Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB1871 by Bonnen, Greg (Relating to the duty of the comptroller to report sales and use tax information to certain taxing entities.), As Engrossed
Estimated Two-year Net Impact to General Revenue Related Funds for HB1871, As Engrossed: a negative impact of ($16,610,000) through the biennium ending August 31, 2017.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016
($8,305,000)
2017
($8,305,000)
2018
($8,305,000)
2019
($8,305,000)
2020
($8,305,000)
Fiscal Year
Probable (Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2015
2016
($8,305,000)
98.0
2017
($8,305,000)
98.0
2018
($8,305,000)
98.0
2019
($8,305,000)
98.0
2020
($8,305,000)
98.0
Fiscal Analysis
The bill would amend Section 321.302 of the Tax Code, regarding municipal sales and use taxes.
The bill would direct the Comptroller to include in reports to a municipality information on amounts of tax received as well as amounts due from certain taxpayers and to respond within 120 days to a report by a municipality that a person has not fully collected or reported taxes. A report by a municipality regarding incomplete collection or reporting of tax by a taxpayer would be required to include a statement of facts and legal authorities supporting the municipality's determination.
The response to the municipality, if in relation to delinquent tax, would include: a description of the Comptroller's collection actions with respect to any tax due and the date and periods covered by the most recent audit of the person by the Comptroller or a statement that the Comptroller has not audited the person; or a certification that the person is obligated to pay municipal tax, the periods for which the person is obligated, and a statement as to whether the tax due has been credited to the municipality's account.
The bill would further provide for the Comptroller to set and collect reasonable fees for compiling and providing information, for the information received by a municipality under the section to be confidential, and for a municipality to preserve the right to receive any tax due to the municipality for the four years preceding the report by a municipality and for each subsequent period.
The bill would take effect September 1, 2015.
Methodology
The administrative cost estimate reflects the funds that would be necessary to establish a new division within the CPA that would process, audit, and litigate refund redeterminations on behalf of local jurisdictions.
The bill authorizes a municipality to request a statement resulting from their review of an enhanced quarterly report of delinquent taxpayers and requires the agency to provide a statement that includes a description of the action the comptroller is taking to collect the delinquent tax, the periods for which the person is obligated, and whether the tax due has been credited to the municipality's account. CPA is required to respond to any period of any taxpayer questioned by a municipality and requests could number in the thousands for one given municipality. There are 1152 sales tax cities and 363 Special Purpose Districts that could challenge Comptroller reports and determinations. In addition, there have been up to 100 taxpayers per month that have tax reallocated between cities, and cities may be able to challenge the tax reallocations under this bill. The agency would also be responsible for assisting in the audit training of municipalities, receiving redetermination requests for contested audits, and assisting in the hearings process.
Local Government Impact
There could be an indeterminate amount of sales and use tax reallocations between local taxing jurisdictions.