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Bar Journal 2017

2017 Oklahoma Tax and Fee Legislation

By Sheppard F. Miers Jr.

The following is a summary of some of the changes in Oklahoma law on state taxation and fees enacted by the Oklahoma Legislature in 2017. 

INCOME TAX

Oklahoma Standard Deduction Decoupled from Federal Standard Deduction

For taxable years beginning on or after Jan. 1, 2017, for individuals who use the standard deduction in determining taxable income, there shall be added or deducted the difference that is necessary to allow an Oklahoma income tax standard deduction in lieu of the federal income tax standard deduction allowed by the Internal Revenue Code. The amounts of the Oklahoma standard deduction resulting from this change are to be: $6,350 for single or married filing separately, $12,700 for married filing jointly or qualifying widower with dependent child and $9,350 for head of household, irrespective of the standard deduction allowed for federal income tax purposes.1 

Note: At the time of submission of this section note, an action challenging the constitutionality of enactment of HB 2348 to make this statutory change was filed and pending in the Supreme Court of Oklahoma, in Gary L. Richardson v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116162, filed June 28, 2017, arguing that HB 2348 is a revenue bill subject to Article V, §33 of the Oklahoma Constitution and enactment of the bill did not meet the requirements of that provision of the Constitution.

Zero-Emission Electricity Generation Credit Limited for Wind Facilities

The Oklahoma income tax credit allowed for electricity generated by zero-emission facilities was amended to provide that it will be allowed with respect to electricity generated by wind only for a facility placed in operation no later than July 1, 2017.2 

Oklahoma 4.85 Percent Top Individual Income Tax Rate Implementation Repealed

The statute authorizing a “trigger” to implement a top marginal individual income tax rate of 4.85 percent in Oklahoma was repealed; and actions of the State Board of Equalization with respect to implementation of that rate were declared null and void.3 

Individual Income Tax Returns

For tax years beginning on or after Jan. 1, 2017, every resident individual whose gross income exceeds the sum of the Oklahoma individual standard deduction and personal exemption must file an Oklahoma income tax return. Resident individuals not required to file a federal income tax return must attach a completed federal income tax return to the Oklahoma income tax return to show how adjusted gross income and deductions were determined if their gross income is more than their adjusted gross income. The Oklahoma income tax return must show the taxable income and, where necessary, the adjusted gross income and modifications required by the Oklahoma Income Tax Act, and any other information the Oklahoma Tax Commission (tax commission) may require. Every nonresident individual having Oklahoma gross income for the taxable year of $1,000 or more must file an Oklahoma income tax return.4  

Oklahoma Equal Opportunity Education Scholarship Credits

The Oklahoma income tax credit allowed for contributions made to eligible scholarship-granting organizations and educational improvement-granting organizations pursuant to the Oklahoma Equal Opportunity Education Scholarship Act was amended to modify the manner in which the statewide cap on annual credits is to be allocated and applied.5 

Aerospace Industry Credits

The period during which Oklahoma income tax credits for the aerospace industry may be claimed was extended to be for taxable years ending before Jan. 1, 2026.6

Withholding from Royalty Owners

The statute providing for withholding of income tax from royalty owners was amended to add an exception for which withholding is not required. The withholding requirement shall not apply to payments which are made to a publicly traded partnership that is treated as a partnership for federal tax purposes under the Internal Revenue Code or its publicly traded partnership affiliates.  For this purpose a “publicly traded partnership affiliate” shall include any limited liability company or limited partnership of which at least 80 percent of the limited liability member interests or limited partnership interests are owned directly or indirectly by the publicly traded partnership.7

Volunteer Firefighter Credit

The Oklahoma income tax credit allowed to volunteer firefighters was amended with re-spect to qualification requirements.8 

Contributions to Folds of Honor Scholarship Program

Contributions to Folds of Honor Scholarship Program
The income tax return check-off procedure for charitable contributions of refunds due to a taxpayer to the Folds of Honor Scholarship Program will not be subject to the rule that can result in removal of a charity from being listed on income tax return forms. The rule that a charity that has been designated to receive funds through contributions made on Oklahoma income tax return forms will be removed from such forms if such contributions to the charity do not equal $15,000 or more for three consecutive years but will not apply to the Folds of Honor Scholarship Program.9 

