Our fair share

Honest Kansans don’t mind paying their fair share of taxes, but audits showing how many people are beating the state’s tax system are disheartening.

When you look at the results of recent state audits on tax collections, it sort of makes you feel like a sucker for paying your taxes.

Obviously, not everyone in Kansas does, and the state seems to have done a pretty poor job of catching up with them.

In February, a state audit showed that two-thirds of corporations in Kansas are paying no state corporate income taxes, and the Kansas Department of Revenue last year granted sizable business tax credits without reviewing the taxpayer claims.

Most of the recent downturn in corporate tax collections was attributed to the sagging U.S. economy, but the audit also revealed an extremely lax attitude on the part of the state tax collectors. The Department of Revenue was not checking the validity of an increasing number of tax credits and was conducting audits on only a minuscule number of corporate taxpayers. Of 31,000 corporations that paid taxes in 2002, only 25 were audited.

This week, an audit has revealed similar problems with the collection of state sales tax on vehicle transactions. The problem isn’t with large franchise car dealerships but with some small dealers and the many car sales completed between private individuals.

One example that was cited was a car dealer who had continued to sell vehicles — about 500 vehicles — over a period of five years without filing tax returns or forwarding sales tax payments to the state. The Department of Revenue reported it had $7 million in accounts receivable from 500 vehicle dealers.

How can this happen? Apparently it’s pretty easy. The department had done audits on only 10 of the state’s 3,000 licensed dealers in the last five years.

The audit also found that many private individuals apparently are avoiding sales tax by under-reporting the value of the cars they sell. No one checks; the county treasurers who collect the taxes when the vehicles are registered just take the seller’s word for it. As Douglas County Treasurer Pat Wells said: “Sometimes the price looks questionable, but we are not here to monitor that. … We are here to provide a service — we don’t like to argue.”

The people registering their cars and paying the sales tax no doubt appreciate this accommodating attitude.

If the state were flush with money, these oversights in tax collections might attract little attention, but when the state is trying to fill a $230 million hole in the budget, people start to look for every penny they can get their hands on.

As well she should, Revenue Secretary Joan Wagnon welcomes the findings of the audit as “very instructive and totally in concert with achieving our mission.” That mission, she said, “is to ensure that all Kansas taxpayers pay their fair share in accordance with Kansas tax laws.”

It’s a good goal. Making sure as many people as possible are forced to share the pain not only will help the state treasury; it will make the rest of us honest Kansans feel a little better about paying OUR “fair share.”