What If You Owe Taxes in Kansas? Consequences and Resolution Options
The Kansas Department of Revenue (DOR) administers and collects taxes in this state. The DOR takes care of individual income tax, corporate income tax, withholding tax, sales and use tax, and several other business taxes. If you don't file returns or pay taxes, the state can enforce collection actions against you.
This guide to Kansas back taxes looks at resolution options for Kansas back taxes. Then, it outlines what can happen if you don't pay your state taxes. To get help now, use TaxCure to search for a local tax pro experienced with Kansas tax relief.
Tax Relief Programs for Kansas Tax Debt
Can't afford to pay your Kansas back taxes? Disagree with a tax assessment? Need help with Kansas taxes? Here is an overview of the options for people who are struggling with taxes in Kansas.
Payment Plan on Kansas Back Taxes
The Kansas Department of Revenue may allow you to make monthly payments on tax debts if you meet certain criteria. You can apply for a payment plan online — you need your case number, Social Security or Employer Identification Number, and zip code. Or you can apply through fax/mail using Forms CM-15 Pay Plan Request for Individuals or CM-16 Pay Plan Request for Businesses.
If you need more than six months to pay, the state will issue a tax lien against you. The state will also issue a lien if the statute of limitations expires before the end of the installment agreement.
While making payments, penalties and interest will continue to accrue on your account. You must file and pay all tax returns while on the payment plan. If you don't stay current with any new tax liabilities you incur, your payment plan will default, and the state can demand full payment and start collection actions.
Offer in Compromise
If you truly cannot afford to pay your state taxes, you may be able to settle for less than you owe. The Kansas DOR calls this program Petition for Abatement (PFA), but the IRS and most other states call tax settlements offers in compromise. You can apply based on doubt as to collectability or doubt as to liability.
Doubt of collectability means that you prove to the state that your settlement is the most that could possibly be collected. You must provide the state with very detailed information about your assets, debts, income, and expenses. If the DOR sees that you could pay by selling assets or reducing expenses, it will not approve a settlement for you.
Doubt of liability means there is a legitimate doubt that you owe the tax. This can be complicated to prove. Contact a Kansas tax professional for help. To qualify for Petition for Abatement, you must be current with all of your tax filing and payment obligations. You cannot apply if you are in the midst of a bankruptcy case.
To apply because you can't afford to pay, submit the following documents:
- CE-5 Collectability Petition for Abatement
- CE-3 Individual Income Financial Statement
- CE-2 Business Taxes Financial Statement
- Supporting Documents
- CE-7 Individual Income Tax Waiver of Confidentiality if you owe $5,000 or more
- CE-6 Business Taxes Waiver of Confidentiality if your final business tax liability is $5,000 or more
- Supporting documents
To apply because you believe that you don't owe the tax, you need to file CE-4 Validity of Debt Petition for Abatement and the waivers of confidentiality listed above. You don't have to submit a financial statement for this abatement program.
Innocent Spouse Relief
If your tax owed is due to your spouse's actions, you may be able to qualify for innocent spouse relief. In Kansas, you automatically qualify if you get approved for IRS innocent spouse relief. Typically, you need to prove that your spouse underreported income or overclaimed deductions without your knowledge. Still, innocent spouse relief can also apply in other cases where it would be unfair to require you to pay the tax liability.
In cases where you don't owe federal taxes, you may qualify for Kansas innocent spouse relief if you would have ordinarily qualified for IRS relief. To apply, you can send a copy of your IRS approval letter to the Kansas DOR, or you can consult with a tax professional to learn how to apply for innocent spouse relief when you only have state taxes.
If you cannot afford to pay your Kansas tax debt, the DOR advises you to apply for the abatement program explained above. Your account must be in collections, and all of your current taxes must be filed. You also must pay a $50 application fee. Then, the state will review your request and potentially let you settle your taxes for less than you owe. If you are insolvent, the DOR will waive the application fee.
The Kansas DOR does not advertise a penalty abatement program. However, you may be able to convince the state to reduce or waive penalties on a case-by-case basis. Contact the DOR directly or reach out to a tax professional for guidance.
The DOR urges taxpayers to work out disputes when receiving an Initial Notice of Assessment. If this is not possible, the state will send you a Notice of Final Assessment. If you disagree, you have 60 days to request an informal conference.
The DOR will contact you to set up the conference after it receives your request. Conferences typically happen over the phone to save time and money. The DOR has 270 days to make a final decision, subject to review by the Kansas Board of Tax Appeals.
If you disagree with the final determination, you have 30 days to file a written notice of appeal with the Kansas Board of Tax Appeals. You must also send a copy of your appeal to the Secretary of Revenue. Appealing tax assessments can be complicated, and you may want to work with a Kansas tax pro for the best results.
Collection Processes for Kansas Back Taxes
The state will send the account to collections if you don't pay your tax liabilities in Kansas. Then, you can be subject to tax liens, garnishments, and seizures. Here is an overview of what can happen if you don't pay your Kansas taxes.
Tax Liens in Kansas
A tax lien secures the state's interest in your unpaid taxes. Tax liens are public records, and they can make it impossible to borrow money or sell your assets. The DOR also publishes a list of individual and business taxpayers with the highest unpaid tax debts. This list is called the Kansas tax warrant list.
Tax Levies in Kansas
The Kansas DOR also has the right to levy (seize) your property for unpaid taxes. Tax levies can include wage garnishments, bank account levies, or asset seizures. As of 2022, the Kansas DOR contracts the following companies to auction off items that have been seized from taxpayers: Totally Auction, Equip-Bid, and Palmer Auction.
Penalties for Late Tax Payments
On most state taxes, including individual and corporate income tax, the Kansas DOR assesses a penalty of 1% per month on late tax payments, up to 24% of the balance.
If you pay withholding tax late, there is a 15% penalty if you file and pay late but before February 1 of the following year. If you file and pay after February 1, you incur the 15% late payment plus an additional 1% of the liability every month. The maximum penalty for late withholding taxes can be up to 39%.
The DOR assesses interest on unpaid taxes. The interest rate adjusts annually and accrues on the taxes owed. It doesn't apply to penalties or compound. As of 2022, the interest rate on Kansas back taxes is 3%.
Statute of Limitations on Kansas Tax Debt Collection
The state typically has three years to audit a tax return after it has been filed. The DOR has to take action two years after discovering a fraudulent incident before the statute of limitations expires. Tax liens can stay in place for up to 20 years after they are filed. This means the state can act on the lien for up to 20 years. After that, tax liens typically go dormant.
Get Help With Kansas Back Taxes
Are you struggling with Kansas back taxes? Do you have unfiled returns? Are you dealing with threatening letters or collection actions? You should reach out for help from a Kansas tax professional. Using TaxCure, you can search for local CPAs, enrolled agents, and tax attorneys who are based in Kansas and have extensive experience dealing with the Kansas DOR.