In Kentucky, not paying taxes can result in loss of drivers and professional licenses

Beginning July 1, Kentuckians who don’t pay their state taxes can lose their drivers and professional licenses and their ability to register and license a vehicle.

State revenue officials say they expect to use the measure rarely and as “a last resort,” but some lawmakers who voted in March for a bill containing the tougher tax penalties now say they were unaware of the provision and think it may go too far.

Professionals ranging from attorneys to hair dressers could be denied renewal of their state licenses under the law, which was approved on the final day of the 2013 General Assembly as part of a compromise bill to reform the state’s ailing pension system.

Earlier this week, at a meeting of the Interim Joint Committee on Transportation, leaders of the Senate and House transportation committees said the change was a surprise.

“This is something that we want to iron out,” House Transportation Chairman Hubert Collins, D-Wittensville, said Thursday in an interview.

How can people pay taxes if their professional licenses have been suspended and “they aren’t working,” Collins asked.

Sen. Bob Leeper, an independent from Paducah, was on a small committee that hashed out details of the bill behind closed doors.

“Probably because we did it so quickly I am not sure it was as well thought out as we would have liked it to have been,” Leeper said Friday. “I feel pretty confident it will be revisited.”

The new regulation was recommended last year by the Governor’s Blue Ribbon Commission on Tax Reform at the request of the state Department of Revenue, according to the commission’s 2012 report.

Pamela Trautner, a spokeswoman for the Finance & Administration Cabinet, said officials expect the measure to net $10 million for Kentucky over the next two years. Trautner said the law allows revenue officials to block the renewal of professional licenses administered by state government, driver’s licenses and vehicle registration.

The measure is aimed at taxpayers who have exhausted appeals and still refuse to pay any state tax other than real property taxes, which are collected at the local level, she said.

The law specifically says attorneys who are delinquent taxpayers can lose their license to practice law. Trautner said revenue officials will advise the state Supreme Court, who oversees attorneys, about delinquent taxpayers.

Amy Carman, a spokeswoman for the Kentucky Bar Association, said any notification that group receives will be sent to the Supreme Court “for appropriate action.” Carman said the association didn’t have any further comment about the measure.

Charles Lykins, the executive director of the Kentucky State Board of Hairdressers and Cosmetologists, said his board and others that oversee professional licenses have been required to send names of the people they license to revenue officials. He said he didn’t have any major concerns about the measure.

“My guess is that it will affect very few” of the cosmetologists in the state, Lykins said.

Revenue officials are still determining how many people will be affected, Trautner said. But she said “95 percent of Kentuckians pay their taxes.”

The measure is aimed at those “who have just ignored every effort that revenue has made,” she said.

Trautner said citizens affected by the change will be notified with a letter sometime after July 1. Those who agree to a payment plan will be considered in compliance and not at risk of the sanctions, she said.

Transportation Cabinet spokesman Chuck Wolfe said the Department of Motor Vehicle Regulation already withholds drivers licenses for a variety of reasons, including when it gets notices from the Administrative Office of the Courts of certain traffic convictions.

“It’s a mandate we will carry out,” Wolfe said. “It will be very similar to what we already do with notices from AOC.”

The Governor’s tax reform commission reported that Massachusetts and Delaware have similar programs that deny and revoke vehicle registration, drivers licenses and professional licenses.

Only professional licenses are denied or revoked in Hawaii, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Minnesota, Missouri, New Jersey, North Carolina, Oklahoma, Oregon, Pennsylvania, Vermont, and Wisconsin, the report said.

Senate Transportation Chairman Ernie Harris, R-Crestwood, said Thursday that he wants to hear more about the measure from revenue officials but thinks “it’s not as onerous as what we thought earlier because we didn’t have full information.”

“I’m going to make the assumption,” Harris said, that revenue officials “will do everything it can to resolve the issue before they suspend the license.”

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