LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 28, 1997
TO: Honorable Tom Craddick, Chair IN RE: Senate Bill No. 461, Committee Report 2nd House, Substituted
Committee on Ways & Means By: Moncrief
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB461 ( Relating
to the authority of the comptroller to contract for certain
tax collection services.) this office has detemined the following:
Biennial Net Impact to General Revenue Funds by SB461-Committee Report 2nd House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $40,127,000 to General Revenue Related Funds
through the biennium ending August 31, 1999.
The bill would appropriate revenue received from tax audits,
which would vary depending on the amount of revenue received
by the Comptroller for out-of-state audit by contract audit
entities.
Fiscal Analysis
The bill would amend Chapter 111 of the Tax Code to authorize
the Comptroller to contract with an appropriate vendor to develop
and implement an advanced database system to enhance tax collections.
The contract would allow the vendor that developed, implemented,
and maintained the system to receive compensation equal to the
product of the percentage stated in the contract and the amount
of revenue collected from taxpayers by the Comptroller from
audit and enforcement actions taken as a result of cases identified
by the system after all available administrative and judicial
appeals were exhausted. The amount of compensation paid to
a vendor could not exceed the maximum amount, if any, stated
in the contract.
The bill would authorize the Comptroller
to contract with one or more appropriate persons to perform
tax audits in states that are not covered by Comptroller field
offices. The contract would provide that the person performing
the audits receive compensation equal to the product of a percentage
stated in the contract and the amount of revenue collected from
taxpayers by the Comptroller, after all available administrative
and judicial appeals are exhausted, as a result of those audits.
The amount of compensation paid to a vendor could not exceed
12 percent.
The bill would authorize the Comptroller to pay
compensation to vendors under both programs periodically and
at times as specified by contract. The amount of payment calculated
could include money from a case only if it became administratively
final during the period covered by the payment and was not the
subject of litigation at the end of the period. The bill would
allow a vendor to receive compensation only through warrants
issued or electronic funds transfers initiated by the Comptroller.
Payments would be accounted for as a subtraction from tax collections
and not as a general expense of the Comptroller.
The bill
would appropriate the revenue resulting from tax audits conducted
under the bill to the Comptroller for the fiscal biennium ending
August 31, 1999. The Comptroller could use this appropriation
only to pay contract expenses and the Comptroller s direct administrative
costs associated with those contracts. Any amounts that exceed
the amount necessary to pay these expenses and costs would be
transferred to the General Revenue Fund or any dedicated or
special funds to which the excess amount belonged.
Methodolgy
The state would receive additional revenue from audit payments,
collections through enforcement actions, and enhanced voluntary
compliance. Deployment of more auditors to conduct audits in
other states also would generate additional revenue.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable Revenue
Gain/(Loss) from
General Revenue
Fund
0001
1998 $3,210,000
1998 36,917,000
2000 47,328,000
2001 59,567,000
2002 74,665,000
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $3,210,000
1999 36,917,000
2000 47,328,000
2001 59,567,000
2002 74,665,000
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
If a taxpayer, delinquent in state taxes, was also delinquent
in local taxes, the comptroller would attempt to collect the
delinquent local taxes on behalf of the appropriate locality
or localities. The comptroller would not attempt to collect
delinquent local taxes from a taxpayer who was not also delinquent
in state taxes. Consequently, the potential exists for units
of local government to receive a revenue gain due to increased
collection of delinquent local taxes.
Source: Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK ,RR ,RN