Honorable Jane Nelson, Chair, Senate Committee on Finance
Jerry McGinty, Director, Legislative Budget Board
HB1258 by Ashby (Relating to data matching with financial institutions to facilitate the collection of certain delinquent tax liabilities.), As Engrossed
Estimated Two-year Net Impact to General Revenue Related Funds for HB1258, As Engrossed : a positive impact of $38,480,000 through the biennium ending August 31, 2023.
Additionally, the bill will have a direct impact of a revenue gain to the Property Tax Relief Fund of $1,530,000 for the 2022-23 biennium. Any gain to the Property Tax Relief Fund will result in an equal amount of savings to the General Revenue for funding the Foundation School Program.
General Revenue-Related Funds, Five- Year Impact:
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
All Funds, Five-Year Impact:
Probable Revenue Gain from General Revenue Fund 1
Probable Revenue Gain from Property Tax Relief Fund 304
The bill would amend Chapter 111 of the Tax Code, relating to data matching with financial institutions to facilitate the collection of state delinquent tax liabilities.
The bill allows the Comptroller to request that financial institutions search their systems for delinquent taxpayers with accounts at those institutions. Search criteria can include account holder names, social security numbers, or federal employer identification numbers. Reports from the financial institution to the Comptroller would contain account types and amount of funds within accounts.
The Comptroller's Enforcement division would incorporate the record match information into current enforcement processes by targeting the matched accounts for freeze action, significantly improving efficiency, and increasing return on delinquent tax collections.
The bill would take effect September 1, 2021.
The bill would bring an estimated additional $13.37 million to the treasury for fiscal year 2022, and an additional $26.64 million for fiscal year 2023. The estimate is based on the conservative end of success rates from five other states that have implemented similar programs. Under the provisions of the bill, it is estimated that of the 67,698 freezes issued in fiscal year 2019, an additional 6,326 would have been successfully captured, with an average amount of $4,248 per capture, resulting in a gain of $26.87 million. As a result of initial program implementation, partial effects would occur in fiscal 2022.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.