
the leg-
islature shall take any audit steps they deem necessary to
assure that
abatements under this section are made in accordance with law.
The di-
vision of post audit shall issue a report to the legislature on
the division's
findings at least once every three years. Any other provision of
law not-
withstanding, the secretary shall make the record of any
abatement avail-
able for public inspection upon written request.
Sec. 4. K.S.A. 79-3233g is hereby
amended to read as follows: 79-
3233g. In all cases where the income tax liability exceeds the sum
of
twenty-five dollars ($25) $100 including
penalties and interest, the direc-
tor secretary shall petition the board of
tax appeals to abate said such
income tax liability setting forth the name of the debtor, the year
for which
the tax is due, and one of the grounds for
abatement as set forth in K.S.A.
79-3233i, and amendments thereto.
The board of tax appeals may, within
sixty (60) 60 days after the petition
is filed by the director of taxation
secretary, approve or disapprove of the
requested abatement of any tax indebtedness
submitted by the director
of taxation. The director of taxation shall prepare an
order abating any
income tax indebtedness, the abatement of which has been
approved by
the board of tax appeals upon receiving notice of such
approval. The
director of taxation secretary shall
prepare an order abating any tax in-
debtedness that has been approved by the board or that has
been sub-
mitted to and not specifically disapproved by the board of
tax appeals
within sixty (60) 60 days of the filing of
the petition to abate said income
tax liability. Notwithstanding the secrecy
provisions of K.S.A. 79-3234 any
other contrary provision of law, a list of all tax
indebtedness abated under
the authority of this section shall be filed with the secretary of
state and
thereafter preserved by him or her as a public
record.
Sec. 5. K.S.A. 79-3233h is hereby
amended to read as follows: 79-
3233h. Any individual and corporate tax indebtedness, including the
pen-
alty and interest thereon which is determined by the
director of taxation
secretary to be an uncollectible account by reason of the
death of the
person owing the tax and leaving no estate or by the dissolution of
a
corporation may be abated in the manner and subject to the
limitations
prescribed by K.S.A. 79-3233g.
Sec. 6. K.S.A. 79-3233i is hereby
amended to read as follows: 79-
3233i. Any individual and corporate tax indebtedness, including the
pen-
alty and interest thereon which has (a) been:
(a) Been delinquent for more
than seven (7) five years, or (b) is in the
amount of twenty-five dollars
($25) $100 or less, and is determined by
the director of taxation secretary
to be an uncollectible account after all reasonable efforts have
been made
to effect collection, may be abated in the manner and subject to
the
limitations prescribed by K.S.A. 79-3233g for any one of the
following
reasons:
(1) The statute of limitations bars
collection;
(2) Lack of jurisdiction;
(3) The domicile of the taxpayer is
located outside of the state, and
the taxpayer has no assets within the state of Kansas upon which
the
division of taxation may levy;
(4) Insolvency of taxpayer;
(5) The taxpayer cannot be located;
(6) The taxpayer is receiving social
security benefits, or social welfare
payments and the taxpayer has no other assets upon which the
division
of taxation may levy;
(7) The taxpayer is mentally ill or
physically incapacitated and circum-
stances indicate that the taxpayer will not be economically
productive in
the foreseeable future;
(8) The administration and collection
cost involved would not warrant
collection of the amount due, and it will be to the advantage of
the state
to grant abatement of taxpayer's indebtedness.
Sec. 7. K.S.A. 79-3618 is hereby
amended to read as follows: 79-
3618. (a) The secretary of revenue or the secretary's
designee shall ad-
minister and enforce this act. The secretary shall adopt rules and
regu-
lations for the administration of this act. The secretary or the
secretary's
designee may upon application of any taxpayer give such applicant
the
privilege of paying the tax levied by this act upon the basis of
gross receipts
accrued but not received provided such applicant's books are
regularly
kept on such basis. The secretary or the secretary's designee shall
appoint
agents and employees for the enforcement and administration of this
act.
(b) The secretary of revenue or the
secretary's designee may abate all
or part of any final sales tax and compensating tax liabilities
in the same
manner and to the same extent as provided for final income tax
liabilities
at K.S.A. 79-3233a through K.S.A. 79-3233i, and amendments
thereto.
New Sec. 8. The secretary of
revenue or the secretary's designee
may, in the same manner and to the same extent as provided for
income
tax liabilities by K.S.A. 79-3233a through K.S.A. 79-3233i, and
amend-
ments thereto, abate all or part of a final liability for any
excise tax imposed
under the provisions of K.S.A. 12-1692 et seq., 12-1696
et seq., 41-501 et
seq., 79-3301 et seq., 79-3370 et seq.,
79-3401 et seq., 79-3490 et seq., 79-
34,108 et seq., 79-3817 et seq., 79-4101 et
seq. or 79-41a01, and amend-
ments thereto.
