BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  2

DATE:  February 18, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: HB –252 as amended by HTRC

SPONSOR: Representative Gubbels (for Revenue Stabilization and Tax Policy Committee)

BILL SHORT TITLE: Tax Administration Act Technical Amendments

CONFLICTS, DUPLICATES, COMPANIONS:  HTRC amendment #1 reconciles this bill with HB-154.

DESCRIPTION: This bill is Taxation and Revenue Department’s suggestions for improvements in the way the state administers taxes. A complete section-by-section description is included with this review. The predominant impact of the bill is to complete the modernization of references from “director” to “secretary”. This language is a hold-over from the old Bureau of Revenue days, when the director of the revenue division held the adminstrative authority over most liens, levies and seizures. Since the Taxation and Revenue Department has existed since the Executive Reorganization Act in 1978, it probably high time to complete these changes. More substantive provisions change the confidentiality statutes by allowing: (1) a Department employee to release information obtained from public sources; (2) the Department to release tax information to a district attorney or grand jury with respect to any investigation related to an alleged criminal violation of the tax laws; and (3) the Department to release confidential tax information to a third party who has been subpoenaed or levied pursuant to the provisions of the Tax Administration Act. Another change provides statutory authority for an eons-old audit procedure. If the taxpayer’s books and records do not exist or are insufficient to determine the taxpayer’s liability, the Department is authorized to use any reasonable method of estimating the tax liability. The final substantive provision is that the bill adjusts one more time, the details of how long the Department retains jurisdiction over a refund claim and how long a taxpayer has to act.  HTRC made two amendments: (1) included a definition of “managed audit” to conform the bill to the provisions of HB –154, whether HB –154 passes or not; and, (2) requires the Department to divulge and publish audit procedures and policies, but not the criteria whereby taxpayers are chosen for audit. This is also a provision of HB –154.

EFFECTIVE DATE: July 1, 2001

FISCAL IMPACT (Thousands of dollars):  		Note: Parenthesis ( ) indicate a revenue loss:

		Recurring or		
Estimated Impact on Revenues	Nonrecurring	Funds 	
	 FY 2002 	Full Year	     Impact     t     	             Affected          .             	
	0*	0*	Recurring	General Fund	
	0*	0*	Recurring	Local Governments	

These changes will only serve to decrease contentions raised during audits and hearings. On all these issues, the Department has prevailed, but only after sometimes hard-fought battles. In a couple of instances, the bill brings statute into conformance with practice. HTRC amendments do not create any revenue impact.

SECTION BY SECTION DESCRIPTION:

Bill Section	Statutory Reference	
Description and Discussion	
1	7-1-2	Adds Capital Equipment Tax Credit Act (telephone calls centers), Rural Job Credit, Laboratory Partnership with Small Business Tax Credit and Technology Jobs Tax Credit Act to the list of taxes and credits to be administered through the provisions of the Tax Administration Act. The Job Mentorship credit is scheduled to expire next year and has not been included in the list. Rather than list each credit separately in the lengthy list, all similar credits are grouped under one subparagraph number. This will aid in future maintenance of this list.	
2	7-1-3	Now that all references in every section of the tax code have been modernized after the 1978 and 1987 mergers, now obsolete definitions are deleted. HTRC amendment added a definition of “managed audit” to conform to the provisions of HB-154.	
3	7-1-8	Clarifies that a Department employee may release information obtained from public sources without invoking the penalties of the confidentiality section. In the days of easy dissemination of information through the Internet, this restriction has been a slight impediment to administration. Also, the Department may release tax information to a district attorney or grand jury with respect to any investigation related to an alleged criminal violation of the tax laws. The Department may release confidential tax information to a third party who has been subpoenaed or levied pursuant to the provisions of the Tax Administration Act. This is particularly an issue when the Department levies on a third party to discharge an assessment against another taxpayer. 	
4	7-1-11	This change provides statutory authority for an eons-old audit procedure. If the taxpayer’s books and records do not exist or are insufficient to determine the taxpayer’s liability, the Department is authorized to use any reasonable method of estimating the tax liability. 	
5	7-1-26	Adjusts, one more time, the details of how long the Department retains jurisdiction over a refund claim. (1) The one-year period with respect to the denial of a claim for credit under the various tax credits, including Investment Credit Act begins when tax is assessed or the Department sues for recovery. (2) When the claim for refund follows an assessment for taxes owed from more than three years, the claim for refund cannot apply to any period before the earliest period shown on the assessment or for any other tax. This is a two-fold change. First, it authorizes a taxpayer who is being audited to apply for a claim for refund for any period covered in the audit; and it prohibits the taxpayer from using the audit assessment as a pretense of opening even older periods to a claim for refund.	
6	7-1-41	Changes reference from director to secretary. This is a hold-over from the old Bureau of Revenue days, when the director of the revenue division held the adminstrative authority over most liens, levies and seizures.	
7	7-1-42	Changes reference from director to secretary	
8	7-1-43	Changes reference from director to secretary	
9	7-1-45	Changes reference from director to secretary	
10	7-1-46	Changes reference from director to secretary	
11	7-1-47	Changes reference from director to secretary	
12	7-1-48	Changes reference from director to secretary	
13	7-1-49	Changes reference from director to secretary	
14	7-1-52	Changes reference from director to secretary	
15	7-1-53	Changes reference from director to secretary	
16	7-1-56	Changes reference from director to secretary	
17	7-1-57	Changes reference from director to secretary	
18	7-1-71.1	Changes reference from director to secretary	
19	7-1-78	Changes reference from director to secretary	
20		Effective date: July 1, 2001