Topeka ? Kansas officials say it is time to drop the hammer on deadbeat businesses that are costing the public treasury millions in unpaid or late taxes and unfairly shifting the burden to more upstanding taxpayers.

“We value Kansas businesses, but we don’t value cheaters,” Senate Majority Leader Lana Oleen, a Republican from Manhattan, said Thursday.

The issue gained momentum from a new report that Kansas has $195 million in delinquent “trust” taxes, which include state sales, withholding and compensating use taxes. That represents nearly 5 percent of the $4.2 billion in trust taxes collected.

The lost dollars increase the tax burden on law-abiding citizens, members of a special tax committee said.

Sen. Greta Goodwin, a Winfield Democrat, suggested that extra sanctions, such as community service, should be assessed on business owners who fail to pay their taxes.

“If they’re out there mowing weeds and tending flowers in the park, perhaps that might provide incentive,” she said.

In the clear

A new audit of state tax collection recommends the Legislature approve a law that would require a “tax clearance” for licensed businesses.

The proposal is designed to ensure businesses are registered for all applicable taxes and that they are current on their tax bills before they can be licensed to do business in the state or have their licenses renewed.

The Kansas Chamber of Commerce said it agreed that businesses should pay taxes, but it opposed the proposal.

State to post tax scofflaws on Website (05-29-04) More in Kansas Legislature Kansas Department of Revenue’s collection of trust taxes

“First, if the license of a professional is not renewed because of failure to pay taxes, that takes away the livelihood of the professional and their ability to earn money and pay the taxes owed,” Marlee Carpenter, vice president of government relations for the chamber, said in prepared remarks to the tax committee.

Carpenter said nonrenewal of a license also affected those who depended on that business and who had paid their taxes.

But Sen. Les Donovan, a Wichita Republican, said he didn’t understand why business owners would be opposed to making sure that all businesses were current on their taxes.

He noted that in January the Revenue Department started requiring tax clearances on motor-vehicle dealers after an audit showed that some dealerships had been delinquent on their taxes for years and still were allowed to maintain their business licenses.

Of 3,584 tax clearances performed of motor-vehicle dealers, 188 were disapproved, according to the audit.

Businesses wanting to sell liquor must be current on all liquor taxes to keep their license, but they are not required to be current on all taxes.

Debt security

Revenue Secretary Joan Wagnon said expanding the tax-clearance policy to all licensed businesses would greatly help secure past debts.

“Failure to abide by the tax laws should result in automatic license forfeiture. Such a requirement would do more to improve the effectiveness of collection efforts than any other change in practice or procedure that (the revenue department) might undertake,” she said.

Internally, the Kansas Department of Administration started making all vendors wanting to do business with the state be in compliance with state tax laws. The state found that 27 percent of vendors were not in compliance. After seven months of letting them know they had to be, Wagnon said those not in compliance had dropped to 4 percent.

Wagnon said the revenue department’s internal auditors said the amount of delinquent trust taxes was $133 million, which is $62 million less than the auditors estimated. But Wagnon said the difference was that some of those delinquent taxes would never be recovered because of businesses that had shut down or were bankrupt.

Even so, she noted that $133 million would have covered the cost of many of the school finance proposals that failed during the last legislative session.