Sec. 9. K.S.A. 79-2971 is hereby
amended to read as follows: 79-
2971. (a) Any individual who is responsible for collection
or payment of
excise taxes imposed under the provisions of K.S.A. 12-1692 et
seq., 12-
1696 et seq., 41-501 et seq., 79-3301 et seq.,
79-3370 et seq., 79-3401 et
seq., 79-3490 et seq., 79-34,108 et seq.,
79-3817 et seq., 79-4101 et seq.
or 79-41a01, and amendments thereto, or for control, receipt,
custody or
disposal of funds due and owing under such acts who
willfully fails to
collect such tax, or account for and pay over such tax, or attempts
in any
manner to evade or defeat such tax or the payment thereof shall be
per-
sonally liable for the total amount of the tax evaded, or not
collected, or
not accounted for and paid over, together with any interest and
penalty
imposed thereon. The provisions of this section shall apply
regardless of
the relationship: (1) Relationship with the
taxpayer held by such individual
and regardless of the; (2) form under which
the taxpayer conducts busi-
ness, whether a sole proprietorship, partnership or corporation;
or (3)
dissolution of the business.
(b) A notice of assessment issued to a
responsible individual shall be
considered to be a proceeding for the collection of the tax
liability of the
business. If the liability of the business is determined in a
proceeding that
has become final, any notice of assessment to a responsible
individual must
be issued within three years after the proceeding against the
business
became final.
(c) Within 60 days after the mailing
of a notice of assessment to a
responsible individual, the person assessed may request an
informal con-
ference with the secretary of revenue under K.S.A. 79-3226, and
amend-
ments thereto, for a determination of whether such person is a
responsible
individual under subsection (a), and for a determination of the
tax liability
of the business.
(d) If a notice of assessment and a
warrant are issued to a responsible
individual pursuant to a jeopardy provision of chapter 79 of the
Kansas
Statutes Annotated, the person assessed may request that the
informal
conference held pursuant to subsection (c) be expedited. When
such a
request is made, the secretary shall schedule the conference to
be held
within 21 days after receipt of the request and shall issue a
written final
determination within 21 days after the close of the
conference.
Sec. 10. K.S.A. 79-3643 is hereby
amended to read as follows: 79-
3643. (a) Any individual who is responsible for collection
or payment of
sales or compensating tax or control, receipt, custody or disposal
of funds
due and owing under the Kansas retailers' sales and compensating
tax acts
who willfully fails to collect such tax, or account for and
pay over such
tax, or attempts in any manner to evade or defeat such tax or the
payment
thereof shall be personally liable for the total amount of the tax
evaded,
or not collected, or not accounted for and paid over, together with
any
interest and penalty imposed thereon. The provisions of this
section shall
apply regardless of the relationship: (1)
Relationship with the retailer held
by such individual and regardless of the;
(2) form under which the retailer
conducts business, whether a sole proprietorship, partnership or
corpo-
ration; or (3) dissolution of the business.
(b) A notice of assessment issued to a
responsible individual shall be
considered to be a proceeding for the collection of the tax
liability of the
business. If the liability of the business is determined in a
proceeding that
has become final, any notice of assessment against a responsible
individual
must be issued within three years after the proceeding against
the business
has become final.
(c) Within 60 days after the mailing
of a notice of assessment against
a responsible individual, the person assessed may request an
informal
conference with the secretary of revenue under K.S.A. 79-3226,
and
amendments thereto, for a determination of whether such person
is a
responsible individual under subsection (a) and for a
determination of the
tax liability of the business.
(d) If notice of assessment and
warrant are issued to a responsible
individual pursuant to K.S.A. 79-3610, and amendments thereto,
or any
other jeopardy provision of chapter 79 of the Kansas Statutes
Annotated,
the person assessed may request that the informal conference
held pur-
suant to subsection (c) be expedited. When such a request is
made, the
secretary shall schedule the conference to be held within 21
days after
receipt of the request and shall issue a written final
determination within
21 days after the close of the conference.
(e) The provisions of this section
shall be deemed to be supplemental
to the Kansas retailers' sales and compensating tax acts.
Sec. 11. K.S.A. 75-5149, 75-5150, 79-2971, 79-3233,
79-3233a, 79-
3233b, 79-3233d, 79-3233f, 79-3233g, 79-3233h, 79-3233i, 79-3618
and
79-3643 are hereby repealed.
Sec. 12. This act shall take effect and be in
force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the
SENATE, and passed that body
____________________________________
SENATE concurred in
HOUSE amendments ______________________________
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Passed the HOUSE
as amended ______________________________
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APPROVED ______________________________
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