Donations to the Oklahoma Wildlife Diversity Program
Donations to the Oklahoma Wildlife Diversity Program

Donations to the Oklahoma Wildlife Diversity Program

An income tax return refund contribution was reauthorized for contributions from a tax refund for the benefit of the Oklahoma Wildlife Diversity Program.10 

Donations to Oklahoma Emergency Responders Assistance Program

For tax years beginning in 2017, tax returns will contain a provision allowing a donation from a tax refund for the benefit of the Oklahoma Emergency Responders Assistance Program.11

SALES AND USE TAX

State Sales Tax on Motor Vehicle Sales

The state sales tax exemption allowed for the sale of a motor vehicle or any optional equipment or accessories attached to motor vehicles on which the Oklahoma Motor Vehicle Excise Tax is levied was amended to provide that the exemption shall not apply to a portion of the levy of state sales tax equal to 1.25 percent of the gross receipts of motor vehicle sales. However, sales of motor vehicles shall not be subject to any sales and use taxes levied by cities, counties or other jurisdictions of the state.12

Note: At the time of submission of this section note, actions challenging the constitutionality of enactment of HB 2433 to levy sales tax on motor vehicle sales were filed and pending in the Supreme Court of Oklahoma, in Oklahoma Automobile Dealers Association, et al. v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116143, filed June 23, 2017, and in Gary L. Richardson v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116162, filed June 28, 2017, arguing that HB 2433 is a revenue bill subject to Article V, §33 of the Oklahoma Constitution, and its enactment did not meet the requirements of that provision of the Constitution.

Vendor Sales and Use Tax Deduction to Compensate for Record Keeping and Tax Remittance Repealed

The sales tax code and use tax code provisions allowing a seller or vendor a deduction of 1 percent of the tax due, not exceeding $2,500 per month per sales tax permit, for the purpose of compensating the seller or vendor for keeping sales and use tax records, filing reports and remitting the tax when due, were repealed.13 

Oklahoma Tourism Development Act; Sales Tax Credits

Oklahoma Tourism Development Act; Sales Tax Credits
An Oklahoma Tourism Development Act was enacted to provide sales tax credits as inducement for the creation or expansion of tourism attraction projects within the state. The act provides for business entities operating or intending to operate a tourism attraction project within the state that meets certain standards to enter into an agreement with the executive director of the Oklahoma Tourism and Recreation Department providing for the completion and operation of the project. The act specifies such qualification standards, criteria and requirements; and also procedures for review and approval of projects and agreements and for the application, claiming and timing of credits. 

The sales tax credit allowed may only offset increased sales tax liability of the company resulting from sales to customers at the tourism attraction in excess of reported sales tax liability for sales in the same month in the calendar year preceding the certification of the project approving it for sales tax credit inducements under the act. The tax commission shall provide an approved company with forms and instructions to claim the sales tax credit inducement allowed under the act. 

An approved company that certifies that it has expended approved costs of more than $500,000 for a tourism attraction project but less than $1 million shall be issued a tax credit memorandum by the tax commission granting a sales tax credit in the amount of up to 10 percent of the approved costs. An approved company that has expended approved costs in excess of $1 million for a tourism attraction project shall be issued a tax credit memorandum by the tax commission granting a sales tax credit in the amount of up to 25 percent of the approved costs. The credits shall be limited to the percent of the approved costs that will result in the project being revenue neutral to the state as determined by the tax commission. An approved company receiving a credit shall be entitled to use only a specified part of the credit to offset increased sales tax liability during each calendar year, which is 10 percent each calendar year for projects with approved costs in excess of $1 million and 20 percent each calendar year of projects with approved costs less than $1 million. 

