Oklahoma tax commission waiver request

Oklahoma tax commission waiver request DEFAULT

Waiver of Oklahoma Tax Penalties and Interest

The Oklahoma Tax Commission (“OTC”) imposes tax penalties and interest on delinquent taxes. Interest accrues at 1.25% per month from the date of tax delinquency until paid in full. In addition, a tax penalty of at least 10% shall be added. If the OTC determines negligence caused the tax delinquency, they may assess greater tax penalties up to 25%. If fraud and intent to evade causes the tax deficiency, the OTC may impose up to a 50% tax penalty in addition to the delinquent tax owed and monthly interest.

In certain situations the OTC enters into agreements to compromise tax penalties and interest. When the OTC considers a waiver request, it looks at several factors: whether the interest and tax penalties will result in bankruptcy, whether the interest and tax penalties are uncollectible due to insolvency, whether the tax liability was caused by others and it would be inequitable to hold the taxpayer liable, and whether the taxpayer failed to collect from its customers trust fund taxes (such as sales tax) and the taxpayer had a good faith belief that collection was not required. The OTC will also consider whether the taxpayer benefited from the nonpayment of taxes, whether the taxpayer received an economic benefit from the failure to timely pay, and if the taxpayer made good faith efforts to comply with tax laws.

If the Oklahoma Tax Commission levies interest and tax penalties on delinquent taxes, a taxpayer may timely protest the amount. In response to a protest, an abatement of tax liability can occur by unanimous vote of the members of the OTC pursuant to 68 O.S. Section 219.1. The OTC’s protest decision shall be discretionary and final.

If the OTC grants an abatement of tax penalties and interest, and the amount is in excess of $10,000, the agreement is not effective until it has been approved by an Oklahoma county district judge after a hearing. The district court judge is assigned to the matter by the chief judge on a rotating basis.

If you obtain a waiver order from the OTC in excess of $10,000 waving interest and tax penalties pursuant to 68 O.S. § 220, contact our firm to obtain court approval of the tax abatement. Our lawyers can file the necessary petition, have the matter set for hearing, and attend the hearing to obtain proper judicial consent for the waiver of tax penalties and interest.

By Jeremy Ward
918-764-3126
[email protected]

Sours: http://tulsalawyer.com/transactional/waiver-oklahoma-tax-penalties-interest/

Cite as: 2009 OK 75, __ P.3d __

FEATHER SMOKE SHOPS, LLC v. OKLAHOMA TAX COMMISSION
2009 OK 75
Case Number: 106247
Decided: 09/29/2009

THE SUPREME COURT OF THE STATE OF OKLAHOMA



FEATHER SMOKE SHOPS, LLC, Plaintiff/Appellee,
v.
OKLAHOMA TAX COMMISSION, Defendant/Appellant.

APPEAL FROM THE DISTRICT COURT OF OSAGE COUNTY, OKLAHOMA

HONORABLE B. DAVID GAMBILL, JUDGE

VACATED AND REMANDED FOR FURTHER PROCEEDINGS

Douglas B. Allen, Larry D. Patton, Oklahoma Tax Commission, Oklahoma City, Oklahoma, for Appellant,
Gentner F. Drummond, Anne M. Zimmerman, Tulsa, Oklahoma, for Appellee.

OPINION

WATT, J.:

?1 In this case we are asked to determine whether the trial court exceeded its jurisdiction and abused its discretion when it entered a temporary injunction against the State of Oklahoma, by and through the Oklahoma Tax Commission (OTC). The Plaintiff is Feather Smoke Shops, LLC, (Feather) an Oklahoma limited liability company with its principal place of business located in Osage County, Oklahoma. Feather is a tribally licensed retailer of the Osage Nation (Tribe) with a license to sell cigarettes and tobacco products for resale. It is also a holding company for three smoke shops in Osage County1 and for other shops in different counties. The injunction entered by the trial court prevents the OTC from collecting and enforcing a payment in lieu of excise tax on the sale of cigarettes and tobacco products at Feather's Osage County shops at the rate of $8.58 per carton (.8575 per pack), instead of $2.58 per carton (.2575 per pack), which Plaintiff contends is the correct rate. We find the trial court was without jurisdiction to enter the injunction. We vacate the injunction and remand for further proceedings.

