Voluntary Disclosure
Description of Program
The Kansas Department of Revenue encourages businesses and individuals
that are not in compliance with Kansas tax laws to voluntarily come
forward to register and pay prior tax obligations. This applies
to any tax administered by the Division of Taxation and to any type
of domestic or foreign taxpayer who is subject to tax in this State.
Taxpayers may anonymously contact the Department to seek resolution of tax liabilities arising from past activities in Kansas.
Benefits of Voluntary Disclosure
Taxpayers will benefit from the voluntary disclosure process by a limited three-year look-back period, and by not having to be concerned with discovery through the State's normal investigative or audit procedures. In addition, no penalties are imposed for late filing and payment, however, interest will be due at the statutory rate on all tax due.
Qualifying for Voluntary Disclosure
Each voluntary disclosure request is considered separately on its own facts. Before the Department will consider a request for a voluntary disclosure agreement, the following criteria must be met:
- The taxpayer has not been contacted by the Department or The Multistate Tax Commission with respect to any tax for which the taxpayer is requesting voluntary disclosure.
- The taxpayer is not under audit for any tax for which the taxpayer is requesting voluntary disclosure.
- The taxpayer's failure to file is not the result of fraud or gross negligence on the part of the taxpayer.
The Kansas Department of Revenue will accept telephone inquiries about the program. However, formal requests to participate in the program must be in writing and must contain the following information:
- A description of the taxpayer's business.
- The nature and extent of the taxpayer's activities in Kansas,
including the following:
- A description of the type of property owned or leased in Kansas.
- A description of the activities of employees or independent sales representatives who have activities in the State. This includes third party activities to install or repair property sold to the taxpayer's Kansas customers.
- The amount of inventory located in the State.
- The type and frequency of deliveries into the State.
- The average number of times the taxpayer or their representative comes into Kansas to conduct business during a year.
- The length of time the taxpayer has been in business and the period of time it has conducted activities in Kansas.
- The taxpayer's previous filing or payment history with the Department.
- Whether the taxpayer has been contacted by the Kansas Department of Revenue or the Multistate Tax Commission regarding its Kansas liability.
- Whether the taxpayer has any outstanding liabilities for any tax administered by the Department.
- Whether the taxpayer has collected Kansas sales or use taxes.
- An explanation of why returns have not been filed and taxes have not been paid.
- Terms proposed by the taxpayer for the voluntary disclosure, including the type of tax and periods to be reported in the disclosure.
- An estimate of the amount of Kansas taxes due.
Review and Approval of Voluntary Disclosure Requests
An application will not be considered until a full written disclosure has been made setting out all pertinent facts and circumstances concerning the information required by the Department. Based on the information submitted, the application will be approved or rejected or a counter proposal will be made. The Department will offer a draft agreement for review and approval by the taxpayer or their representative.
The taxpayer will be given 60 days to return the signed agreement, provide the requested registration, returns and schedules, and pay the tax. Upon receipt, the Department will issue a bill to the taxpayer for interest owed at the statutory rate.
The taxpayer will remain anonymous until the signed agreement is returned to the Department. When the taxpayer is identified, the Compliance Division will check to determine if the taxpayer has an outstanding liability for any tax and if the taxpayer has a prior filing history.
If the Department determines that the taxpayer or its representative misrepresented the information upon which the Agreement is based, the Agreement can be voided and the Department can take action as if the Agreement did not exist.
Audits for Voluntary Disclosure Period
The Department reserves its right to audit a taxpayer's books and records, subject to statutory time limits. The audit may include all or part of a voluntary disclosure period. The Department will assess any tax determined to be due that was not discharged under the Voluntary Disclosure Agreement. All applicable penalties and interest will apply to additional taxes discovered to be due that have not been paid. If any of the factual representations made in the voluntary disclosure process are found to have been materially misrepresented or a material fact is found to have been omitted by the taxpayer or its representative, the Department may consider the Agreement null and void and proceed as though the Agreement never existed.
Kansas will maintain complete confidentiality of the Disclosure Agreement. The Department will not discuss the identity of the taxpayer or the existence of the Disclosure Agreement with any tax authorities of any State or government authority or with any person or party except as required by exchange agreements in effect.
Voluntary Disclosure Program
Contact
Kansas Department of Revenue
Audit Services
915 SW Harrison Street
Docking State Office Building - 10th Floor North
Topeka, KS 66625-7719
Phone: (785) 296-7487
Fax: (785) 296-0531