States Largely Cool to Penalty-Free Business Tax Compliance

Former Missouri Revenue Director Janette Lohman has a hypothetical question for state tax administrators puzzling over the billions of dollars in sales and business taxes that go uncollected each year:

Would you rather cut your perpetual tax gap dramatically next year, or cling to the hope that auditors will eventually catch up with delinquent businesses and collect an uncertain chunk of their past tax liabilities, plus penalties and interest?

Lohman recently posed the question to the Federation of Tax Administrators and has raised the issue with the Multistate Tax Commission, the intergovernmental agency that promotes tax uniformity. Lohman challenged ...