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Committee gives do‑pass to broad Taxation & Revenue cleanup bill updating penalties, disclosure rules
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Summary
House Bill 198, a Taxation & Revenue Department package updating penalties, elevating unlawful disclosure of taxpayer information and adjusting penalty amounts for inflation, received a committee do‑pass after department officials explained collection gains and provisions allowing limited waivers for interest and penalties.
The House Taxation & Revenue Committee voted to give House Bill 198 a do‑pass recommendation after hearing department officials describe a package of technical changes that update penalty amounts, tighten disclosure rules, and modernize collection authorities.
The bill, presented by department staff, would adjust multiple penalty amounts in the tax code for inflation, elevate unlawful disclosure of confidential tax information from a misdemeanor to a felony to match federal law, and create limited administrative authorities to waive small penalties or interest in certain circumstances, department officials said. "The bill will... adjust several penalties contained in the tax code for inflation" and would "elevate unlawful disclosure of confidential tax information from misdemeanor to felony," the department's presenter said in committee.
Taxation & Revenue Secretary Charlton Clark and Deputy Secretary Aisha Mora answered committee questions. Clark said recent investments in collection analytics — referenced in testimony as the department's C2 collection services project — have increased collections. "We are over our percentage of collections for that performance measure currently by about 17%. I believe we're at about a $190,000,000 so far this fiscal year," Clark told the committee.
Members asked about the size of the state’s remaining tax gap and the effect of raising penalties. Department witnesses said some tax programs (personal income tax and certain licensing‑linked taxes) have high compliance and that the department will provide more detailed tax gap estimates by program. Deputy Secretary Mora told the committee that, for example, the department estimates the personal income tax compliance gap is low — "less than 2 percent" — where it has robust data.
Lawmakers raised concerns about criminal penalties in the bill. Representative Duncan pointed out an apparent mismatch: the bill proposes raising the fine for assault and battery on a department employee to $5,000, while the criminal sentencing statutes limit a petty misdemeanor fine to $500. Department officials said the penalty increases were computed by adjusting historic amounts for inflation and that the department is open to aligning statutory cross‑references.
On taxpayer relief, the bill includes language allowing the department to forego interest where a failure to pay results from a good‑faith mistake of law and gives the secretary discretion to waive penalty and interest in small protest cases (department testimony noted a $50 administrative threshold for expedited waiver in certain cases). Representative Patahoehn and others framed the provision as a tool to reduce protests over small interest amounts and ease taxpayer burden.
After questions from committee members about enforcement and the justification for criminal disclosures and penalty increases, a member moved to pass the bill; the motion was seconded and the chair announced House Bill 198 had a do‑pass recommendation from the committee.
Committee members and department officials said they would continue to provide technical detail to members and follow up on specific items such as cross‑statutory fine limits and program‑level tax gap estimates.
Votes at a glance: Committee moved to pass House Bill 198; the chair announced the motion carried and the bill received a do‑pass recommendation.