No sales tax credit authorized by the act shall be granted on or after Jan. 1, 2021; provided, that an approved company that has entered into a tourism attraction project agreement with the Oklahoma Tourism and Recreation Department prior to Jan. 1, 2021, shall continue to be entitled to claim any sales tax credit authorized pursuant to the act and as contemplated by the tourism project agreement.14 

Collaborative Model Connecting Community Agencies Exemption

A sales tax exemption was enacted to be effective Nov. 1, 2017, to exempt from sales tax the sale of tangible personal property or services to an organization which is exempt from taxation pursuant to the provisions of the section 501(c)(3) of the Internal Revenue Code and operates as a collaborative model which connects community agencies in one location to serve individuals and families affected by violence and where victims have access to services and advocacy at no cost to the victim.15  

Sales to Tourism and Recreation Department Contractors Exemption

The sales tax exemption related to Oklahoma Tourism and Recreation Department promotional materials was amended to provide an exemption for sales of tangible personal property or services to any person with whom the department has entered into a public contract necessary to assist the department in the development and production of advertising, promotion, publicity and public relations programs.16 

National Guard Association of Oklahoma Exemption

A sales tax exemption was enacted to be effective July 1, 2018, to exempt sales of tangible personal property or services to or by an association which is exempt from taxation pursuant to the provisions of the Internal Revenue Code, and which is known as the National Guard Association of Oklahoma.17 

Marine Corps League of Oklahoma Exemption

A sales tax exemption was enacted to be effective July 1, 2018, to exempt sales of tangible personal property or services to or by an association which is exempt from taxation pursuant to the provisions of the Internal Revenue Code, and which is known as the Marine Corps League of Oklahoma.18 

Sales Tax Noncompliant Taxpayer Closings

The provisions of the Sales Tax Code authorizing the tax commission to close the business of a noncompliant taxpayer for failure to file reports or remit tax due was modified, providing that a taxpayer operating under a sales tax permit shall not be deemed “noncompliant” for nonpayment of income taxes; and providing for clarification as to failure to file reports required for sales taxes.19 

AD VALOREM TAX

Delay of Five-Year New Manufacturing Facility Exemption Until Expiration of Local Development Act Tax Exemption

New manufacturing facilities applying for the five-year ad valorem tax exemption under 68 O.S. §2902 on or after Nov. 1, 2017, that meet specified requirements shall be eligible to delay the beginning of the five-year period of exemption from ad valorem taxes under 68 O.S. §2902 until after the expiration or termination of an ad valorem exemption, abatement or other incentive provided to the taxpayer through a tax incentive district established pursuant to the Local Development Act. 

In order to delay the exemption this way a manufacturing facility must 1) create at least 100 new jobs at the state index wage provided for in 68 O.S. §3604(F)(2) and 2) invest at least 10 times the investment cost in new depreciable property required for the five-year new manufacturing facilities exemption in 68 O.S. §2902 (B)(1), presumably meaning an investment of at least $2.5 million. The delay of the exemption shall not be available for any job creation or investment of new depreciable property that occurred prior to Nov. 1, 2017, or the date of the creation of the tax incentive district under the Local Development Act, whichever is later. 

The application process and procedures for a taxpayer to be able to delay the beginning of the five-year ad valorem tax exemption under 68 O.S. §2902 shall involve approvals, actions and notification of and by the governing body creating a tax incentive district in a city or county under the Local Development Act, the tax commission and the Oklahoma Department of Commerce. If an application for an exemption is approved, the five-year period of exemption from ad valorem taxes for a qualifying manufacturing facility under 68 O.S. §2902 shall begin on Jan. 1 following the expiration or termination of the ad valorem exemption, abatement or other incentive provided through the tax incentive district under the Local Development Act. This allowance of such a delay shall not apply to electric power generation facilities, and they shall not qualify to delay the exemption from ad valorem taxes following the expiration or termination of the ad valorem exemption, abatement or other incentive provided through the tax incentive district pursuant to the Local Development Act.20 

Paper Product Manufacturing Facility Exemption Repealed

The statute separately providing for a five-year new manufacturing facility exemption for a facility engaged in pulp, paper, tissue and paper board manufacturing if it meets specific minimum capital improvements and wage per employee requirements was repealed.21 

Manufactured Home Tax Delinquency Notices

The ad valorem tax procedure governing delinquent taxes was amended to provide that if personal property taxes become delinquent on a manufactured home which is located on property not owned by the owner of the manufactured home, the county treasurer shall send a notice to the taxpayer of delinquency to the owner of the manufactured home as generally authorized and required, and such notice shall also be sent to the last known address of the owner of the real property on which the manufactured home is located.22 

