Can a Kansas motor vehicle dealer lose its license for failing to file sales or withholding tax returns?

Plain-English summary

This June 16, 2004 memorandum from the Kansas Department of Revenue's Dealer Licensing Bureau (Division of Vehicles) was sent to all licensed motor vehicle dealers as an "advance courtesy notice" about a new enforcement law.

House Bill 2375, passed by the 2004 Legislature and signed by Governor Sebelius, took effect July 1, 2004. It "amends section 8-2411(b) of the Dealer Licensing and Manufacturer's Act providing for mandatory suspension or revocation of a dealer's license if they are found to have violated the sales or withholding tax statutes."

The memo quotes the amended statute directly: "the director shall suspend or revoke the license of any person who is found to have violated the provisions of K.S.A 79-3601 et seq. ... by the failure to file returns and remit sales tax as required pursuant to K.S.A. 79-3607 ... or [the withholding tax act] ... by the failure to file returns and remit withholding tax as required pursuant to K.S.A. 79-3298 ... for three consecutive months." Because the statute says "shall," the penalty is not discretionary once the violation is established.

A key practical point the memo emphasizes: "Even if you owe no tax, you must file a return." The trigger is the failure to file (and remit) for three consecutive months, so a dealer with no tax due can still jeopardize its license by not filing. The memo also notes the Dealer Licensing Bureau and the Division of Taxation Compliance and Enforcement "will be working in concert to identify violations and initiate appropriate action."

(One note on the source text: the memo's block quote also references "K.S.A 8-3294 et seq." as the withholding tax act; Kansas's withholding statutes are codified in Chapter 79, and the specific remittance requirement it cites — K.S.A. 79-3298 — is stated correctly. The quotation is reproduced verbatim below.)

What this means for you

Licensed Kansas motor vehicle dealers

Keep your sales tax and withholding tax filings current. Missing filings and remittances for three consecutive months makes suspension or revocation of your dealer license mandatory, not optional. File every return that is due even in a month when you owe nothing — a zero-liability month still requires a return, and non-filing is what triggers the penalty. The Dealer Licensing Bureau coordinates with tax compliance staff, so a tax-filing lapse can surface as a licensing problem.

Accountants and advisors to dealers

For motor vehicle dealer clients, treat sales and withholding tax filing as a license-critical obligation, not just a tax matter. A three-month filing lapse carries a licensing consequence (loss of the ability to operate as a dealer) on top of the ordinary civil tax penalties, which this law says apply "in addition to" the license action.

Scope

This is guidance about a 2004 statutory change to dealer licensing; the specific K.S.A. cross-references reflect the law as quoted in 2004 and may have been renumbered or amended since. Confirm current requirements before relying on the exact citations.

Common questions

Q: Can I really lose my dealer license just for not filing tax returns?
A: Yes. Under HB 2375 (effective July 1, 2004), the director "shall" suspend or revoke a dealer's license for failure to file returns and remit sales tax (K.S.A. 79-3607) or withholding tax (K.S.A. 79-3298) for three consecutive months. The word "shall" makes it mandatory.

Q: I didn't owe any tax that month — do I still have to file?
A: Yes. The memo states plainly, "Even if you owe no tax, you must file a return." The penalty is triggered by failure to file (and remit) for three consecutive months, regardless of whether tax was owed.

Q: Is the license penalty instead of the usual tax penalties?
A: No. The statute imposes the suspension or revocation "in addition to any civil penalty" — the licensing action is on top of the ordinary tax penalties.

Q: How would the licensing bureau even know about a tax lapse?
A: The memo says the Dealer Licensing Bureau and the Division of Taxation Compliance and Enforcement "will be working in concert to identify violations and initiate appropriate action."

Citations and references

• House Bill 2375 (2004), effective July 1, 2004 — amended the Dealer Licensing and Manufacturer's Act to require license suspension or revocation for the described tax violations.
• K.S.A. 8-2411(b) — the Dealer Licensing and Manufacturer's Act provision amended by HB 2375 to add the mandatory license suspension/revocation penalty.
• K.S.A. 79-3601 et seq. — the Kansas retailers' sales tax act; a dealer's failure to file returns and remit sales tax under it can trigger the license penalty.
• K.S.A. 79-3607 — the sales tax filing/remittance requirement whose violation (for three consecutive months) triggers the penalty.
• K.S.A. 79-3298 — the withholding tax remittance requirement whose violation (for three consecutive months) likewise triggers the penalty.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: MEMO-NewLegLicSuspensionRev

Original ruling text

Memorandum

Body:

DEPARTMENT OF REVENUE
DIVISION OF VEHICLES

Memorandum

DATE: June 16, 2004

TO: All Licensed Motor Vehicle Dealers

FROM: Mathew H. Moser, Manager, Dealer Licensing Bureau

SUBJECT: NEW Legislation Requiring License Suspension or Revocation for Violation of the Tax Statutes

HB 2375 was passed by the 2004 Kansas Legislature and signed into Law by Governor Sebelius.

This law will become effective July 1, 2004.

The new law will have a significant impact on any motor vehicle dealer not in compliance with certain tax laws. HB 2375 amends section 8-2411(b) of the Dealer Licensing and Manufacturer’s Act providing for mandatory suspension or revocation of a dealer’s license if they are found to have violated the sales or withholding tax statutes.

The new statute reads… (please read carefully)

“…in addition to any civil penalty imposed pursuant to this subsection, the director shall suspend or revoke the license of any person who is found to have violated the provisions of K.S.A 79-3601 et seq., and amendments thereto, by the failure to file returns and remit sales tax as required pursuant to K.S.A. 79-3607, and amendments thereto, or the provisions K.S.A 8-3294 et seq., and amendments thereto, by the failure to file returns and remit withholding tax as required pursuant to K.S.A. 79-3298, and amendments thereto, for three consecutive months.”

Even if you owe no tax, you must file a return. The Dealer Licensing Bureau and the Division of Taxation Compliance and Enforcement will be working in concert to identify violations and initiate appropriate action. This memorandum is being provided to all licensed dealers as an advance courtesy notice - advising of the severity of penalties for tax violations and the priority placed on tax compliance by the Department of Revenue.

If you have any questions regarding this new legislation, please feel free to contact me at (785) 296-2242.

Cc: Joan Wagnon, Secretary of Revenue
Carmen Alldritt, Director of Kansas Division of Vehicles 04-045

Date Composed: 06/28/2004 Date Modified: 06/28/2004

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