BACKGROUND AND THE ENACTMENT OF 68 O.S. ?346

?2 The dispute in this case arises out of the rights and duties of the parties under the "Tobacco Tax Compact Between the State of Oklahoma and the Osage Nation" (Compact), which became effective December 16, 20032 The authority for the Compact derives from the State Legislature's enactment of 68 O.S. Supp. 1992 ?346,(amended 2004),< SUP>3 following the United States Supreme Court's decision in Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 111 S.Ct. 905, 112 L.Ed.2d 1112 (1991).4 The Court considered whether the State of Oklahoma could legally sue the Tribe for taxes on sales of cigarettes and tobacco products, sold either to members or nonmembers of the Tribe, at its tribal stores within Oklahoma. The Court found the doctrine of tribal sovereign immunity prohibited the State from bringing a lawsuit against the Tribe to collect state taxes on sales to either members or nonmembers of the Tribe, absent the Tribe's waiver of immunity or Congressional abrogation of the doctrine. Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 510, 111 S.Ct. 905, 910. However, the Court held the Tribe's sovereign immunity did not deprive the State of its authority to tax sales to nonmembers of the Tribe at the Tribe's store. 498 U.S. at 512, 111 S.Ct. at 911. Moreover, the Court reiterated that tribal sellers have an obligation to assist the State in the collection of valid state taxes on sales to nonmembers at Indian stores on reservation lands. Id., citing Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134, 100 S.Ct. 2069, 65 L.Ed.2d 10 (1980) and Moe v. Confederated Salish and Kootenai Tribes of Flathead Reservation, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976). Additionally, the Court suggested alternative methods for collection of taxes on sales to nonmembers of the Tribe. One such method was the adoption by the State and Tribe of "a mutually satisfactory regime for the collection of this sort of tax," Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe, 498 U.S. at 514, 111 S.Ct. at 912, citing 48 Stat. 987, as amended, 25 U.S.C. ? 476. In response, our Legislature enacted 68 O.S. Supp. 1992 ?346. See ?346(A)(3).5

THE COMPACT

?3 The Compact, effective December 16, 2003, provides the Tribe will pay 25% of all applicable excise taxes6 which were effective as of January 1, 2003, and 100% of all increases enacted by the State after January 1, 2004, with exceptions noted. At the time the Compact was executed, the 25% rate was $2.58 per carton of ten packs ($.2575 per pack). See Compact, ?3.7 However, the compact provided that the Tribe would not be required to pay the increase in Oklahoma taxes after January 1, 2004, in the following cases:

1. At any of its retail businesses within 20 miles of the Kansas state line until Kansas increases its taxes on tobacco products [emphasis added];

2. At its existing retail business on Highway 99 in Pawhuska and at a future retail business to be located "on the corner of 15th Street and Highway 99 in Pawhuska until Kansas increases its tax on tobacco products;8 [emphasis added] and

3. On products bought and sold at any of its retail businesses within 10 miles of a retail business which:

(a) was in operation on January 1, 2003,
(b) was owned by a tribe subject to a compact,
(c) under which the Tribe was obligated to pay only 25% of all applicable excise and sales taxes,

until such tribe's compact terminates or is cancelled by mutual agreement of the parties. [emphasis added].

Compact, ?3.

?4 Another provision of the Compact which could affect the rate required from the Tribe is paragraph 16, informally referred to as the "favored nation clause," (FNC). It provides:

16. Should the State at some future date enter into a tobacco tax compact with another Indian tribe with terms more favorable to the other Indian tribe than those in this compact, such more favorable terms may, at the option of the Nation, automatically be incorporated herein.

?5 After the Compact became effective, the Tribe, through its Principal Chief Jim Gray, sent a letter dated December 3, 2004, via FAX to the OTC, advising it of more favorable provisions included in later executed compacts. These compacts contained a lower tax rate for the other tribes which were located within 20 miles of another state's border, as well as more favorable terms for shops within 10 miles of other tribes' shops. In particular, the Chief noted Choctaw Nation smoke shops located within 20 miles of the Texas border, pay $.58 per carton. Because the Choctaw Nation's Compact contains savings clauses identical to those in the Osage Compact,9 the Chief asserted the Tribe's right to pay the tax at the $.58 per carton rate ($.0575 per pack).

