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Collected back taxes pass $2 million mark

City begins enhanced tax enforcement initiatives

The City of Kansas City, Mo., Tax Amnesty Program has already collected more than $2 million. The Revenue Division of the Finance Department reported these preliminary results May 2.

The program allowed taxpayers to pay back taxes interest- and penalty-free March 1 through April 16. The Revenue Division is continuing to process the large volume of returns and payments received in the final days of the program.

"We are pleased with the preliminary results of the program," said Deb Hinsvark, director of the Finance Department and chief financial officer. "One of our goals was to educate taxpayers about their financial obligation to the City. We contacted more than 450 organizations before and during the program about the types of taxes their members may owe. We made presentations or distributed information to many of these groups. As a result of an extensive educational campaign which included television, radio, billboards, print advertisements and direct mailings, we have already added more than 150 business and individual accounts to the tax roll."

The preliminary collection figure of $2 million more than covers the cost of conducting the Tax Amnesty Program and completing other initiatives authorized by the City Council in July 2006. The expectation was that the program would cover the costs of the initiatives. However, a significant net benefit currently is anticipated. Results will be finalized after all returns and payments have been thoroughly analyzed for eligibility and posted to taxpayers' accounts.

The number of taxpayers participating in the amnesty program and/or paying 2006 taxes is at an all-time high, as demonstrated by this preliminary data:

    The Revenue Division received more than 10,000 tax-related telephone calls between March 1 and April 16, which is 30 percent higher than the same time frame in 2006

    The Tax Amnesty Program's Web page logged more than 11,000 views between November 2006 and the end of March 2007

    More than 2,000 taxpayers paid in person at City Hall or at the Water Services Department administrative building at 4800 63rd St., a location that was specifically opened during the Tax Amnesty Program as an added convenience to taxpayers

    The majority of taxpayers, more than 125,000 individuals and businesses, mailed their payments during the final days of the program, and those returns are still being processed.

With the revenues expected to be generated by the amnesty program, the City Council authorized the Revenue Division to conduct several initiatives. The amnesty program cost approximately $875,000 to operate. Total Revenue Division related initiatives, including both amnesty and establishing the new field audit team, have cost approximately $1.34 million. In addition to the revenues gained by the amnesty program, establishing the new field audit team will generate new revenues in Fiscal Year 2008 and beyond.

"We also accomplished our primary goals with the revenue from the amnesty program," said Judy Hadley-Williams, commissioner of revenue. "We committed to the City Council that we would establish a new field tax audit team, create new audit procedures, re-write the City's tax regulations, which were last updated in 1979, and streamline our peak season processes. We are accomplishing all of these objectives and doing so with fewer costs than originally projected."

This program has been a win/win situation for the City and its taxpayers. While the City has collected additional revenue, taxpayers participating in the program have received a discount of approximately 35 percent on the amount they owed. Of the estimated $2 million in tax payments collected, $1.14 million already has been posted to taxpayers' accounts. Thus far, $277,698 in interest and $327,920 in penalties have been waived.

The City has now shifted its focus to enforcement efforts. Delinquent taxpayers who did not take advantage of the Tax Amnesty Program will now face penalties, interest and fees. The City will actively pursue delinquent taxpayers and implement its enhanced enforcement initiatives including field audits of individuals and businesses.

The City hired 17 people in the Revenue Division in the last three months. These employees will perform field and desk audits of returns that have been submitted, collect delinquent amounts owed to the City, conduct targeted reviews to ensure taxpayers are compliant and provide additional educational efforts to businesses and individuals regarding their tax responsibilities.

"We gave delinquent taxpayers an opportunity to come forward and avoid penalty and interest," City Manager Wayne A. Cauthen said. "From this point forward, we will find delinquent taxpayers and they will face stiffer enforcement, resulting in penalties and interest on back taxes owed to the City."

Past due taxes collected by the Revenue Division were eligible for the program. These taxes include earnings, withholding, profits, convention and tourism (including fees on hotels, motels and rental cars), utility taxes and business licenses fees that were due for periods ending on or prior to Dec. 31, 2005. The program was approved by the City Council in October 2006.

Media inquiries about this issue and other requests for more information should be directed to Judy Hadley-Williams, commissioner of revenue, (816) 513-1120.

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