Missouri Senate OKs tax amnesty proposal to raise up to $60M

JEFFERSON CITY, Mo. -- Delinquent Missouri taxpayers could get their first chance since 2002 to pay back taxes without facing penalties under a proposal given initial approval in the Senate on Wednesday.

The tax amnesty proposal would bring in an estimated $60 million for fiscal year 2016, but the money comes with a catch.

It would have to be used for rate increases for Medicaid providers or Medicaid dental coverage for adults, which lawmakers have previously funded but the governor has blocked, citing lagging general revenue.

Sen. Rob Schaaf, R-St. Joseph, has opposed tax amnesty in previous years and said he still thinks it gives an advantage to people who have been breaking the law over law-abiding citizens. He agreed not to block it this year because of the chance to vote on earmarking the money for programs he supports.

Schaaf, a physician, said he's seen people getting treatment that could've been prevented if they had dental coverage.

"If the governor is going to like ignore our wishes and look the other way when these people are suffering then we need to take an unusual step of tying his hands," he said.

The requirement presents some challenges for lawmakers who are working through the budget, because the House based increases in its budget on the additional $60 million in revenue.

Senate Appropriations Chairman Kurt Schaefer, R-Columbia, said without the tax amnesty measure, cuts would be necessary.

"I want to see this pass because we need the money for the budget," he said.

Instead, changes to the funding mechanisms for the two programs will be needed to mirror the tax amnesty measure's language.

Delinquent taxpayers would need to pay between Sept. 1 and Nov. 30 to qualify. They also would need to comply with state tax laws for the next eight years. Unpaid taxes before Dec. 31 would be eligible.

The proposal includes additional measures creating a bill of rights for taxpayers, an independent office taxpayers can address concerns to and a new commission to do a comprehensive study of the tax code. Sen. Bob Dixon, R-Springfield, described it as a taxpayer protection measure.

Although the measure would provide about $60 million in additional general revenue for fiscal year 2016, an analysis by legislative staff states the net benefit with future years included would be closer to $20 million.

That's because much of the money collected during an amnesty period would have been recovered in later years by the Department of Revenue.

The measure faces another vote in the Senate before returning to the House.