GROSS PRODUCTION TAX

Horizontally Drilled Wells; Rate Increase

The gross production tax rate for certain production of oil and gas was adjusted to provide for a higher rate, to apply prospectively. For production commenced on or after July 1, 2011, and prior to July 1, 2015, the reduced gross production tax rate of 1 percent levied on the production of oil, gas, or oil and gas from a horizontally drilled well for a period of 48 months from the month of initial production, was increased to 4 percent for production occurring on or after July 1, 2017, for the remainder of the 48-month period involved.23 

Elimination of Previously Enacted Exemptions

The Oklahoma gross production tax was amended to limit and eliminate certain gross production tax exemptions allowed for specified time periods as incentives for projects begun before July 1, 2015. The exemptions for specified production from secondary recovery projects, tertiary recovery projects, re-established inactive wells, production enhancement projects, wells drilled to a specified depth, new discovery wells and three-dimensional seismic shoot wells were amended to provide that the exemptions shall not apply to production occurring on or after July 1, 2017. The limitation period for claiming rebates and refunds for allowed exemptions was changed, and refunds are to be paid in deferred installment payments. The exemption allowed for economically at-risk oil or gas leases was amended to limit its application to production from specified calendar years, to change the time for claiming refund, and provide for deferred installment payment of refunds.24 

FRANCHISE TAX AND FEE

Franchise Tax Reporting

Oklahoma franchise tax payment and reporting requirements were amended. For those taxpayers that remitted the maximum amount of tax pursuant to 68 O.S. §1205 for the preceding tax year, the franchise tax shall become due and payable on May 1 of each year, and if not paid on or before the ensuing June 1, penalties shall apply. A taxpayer that so remitted the maximum amount of tax for the preceding tax year must file a return no later than June 1.25 

Reinstatement Fee Increase

The reinstatement fee required to be paid after the issuance of an order of suspension and forfeiture of the charter or organizational document and rights thereunder for failure to file a report and pay franchise tax was increased from $15 to $150.26 

CIGARETTE FEE/TAX

$1.50 Charge Per Pack of Cigarettes

On May 26, 2017, the Legislature passed SB 845 titled “Smoking Cessation and Prevention Act of 2017,” and it was signed by the governor on May 31, 2017. The act provides for a $1.50 charge on cigarettes to be assessed by the tax commission and remitted to the tax commission by every wholesaler. The charge is to be $1.50 per 20 cigarette package, and a proportionate rate on fractions thereof. For purposes of the act “cigarette” and “wholesaler” shall have the same meaning as in 68 O.S. §301 that applies to the Oklahoma cigarette stamp tax. 

The tax commission is authorized to promulgate rules to implement the assessment. The act contains an uncodified provision stating that for the purpose of ensuring maximum wholesaler compliance with remittance of the charge, the tax commission shall not sell cigarette excise tax stamps to any wholesaler in excess of the amount of the monthly average amount of such excise tax stamps sold to such wholesaler during the preceding calendar year prior to the effective date of the act, but that a wholesaler may purchase in excess of the monthly average purchased during the preceding calendar year upon providing documentation to the tax commission’s satisfaction of probable sales greater than the wholesaler’s sales in the preceding calendar year.27 

Note: At the time of submission of this section note, an action challenging the constitutionality of enactment of SB 845 was filed and pending in the Supreme Court of Oklahoma, in Naifeh v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116102, filed June 7, 2017, arguing that SB 845 does not impose a “fee” but is instead a “revenue bill” subject to Article V, §33 of the Oklahoma Constitution, and enactment of the bill did not meet the requirements of that provision of the Constitution.  Attorneys from the author’s firm, GableGot-wals, are representing several of the petitioners in that action.

MOTOR FUEL TAX

Motor Fuel Tax Remittance Increase

The provisions of the Motor Fuel Tax Code for pre-collection and tax remittance by suppliers and bonded importers was amended to change the percentage basis as to amounts of tax due for gasoline from 98.4 percent to 100 percent, and change the remittance percentage basis for diesel fuel from 98.1 percent to 100 percent,  on July 1, 2022.28

