What are the new penalties for an employer that pays Kansas withholding tax late?

Plain-English summary

Kansas Notice 24-07 explains a change to the late-payment penalty for employer withholding tax, made by 2024 Senate Bill 410, Section 17, which amended K.S.A. 79-32,107 (the penalty and interest provision of the Kansas withholding and declaration of estimated tax act).

Most of K.S.A. 79-32,107 is unchanged. The substantive change is to subsection (f), which covers an employer's failure to timely remit withholding tax. Under prior law, the penalty was a flat 15% regardless of how late the payment was. New subsection (f)(1) makes the penalty on a remittance made after the return's due date (determined under K.S.A. 79-3298) graduated by how late it is:

• 2% of the underpayment if remitted within one to five days;
• 5% if remitted within six to 15 days;
• 10% if remitted after 15 days; and
• 15% if remitted after 15 days and the Department has issued a notice about the underpayment that is not remitted within 10 days of the notice.

The new penalties are effective July 1, 2024. Any remittance that was due but unpaid before July 1, 2024 stays subject to the flat 15% penalty.

What this means for you

Employers remitting Kansas withholding tax

• If you pay withholding tax a little late, the penalty is now smaller and scaled to the delay: 2% for one to five days late, 5% for six to 15 days, and 10% after 15 days.
• The 15% penalty now applies only when a payment is more than 15 days late and you fail to pay within 10 days after the Department sends a notice of the underpayment.
• The graduated penalties apply to remittances due on or after July 1, 2024. Anything that was already due and unpaid before July 1, 2024 keeps the old flat 15% penalty.
• Due dates are determined under K.S.A. 79-3298.

Common questions

What was the old penalty? A flat 15% of the underpayment, regardless of how late.

What is the new penalty schedule? 2% (one to five days late), 5% (six to 15 days), 10% (after 15 days), and 15% (after 15 days plus failure to pay within 10 days of a Department notice).

When does the new schedule apply? To remittances due on or after July 1, 2024. Amounts due but unpaid before that date keep the 15% penalty.

Where is the due date defined? Under K.S.A. 79-3298.

Citations and references

• Senate Bill 410 (2024) -- Section 17 revised the withholding tax late-remittance penalty.
• K.S.A. 79-32,107 -- penalty and interest under the Kansas withholding and declaration of estimated tax act.
• K.S.A. 79-32,107(f) -- the graduated late-remittance penalty for withholding tax.
• K.S.A. 79-3298 -- determines the due date of the withholding return.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 24-07

Original ruling text

Policy and Research
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor

                                      NOTICE 24-07

                          WITHHOLDING TAX PENALTY CHANGES

                                      (JULY 1, 2024)

   During the 2024 Legislative Session Senate Bill 410 was passed and signed into law. Section

17 of the Bill amended K.S.A. 79-32,107, which controls the imposition of penalty and interest for
noncompliance with the provisions of the Kansas withholding and declaration of estimated tax act.

   Most of the provisions of K.S.A. 79-32,107 remain unchanged. The substantive amendments

to K.S.A. 79-32,107(f) address the case of failure by an employer to timely remit withholding tax.
Under current law, when a penalty is imposed, it is imposed at the rate of 15%, regardless of how
late the remittance is made. The new language, in what is now subsection (f)(1), provides the
penalty which will be imposed on a remittance made after the due date of the return, as determined
under K.S.A. 79-3298, is to be:

        (A) 2% of the amount of the underpayment if remitted within one to five days;
        (B) 5% of the amount of the underpayment if remitted within six to 15 days;
        (C) 10% of the amount of the underpayment if remitted after 15 days; and
        (D) 15% of the amount of the underpayment if remitted after 15 days and the
   department has issued a notice to the person regarding the underpayment but the
   amount of the underpayment was not remitted within 10 days of issuance of the notice.

   The new provisions are effective July 1, 2024. Any remittance that was due, but unpaid,

prior to July 1, 2024, will be subject to the imposition of penalty at the rate of 15%.

                                  TAXPAYER ASSISTANCE

  Additional copies of this notice, forms or publications are available from our website,

www.ksrevenue.gov. If you have questions about this Notice, please contact:

                               Taxpayer Assistance Center
                              Kansas Department of Revenue
                              Scott Office Building, 1st Floor
                                     120 SE 10th Ave
                                      P. O. Box 3506
                                 Topeka, KS 66601-3506
                                   Phone: 785-368-8222
                                    Fax: 785-291-3614