?6 Also noted in the letter were references to later executed compacts between the State and the Cherokee Nation, the absentee Shawnee Tribe, the Iowa Tribe and the Seminole Nation. The alleged "more favorable" provision in the later compacts related to the distance between shops of different tribes, similar to the Osage Compact's provision saving the Tribe from incurring Oklahoma's 2004 tax increase.10 The Chief advised the OTC that the 10 mile provision in its Compact was enlarged to 35 miles in the compacts mentioned. The letter, admitted as Defendant's Exhibit 6 at the hearing on the injunction, provided as follows:

[S]ubsequent to the execution of the Osage Compact, several tribes signed Compacts under which the ten-mile barrier was extended to thirty-five miles. In particular, the Cherokee Nation Compact executed on February 9, 2004, extends the ten-mile barrier to thirty-five miles for twenty-eight Cherokee smoke shops, presumably because these smoke shops could not come within the ten-mile limit. In addition, the absentee Shawnee Tribe's Compact executed January 14, 2004 also provides for a thirty-five mile barrier for its facility located in Norman, Oklahoma. The other two Shawnee smoke shops are within the ten-mile barrier. I note as well that both the Iowa Tribe and Seminole Nation have thirty-five mile barriers for designated smoke shops. It is our position that the thirty-five mile barrier is automatically incorporated into the Osage Compact pursuant to Section 1611 of the Compact . . . . [emphasis added].
. . .
Accordingly, the Tribe is automatically incorporating the thirty-five mile barrier into its Compact for those shops that are unable to come within the ten-mile barrier.

?7 At the hearing, OTC's witness testified, and it is stated in its briefs, that the OTC considered Exhibit 6 an amendment to the Compact, thus incorporating the exception rate ($.58 per carton) and the 35-mile barrier between shops into the Compact.12 This apparently continued until July 17, 2008, at which time the OTC notified Plaintiff that the applicable rate for Feather and its shops would change from the exception rate ($.0575/pack, $.58/carton) to the "new compact rate" ($.8575/pack, $8.58/carton). The stated reason for the change was the termination of the Pawnee Tribe's compact which resulted in the "non-compact" ($.7725/pack) rate for the Pawnee Tribe.

?8 Plaintiff then filed this declaratory judgment action, pursuant to 12 O.S. Supp. 2004 ??1651-1657, alleging the OTC's actions violated the U.S. and Oklahoma Constitutions. Plaintiff also sought injunctive relief, asking the court to order OTC to apply the tax rate of 25% of all applicable excise taxes, Plaintiff's last legal compact rate.

?9 Feather contends OTC's actions violate the compact under the favored nation clause (FNC) provision of the Compact, which would entitle the Tribe's shops to the most favorable tax rate enjoyed by another tribe. Feather contends the most recent such compact is the Kaw Nation Compact.

SUBJECT MATTER JURISDICTION

?10 The above discussion about the Compact is necessary to consider our jurisdictional issue. The OTC alleges the trial court lacked subject matter jurisdiction to enter the injunction and that federal arbitration is required instead. Plaintiff argues the state district court properly exercised jurisdiction and correctly found that the relief ordered was necessary. Oklahoma's jurisprudence undoubtedly acknowledges arbitration as a valid means of settling disputes, as well as the jurisdiction of our state district courts to issue an injunction. In this case, however, the Compact contains an agreement between the Tribe and the State which determines this jurisdictional question.

?11 Paragraph 11 of the Compact provides the following:

Any dispute arising in the interpretation or performance of this Compact, which is not resolved by good faith negotiations within thirty (30) days, shall be subject to binding arbitration. Arbitration may be invoked by either party following the negotiation period should the dispute remain unresolved. Arbitration shall be the exclusive means of resolving such disputes subject only to review by the United States District Court having jurisdiction and venue. When arbitration is invoked, a panel of arbitrators consisting of three (3) members shall be appointed. One shall be appointed by the nation and one by the State. A third shall be appointed by the other two members. The expenses of arbitration shall be born equally by the parties. The arbitrators shall adopt their own procedural rules regarding the arbitration process in conformity with the rules of the American Arbitration Association. [emphasis added].

?12 The role of this Court is to determine whether there is a valid, enforceable agreement to arbitrate the dispute which is governed by principles of state law. Rogers v. Dell Computer Corporation,2005 OK 51, 138 P.3d 826, citing Wilkinson v. Dean Witter Reynolds, Inc., 1997 OK 20, ?9, 933 P.2d 878, 880. [citations omitted]. No evidence exists that the agreement itself to arbitrate certain disputes is invalid. The Federal Arbitration Act, 9 U.S.C. ??1-16 (2000) (FAA), applies to contracts affecting interstate commerce. See Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 269, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Under the FAA, the question of the contract's validity as a whole is submitted to arbitration. Rogers v. Dell Computer Corporation, 2005 OK 51, ?13, 138 P.3d 826, 829, citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 405, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). The FAA does not preempt state law unless the Congressional purposes and objectives embodied therein are frustrated. Rogers v. Dell Computer Corporation, ?12, at 829, citing Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 477, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989).