MOTOR VEHICLE TAX AND/OR FEES

Electric-Drive and Hybrid-Drive Motor Vehicle Registration

Electric-drive motor vehicle and hybrid-drive motor vehicle registration fees were en-acted.  Beginning Jan. 1, 2018, a motor fuels tax fee is to be levied and shall be paid to the tax commission of 1) $100 for every electric-drive motor vehicle to be registered and 2) $30 on every hybrid-drive motor vehicle to be registered. The fees shall accrue, and shall be collectible under the same circumstances, and be payable in the same manner and times as other vehicle registrations under the Oklahoma Vehicle License and Registration Act. However, the fees shall be paid in full for the then current year at the time any such vehicle is first registered in a calendar year. The collection and payment of the fees shall be a prerequisite to licensing or registration of such vehicles. The statute provides definitions of “electric-drive motor vehicle” and “hybrid-drive motor vehicle.”29 

Note: At the time of submission of this section note, an action challenging the constitutionality of enactment of HB 1449 providing for motor fuels tax registration fees was filed and pending in the Supreme Court of Oklahoma, in Gary L. Richardson v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116162, filed June 28, 2017, arguing that HB 1449 is a revenue bill subject to Article V, §33 of the Oklahoma Constitution, and enactment of the bill did not meet the requirements of that provision of the Constitution. 

PROFESSIONAL SPORTING EVENT ADMISSION FEE

Initial Ticket Sale Fee

A fee shall be assessed on the initial sale of tickets in Oklahoma for admission to professional sporting events involving ice hockey, baseball, basketball, football, arena football or soccer. The fee shall be $1 on each ticket priced less than $50 and $2 on each ticket priced equal to or greater than $50. The fee shall be remitted monthly to the tax commission on forms prescribed by it.  The tax commission is to publish rules as necessary to implement and administer assessment of the fee.30 

ESTATE TAX

Expiration and Release of Lien

The Oklahoma estate tax lien statute was amended to provide that for deaths of decedents occurring before Jan. 1, 2010, any lien related to estate tax shall be extinguished subsequent to the lapse of 10 years after the date of death of a decedent and no order exempting estate tax liability shall be necessary to authorize release of such property or for the title of real property to be marketable.31 

TAX ADMINISTRATION, PRACTICE AND PROCEDURE

Establishment of Out-of-State Collections Enforcement Division of Tax Commission

An Out-of-State Tax Collections Enforcement Act of 2017 was enacted providing that for the purpose of collecting taxes owed to the state, the tax commission may establish and maintain a division to be known as the “Out-of-State Tax Collections Enforcement Division.” The tax commission may contract with out-of-state private auditors or audit firms and may require any person performing an audit to be first approved by the tax commission. 

The Tax Commission may employ full-time, unclassified, out-of-state tax auditors or full-time-equivalent contracted auditors to staff the Out-of-State Tax Collections Enforcement Division. The audit staff shall perform audit functions related to enhancing sales and use tax collections related to sales or transactions involving residents of Oklahoma and out-of-state vendors with a nexus to the state of Oklahoma; and collections of any other unpaid taxes owed the state of Oklahoma by out-of-state individuals, firms and corporations. 

For purposes of the act the term “audit function” includes, but is not limited to, the auditing of the books of individuals, firms and corporations which the tax commission believes may owe the state additional tax monies. The tax commission shall annually submit a report to the governor, president pro tempore of the Senate and speaker of the House of Representatives listing the number of individuals, firms and corporations audited, the types of taxes audited, the amount of taxes assessed and the amount of taxes collected as the result of such audits.32 

Taxpayer Voluntary Disclosure Initiative; Sept. 1, 2017 – Nov. 30, 2017

A statute was added to the Uniform Tax Procedure Code providing that to encourage voluntary disclosure and payment of taxes, the tax commission is authorized and directed to establish a Voluntary Disclosure Initiative (initiative) for certain “eligible taxes” in 2017. Pursuant to the initiative, a taxpayer shall be entitled to a waiver of penalty, interest and other collection fees due on such eligible taxes if the taxpayer voluntarily files delinquent tax returns and pays the taxes due during the initiative. The time period of the initiative in which a voluntary payment of tax liability may be made (or the taxpayer may enter into a payment program and agreement acceptable to the tax commission) is limited to the period beginning Sept. 1, 2017, and ending Nov. 30, 2017. 

