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Senate panel approves technical tax-administration bill moving franchise tax duties to DFA
Summary
The Senate Revenue & Tax Committee approved Senate Bill 561, adopting an amendment and approving several tax-administration changes recommended by the tax-reform task force, including moving franchise tax collection from the Secretary of State to the Department of Finance and Administration (DFNA).
The Senate Revenue & Tax Committee on Dec. 6 approved Senate Bill 561, a package of mostly technical measures aimed at streamlining tax administration.
Senator Hendren, the bill’s presenter, told the committee the bill implements several recommendations from the tax reform task force that studied state tax code over two years. “This is not very exciting stuff and it’s not very expensive stuff but it’s stuff that will make our tax code better,” he said during the committee hearing.
Key provisions in the bill transfer primary responsibility for collecting the franchise tax from the Secretary of State’s office to the Department of Finance and Administration. Sponsor testimony said DFNA is better equipped to collect and reconcile unpaid taxes and that the bill requires DFNA to provide proof-of-payment notices to the Secretary of State. The change also authorizes limited DFNA disclosures to the Secretary of State to verify franchise-tax payments.
The bill also directs the Assessment Coordination Division to issue standardized guidelines for counties on property-tax compliance and how to determine exemptions, a change intended to reduce variation in county processes. An amendment adopted during committee replaces a proposed sanction of withholding county general-revenue turnbacks with withholding funds from the property-tax relief (assessors’) fund for a noncompliant county.
Sponsor testimony described a new DFNA reporting requirement: DFNA must submit a biennial review of tax exemptions, credits and deductions that analyzes revenue loss and the statutory basis for each showing whether the exemption remains justified.
Other, smaller provisions include harmonizing the tax treatment of certain outdoor advertising on buses with billboard advertising and tightening compliance for agricultural all-terrain-vehicle exemptions by requiring disclosures subject to audit.
After adoption of an amendment offered in committee, a motion to pass the bill carried on a voice vote. The chair announced that Senate Bill 561 passed as amended.
