Tax scofflaws face hold on licenses
Topeka Everyone from teachers to tattoo artists would feel a new squeeze from Kansas tax collectors under a proposal aimed at cracking down on tax delinquency among the state's 350,000 holders of professional licenses.
"The department is trying to find ways to identify delinquent taxpayers and get their attention," Kansas Revenue Department Secretary Joan Wagnon said Monday. "This is about getting their attention."
The proposal has rallied numerous business groups, trade associations and special interest lobbyists, many of whom are usually on opposite sides of issues. In this instance, though, they have joined in a chorus voicing alarm over the bill.
Under Senate Bill 15, proposed by the Kansas Department of Revenue, state licensing agencies would deny issuance or renewal of a professional license if the applicant owed the state back taxes.
At stake is approximately $8 million in unpaid taxes, Wagnon said. After reviewing seven of the scores of state licensing agencies, the Revenue Department concluded that 20 percent, or one in five licensees, were delinquent on taxes. The measure would monitor the payment of state income, sales, withholding and excise taxes. Property taxes, collected on the county level, would be exempt from the bill.
Those representing business groups said they had nothing against the legislation's intent. People should pay their taxes, they said, but the Revenue Department proposal is over-reaching and may do more harm than good.
Russell Peterson, of the Kansas Trial Lawyers Assn., said the measure could end up hurting doctors' patients and lawyers' clients.
He asked what would happen when a patient had been prepared for an operation and then the doctor couldn't operate because his or her license has been pulled for tax reasons.
But that hypothetical question drew sharp rebuke from Sen. Janis Lee, D-Kensington.
"That's a ludicrous excuse to use," she said.
Lee said the bill contained provisions for a lengthy appeal process, including administrative hearings and possible court appeals, which could take more than a year. And the delinquent licensee also would be allowed to set up a payment schedule with the Revenue Department so the tax bill need not be paid all at once.
But groups ranging from the Kansas Chamber of Commerce to the Kansas Pet Professionals Assn. said the requirement to get "tax clearance" for a license would hurt businesses and bring numerous unintended consequences.
Taking away a pet dealer's license and ability to make a living would endanger the lives of the animals, said Sharon Monk, a licensed pet breeder from Menlo.
"Do we not have laws on the books that you have to pay your taxes?" Monk asked. "Why don't we enforce that law, and we wouldn't have to write this one?"
But Wagnon said dragging tax cheats through the court system and trying to seize assets was often a time-consuming and expensive proposition. The tax-clearance proposal would just be another tool to remind people they need to be current on their tax debts.
"Of course, payment of the taxes always cures the problem," she said.
Mike Amyx, owner of Amyx Barber Shop in Lawrence, said he hadn't followed the current version of the bill that closely, but that he had no problem with the intent of the Revenue Department.
Amyx, chairman of the State Board of Barbering, said he wanted to confer with his board about the proposal and be sure the measure included an adequate appeals process.
"I see both sides. But the state has to make sure they are getting their taxes," he said.
Jerry Slaughter, executive director of the Kansas Medical Assn., said the bill could jeopardize a partnership practice if only one of the doctors in the partnership was delinquent on taxes.
According to the Kansas State Nurses Assn., 34,000 nurses in Kansas renew their licenses every two years. The time required for the state to process nursing licenses alone would be enormous, an association spokesman said. And representatives of attorneys said that under state law the Kansas Supreme Court, not the Revenue Department, is in charge of regulating lawyers.
But Wagnon said getting people to pay their taxes was a question of fairness, both to those who pay their taxes in a timely manner and those who depend on state tax revenue for services.
She added that 13 states had similar tax clearance laws.
Sen. Barbara Allen, R-Overland Park, chairwoman of the Senate Tax Committee, said she couldn't predict what would become of the Revenue Department's proposal.
"Honestly, I don't know where the committee is on this," she said.
But the various special interest groups and Wagnon have agreed to meet for another week to try to hammer out agreements before bringing the matter back to the committee.