Upon payment of the eligible taxes under the initiative, the tax commission shall abate and not seek to collect any interest, penalties or collection fees that would otherwise be applicable. The eligible taxes include the taxes that were due and payable for any tax period or periods ending prior to the taxpayer and tax commission entering into a voluntary disclosure agreement as provided in the initiative. The “eligible taxes” for which such abatement can be allowed are 1) mixed beverage tax levied; 2) gasoline and diesel tax; 3) gross production and petroleum excise tax; 4) sales tax; 5) use tax; 6) income tax, for tax periods ending prior to Jan. 1, 2016; 7) and withholding tax. 

To be eligible to participate in the initiative and receive abatement of any interest, penalties and collection fees, taxpayers must not have outstanding tax liabilities other than those reported pursuant to the initiative, not have been contacted by the tax commission, or third party acting on behalf of the tax commission, with respect to the taxpayer’s potential or actual obligation to file a return or make a payment to the state; not have collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes; and not have, within the preceding three years, entered into a voluntary disclosure agreement  for the type of tax owed. If the tax commission agrees with the proposed terms for payment of the principal amount of tax due and owing, the penalties and interest otherwise imposed by law upon the principal amount shall be waived by operation of law and no further action by the tax commission or by the taxpayer shall be required for the waiver of such penalty and applicable interest. 

The tax commission is to limit the period for which additional taxes may be assessed to three taxable years for annually filed taxes or 36 months for taxes that do not have an annual filing frequency. Taxpayers who meet all of the qualifications for eligibility except those who have collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes, may enter into a modified voluntary disclosure agreement. The provisions of a modified voluntary disclosure agreement shall be the same as a voluntary disclosure agreement except the waiver of interest shall not apply except as may be optionally granted at the discretion of the tax commission, and the period for which taxes must be reported and remitted or assessed is extended beyond the three-year or 36-month period and to include all periods in which tax has been collected but not remitted. 
The waiver of penalty and interest provided for under the initiative is fully effective provided taxpayer continues payment or collection and remittance of applicable taxes, as required by law, for a period of one year after the tax period(s) for which taxes were paid pursuant to the initiative. The tax commission is authorized to publicly advertise, assist in the collection of eligible taxes and administer the initiative. The tax commission is authorized to publish rules detailing the terms and other conditions of this program.33 

Tax Commission/Taxpayer Voluntary Disclosure Agreements; Modified Voluntary Disclosure Agreements

The provisions of the Uniform Tax Procedure Code generally providing for waiver of interest or penalty by the tax commission were also amended to provide for the tax commission to enter into voluntary disclosure agreements (UTPC voluntary disclosure agreement) with taxpayers under specified conditions. Taxpayers will be allowed to enter into a UTPC voluntary disclosure agreement if they 1) do not have outstanding tax liabilities other than those reported pursuant to a UTPC voluntary disclosure agreement, 2) have not been contacted by the Oklahoma Tax Commission with respect to the taxpayer’s potential or actual obligation to file a return or make a payment to the state, 3) have not collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes, and 4) have not within the preceding three years entered into a UTPC voluntary disclosure agreement for the type of tax owed by the taxpayer. 

If the tax commission agrees with the proposed terms for payment of the principal amount of tax due and owing, the penalty otherwise imposed by law upon the principal amount of tax shall be waived by operation of law and no further action by the tax commission or by the taxpayer shall be required for the waiver of such penalty amount and 50 percent of the otherwise applicable interest amount shall be waived by operation of law and no further action by the tax commission or by the taxpayer shall be required for the waiver of such interest amount. The tax commission shall limit the period for which additional taxes may be assessed (the lookback period) to three taxable years for annually filed taxes or 36 months for taxes that do not have an annual filing frequency. 

UTPC voluntary disclosure agreements may be denied or nullified by the tax commission if a taxpayer’s failure to report or pay is determined to be the result of a pattern of intentional or gross negligence regarding compliance with the laws. Taxpayers who meet all of the qualifications specified for such a UTPC voluntary disclosure agreement, except they have collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes, may enter into a modified voluntary disclosure agreement (UTPC modified voluntary disclosure agreement.) 

