By Gene Meyer
January 14, 2010

(KansasReporter) TOPEKA, Kan.- Filing a traditional pencil-and-paper Kansas income tax return will cost you $25 more if new legislation requested by the Parkinson administration becomes law.

Kansas needs to charge so-called paper filers the extra money to help cover additional handling costs that are not incurred when taxpayers file electronic returns, Revenue Secretary Joan Wagnon told House and Senate tax writing committee members Thursday.

The extra fee, which wouldn't apply to taxpayers without access to electronic filing, and a similar $10 service fee that would be charged to taxpayers who want paper refund checks mailed to them rather than having the state deposit refund money directly into their bank accounts, are among a series of revenue enhancing and money saving changes that Wagnon shopped to members of the House Taxation and the Senate Assessment and Taxation committees for consideration this legislative session.

Wagnon also asked legislators to consider a three-year moratorium on further income, sales and property tax exemptions to give the state time to sort out a proliferation of such exemptions that have been enacted case by case since 1995.

“We don’t have a coherent policy now on who gets an exemption or not,” she told Taxation committee members.

“Our policy has been ‘ask and ye shall receive,” she said.

Nationally, about 70 percent of all tax payers filed electronic forms last filing season. Both the Internal Revenue Service and Kansas are encouraging more of them to file that way this year because it is cheaper and more accurate.

In Kansas' case, just 11 employees who process the electronic returns received by the state handle about two thirds of the money the Revenue Department receives each year, Wagnon told lawmakers.

Handling paper returns, in contrast, takes more than 175 workers, including temporary help hired to handle peak January through April workloads, she said. Except this year, the state isn't hiring those temps because of budget cuts, which will stretch waiting times for paper refund checks to as long as 16 weeks. Electronic filing and direct deposit refunds cut that to as few as five days, she said.

Costs alone make it necessary to shift as many tax returns as possible to electronic filing, she said.

"Your constituents are not going to be happy," Wagnon told committee members, "but we are going to attempt to change the habits of the filing public."

Proposed legislation also would require that Kansas notify retailers at least 30 days in advance when retail sales taxes change.

In addition, the department will press for some technical changes to clean up flawed legislation concerning refundable tax credits, taxes on cigarettes purchased on the Internet, and to bring Kansas closer to federal tax code definitions regarding the improper handling of withholding and sales taxes.