LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              March 28, 1999
  
  
          TO:  Honorable Bill Ratliff, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1319 by Ratliff (relating to tax auditing and
               collection procedures), As Introduced
  
**************************************************************************
*  Estimated Two-Year Net Impact to General Revenue Related Fundsfor     *
*  SB1319, As Introduced:  positive impact of $27,300,000 through the    *
*  biennium ending August 31, 2001.                                      *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                           $8,200,000  *
          *       2001                           19,100,000  *
          *       2002                           27,305,000  *
          *       2003                           27,305,000  *
          *       2004                           27,305,000  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***************************************************************************
*Fiscal      Probable        Probable        Probable        Probable     *
* Year       Revenue         Revenue         Revenue         Revenue      *
*          Gain/(Loss)     Gain/(Loss)     Gain/(Loss)     Gain/(Loss)    *
*          from General    from Cities     from Transit   from Counties   *
*          Revenue Fund                    Authorities     and Special    *
*              0001                                         Districts     *
*  2000        $8,200,000      $1,430,000        $562,000        $173,000 *
*  2001        19,100,000       3,331,000       1,308,000         403,000 *
*  2002        27,305,000       4,762,000       1,870,000         577,000 *
*  2003        27,305,000       4,762,000       1,870,000         577,000 *
*  2004        27,305,000       4,762,000       1,870,000         577,000 *
***************************************************************************
  
Fiscal Analysis
  
The bill would partially implement recommendation GG1 from the
Comptroller's report "Challenging the Status Quo:  Toward Smaller,
Smarter Government."  The bill would allow taxpayers to self-audit under
certain conditions.  Penalty and interest on delinquent taxes found
through self-audits would be waived.  Taxpayers would be entitled to
refund of tax overpayments found through self-audit.

The bill would allow the Comptroller to implement a system under which
suitable taxpayers could report taxes based on percentages calculated
from a sample of transactions.

The bill would allow a person making a claim for a sales tax refund to
take a credit against sales taxes due in the amount of the refund claim.
This provision would be an exception to the current prohibition on a
taxpayer applying for a refund for taxes erroneously or illegally
collected from another person and not refunded to that person.
  
  
Methodology
  
The estimates are based on Comptroller's assumption that self-audits and
percentage-based reporting would result in more productive redirection
of 5% of audit hours in 2000-01 and 10% of audit hours thereafter.
  
  
Local Government Impact
  
The estimates of local tax gains assume that the redirected audits will
be sales tax audits which would result in increased local sales tax
collection proportional to the state gains.
  
  
Source Agencies:   
LBB Staff:         JK, BB, RS