The provisions of a UTPC modified voluntary disclosure agreement shall be the same as a UTPC voluntary disclosure agreement except that 1) waiver of interest shall not apply except as may be optionally granted at the discretion of the Tax Commission, and 2) the period for which taxes must be reported and remitted is extended beyond the three-year or 36-month period (as generally provided for in UTPC voluntary disclosure agreements) to include all periods in which tax has been collected but not remitted.34

District Court Approval of Tax Commission Waiver of Interest and Penalty Exceeding $25,000 

The statute providing for district court approval of tax commission waivers of interest or penalties was amended. The statute will now provide that waiver or remission of all or any part of interest or penalties by the tax commission in excess of $25,000 shall not become effective unless approved by one of the judges of the district court of Oklahoma County after a full hearing thereon. (Pre-existing law provided for required district court approval of a waiver of interest or penalties in excess of $10,000).35

Tax Commission Business Registration and Reporting Program

The tax commission shall establish a program that focuses on educating businesses, as well as identifying and registering businesses who are actively selling or leasing tangible personal property in Oklahoma without a permit as required under 68 O.S. §1364. The tax commission shall monitor and provide education to business owners of their state tax responsibilities. The program shall include the establishment of teams of tax commission employees conducting visits to nonresidential retail businesses to determine the existence of a sales tax permit and other required permits and licenses; verify accuracy and validity of licenses and permits; determine if the business is reporting and remitting taxes properly; and provide information and assistance to the business owner on tax reporting responsibilities. The tax commission shall conduct such visits in a manner that shall not disrupt the operations of a business location.36 

Tax Commission Taxpayer Assistance Program

The tax commission shall be authorized to expend necessary available funds, to publicly advertise the programs and assistance available for the filing of returns and the payment of taxes and education of the tax laws of Oklahoma, including advertising that focuses on social networking services.37 

TAX AND FISCAL POLICY

Tax Incidence Impact Analysis

A statute authorizing analysis of tax incidence of legislation and changes of Oklahoma taxation by the tax commission was enacted. It provides that at the request of the chair of the Finance Subcommittee of the House Appropriations and Budget Committee or the Senate Finance Committee, the tax commission shall prepare an incidence impact analysis of a bill or a proposal to change the Oklahoma tax system which increases, decreases or redistributes taxes by more than $20 million. To the extent data is available on the changes in the distribution of the tax burden that are affected by a bill or proposal, the analysis shall report on the incidence effects that would result if the bill were enacted. The report may present information using system wide measures, such as indexes, by income classes, taxpayer characteristics or other relevant categories. The report may include analyses of the effect of a bill or proposal on representative taxpayers. The analysis must include a statement of the incidence assumptions that were used in computing the burdens. The incidence analyses must use the broadest measure of economic income for which reliable data is available.38 

Incentive Evaluation Act Reporting and Rulemaking

The Incentive Evaluation Act was amended to provide that if the tax commission votes to modify an incentive evaluation provided by the Incentive Evaluation Commission, such modification and the original evaluation of the Incentive Evaluation Commission shall be documented and included in the annual written report of the Incentive Evaluation Commission on its evaluation of tax incentives. The evaluation criteria developed by the Incentive Evaluation Commission shall be through the administrative rule making process pursuant to the Oklahoma Administrative Procedures Act.39 

Tax Commission Employee Background Checks

The tax commission shall be authorized to require tax commission employees in positions that have access to federal tax information and data to supply all information and documentation required in order to be subjected to a criminal history search by the Oklahoma State Bureau of Investigation, as well as to be fingerprinted for submission of the fingerprints through the Oklahoma State Bureau of Investigation to the Federal Bureau of Investigation for a national criminal history check. The tax commission shall be the recipient of the results of the record check to include a national criminal record with a fingerprint analysis.40



1. HB 2348, amending 68 O.S. Supp. 2016 §2358; effective Jan. 1, 2017.
2. HB 2298, amending 68 O.S. Supp. 2016, §2357.32A; effective July 1, 2017.
3. SB 170, repealing 68 O.S. Supp. 2016 §2355.1 G.; effective Nov. 1, 2017.
4. HB 2348, amending 68 O.S. Supp. 2016, §2368; effective Jan. 1, 2017.
5. SB 445, amending 68 O.S. Supp. 2016, §2357.206; effective Nov. 1, 2017.
6. SB 120, amending 68 O.S. Supp. 2016, §§2357.302-2357.304; effective Nov. 1, 2017.
7. SB 225, amending 68 O. S 2011, §2385.26, effective Nov. 1, 2017.
8. HB 1833, amending 68 O.S. Supp. 2016 §2358.7; effective July 1, 2017.
9. HB 1423, amending 68 O.S. 2011, §2368.2, and 68 O.S. Supp. 2016, §2368.19; effective Nov. 1, 2017.
10. HB 1392, amending 29 O.S. Supp. 2016, §3-310; effective Nov. 1, 2017.
11. HB 1392, adding 68 O.S. Supp. 2017, §2368.30; effective Nov. 1, 2017.
12. HB 2433, amending 68 O.S. Supp. 2016, §§1355, 1361, 68 O.S. 2011, §§2106, 1402, 1404; effective July 1, 2017.
13. HB 2367, repealing 68 O.S. Supp. 2016, §1367.1, 68 O.S. 2011, §1410.1; effective July 1, 2017.
14. HB 2131, adding 68 O.S. Supp. 2017, §§2391-2397; effective Nov. 1, 2017.
15. SB 189, SB 353, amending 68 O.S. Supp. 2016, §1356; effective Nov. 1, 2017.
16. SB 353, amending 68 O.S. Supp. 2016, §1356; effective July 1, 2017.
17. HB 353, amending 68 O.S. Supp. 2016, §1356; effective July 1, 2017.
18. HB 353, amending 68 O.S. Supp. 2016, §1356; effective July 1, 2017.
19. HB 2343, amending 68 O.S. Supp. 2016, §1368.3; effective July 1, 2017.
20. HB 2351, adding 68 O.S. Supp. 2017, §2902.5; effective Nov. 1, 2017.
21. SB 293, repealing 68 O.S. §2011, §2902.4; effective Jan. 1, 2018.
22. SB 91, amending 68 O.S. 2011, §3106; effective Nov. 1, 2017.
23. HB 2429, amending 68 O.S. Supp. 2016, §1001(E)(3); effective July 1, 2017.
24. HB 2377, amending 68 O.S. Supp. 2016, §§1001, 1001. 3a; effective July 1, 2017.
25. HB 2356, amending 68 O.S. Supp. 2016, §1208, 68 O.S. 2011, §1210; effective Nov. 1, 2017.
26. HB 2357, amending 68 O.S. 2011, §1212; effective July 1, 2017.
27. SB 845, adding 63 O.S. Supp. 2017 §§1-1525, and 1-1528 – 1-1532; effective Aug. 25, 2017.
28. HB 2358, amending 68 O.S. 2011, §500.22, effective Nov. 1, 2017.
29. HB 1449, adding 47 O.S. Supp. 2017, §1132.7; effective Nov. 1, 2017.
30. HB 2361, adding 68 O.S. Supp. 2017, §1515; effective July 1, 2017.
31. HB 1327, amending 68 O.S. 2011, §804.1; effective Nov. 1, 2017.
32. HB 1427, adding 68 O.S. Supp. 2017, §120; effective Nov. 1, 2017.
33. HB 2380, adding 68 O.S. Supp. 2017, §216.4; effective July 1, 2017.
34. HB 2252, amending 68 O.S. 2011, §220; effective Nov. 1, 2017.
35. HB 2252, amending 68 O.S. 2011, §220; effective Nov. 1, 2017.
36. HB 2380, adding 68 O.S. Supp. 2017, §256.1; effective July 1, 2017.
37. HB 2380, amending 68 O.S. 2011, §256; effective July 1, 2017.
38. HB 2209, adding 68 O.S. Supp. 2017, §291; effective Nov. 1, 2017.
39. SB 154, amending 62 O.S. Supp. 2016, §7005; effective Aug. 25, 2017.
40. SB 292, adding 74 O.S. Supp. 2017, §150.9.1; effective Nov. 1, 2017.


ABOUT THE AUTHOR

Sheppard F. Miers Jr. is a shareholder in the Tulsa office of GableGotwals and practices in the areas of federal and state taxation. The author acknowledges information and assistance he received on the subject of this article from Joanie Raff, legislative analyst of the Oklahoma Senate staff.

Originally published in the Oklahoma Bar Journal -- OBJ 88 pg. 1555 (Aug. 19, 2017)

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