?13 In this case, the parties appear to differ as to how to interpret a compact which has incorporated more favorable terms from the compact of another Tribe when the other Tribe's compact has terminated. The OTC contends the assessed tax increase for the Osage Tribe is due to the termination of the Pawnee Nation's compact. At different times the OTC has argued the exception rate ($.58/carton) and the extended mileage barrier (from 10 miles to 35 miles) between shops were incorporated into the Osage compact because of the Pawnee Nation's Compact. However, OTC witness McConville stated the OTC considered the mileage barrier in the Osage Compact to have been amended by Exhibit 6 which incorporated the terms of the Cherokee compact. Exhibit 6 itself purports to amend the tax rate to $.58/carton because of the Choctaw compact. Feather contends the Kaw Nation's most recent compact of July 24, 2008, with a rate of $.2575/pack, $2.58/carton, should determine its rate.13 Does the tax rate return to the original rate in the compact, or may the compact be affected by the termination of a totally different Tribe's compact? The proper tax rate issue also certainly affects the Tribe's performance under the compact, as Feather, a licensed retailer, alleges it is unable to compete with shops paying only $.58 per carton, as opposed to its assessment of $8.58 per carton. Moreover, we note the Tribe's compact does not terminate on its own terms until 201314 and that the State and the Tribe have not cancelled the compact by mutual agreement. There was also testimony that Kansas had not raised its taxes on tobacco products, a factor which avoids raising the Tribe's rates under the compact. Therefore, a possible interpretation of the Compact is that the original price of $2.58 per carton should be resumed.

?14 As to OTC's other jurisdictional allegations, it argues that it is not the real party in interest because it does not set or levy the tax due; it only collects and enforces the payment of the tax due. It also claims that White Feather, a shop allegedly cancelled on January 18, 2008 at Feather's request, is not the appropriate party to bring the action. However, as noted above, Feather, the Plaintiff, is the holding company for three Osage shops which are affected by OTC's actions. Feather is an Osage licensed tribal retailer, operating by and through its principal, under the jurisdiction of the Osage Nation, and the Compact applies to the Osage Nation's licensees, known as Tribal Retailers. Additionally, the OTC represents the State in this case as the party which enforces the appropriate tax rate. It is, in fact, specifically mentioned in 68 O.S. ?346, in which wholesalers are required to forward to the OTC all invoices of their sales to retailers. Additionally, the amendment to ?346 provides that the OTC "shall" regularly conduct audits of those selling cigarettes and tobacco to the tribes.

?15 We find the resolution of this case is governed by the terms of this Compact. Section 11 requires submitting issues related to the "interpretation or performance" of the Compact to federal arbitration. We therefore hold the trial court did not have jurisdiction to enter the temporary injunction. The Tribe and the State agreed to federal arbitration under these circumstances, and we will not rewrite the compact. In fact, the letter of December 3, 2004, from Chief Gray to the OTC contains an acknowledgment that arbitration is a possibility. The letter provides in the last paragraph, in part:

[I]f you do not agree with our analysis as set forth in this letter, please let me know immediately so that we can attempt to come to a consensus and negotiate in good faith in accordance with Section 1115 of the Compact.... [emphasis added.]

?16 The injunction is vacated, and this case is remanded to the trial court for further proceedings in accordance with the views expressed in this opinion.

VACATED AND REMANDED FOR FURTHER PROCEEDINGS.

EDMONDSON, C.J., TAYLOR, V.C.J., HARGRAVE, OPALA, KAUGER, WATT, WINCHESTER, COLBERT, JJ. - concur

REIF, J. - concurs in part, dissents in part

FOOTNOTES

1 At issue here are Feather's shops in Osage County, White Feather Smoke Shop in Sand Springs and Little Feather Smoke Shop in Hominy, Oklahoma, and Firewalker Smoke Shop in Tulsa, Oklahoma, which is also operated by Feather. Although White Feather is the only shop included on the petition, Feather seeks relief for all three shops, claiming OTC's actions had adverse effect on the other two Osage shops. Feather's witness testified that the only licensed retailer of the Tribe at the time of the hearing was Little Feather.

2 A termination date, subject to certain exceptions, of June 30, 2013, is included in the Compact.

3 The current statute, 68 O.S. Supp. 2004 ?346, is substantially similar to the 1992 statute which was in effect at the time the State and Tribe executed the Compact. The major differences are the addition of ?346(C)(3), giving a penalty to the Tribes for non-compliance with all terms of the Compact; and ?346(D), granting the Tax Commission the authority to conduct regular audits of wholesalers, distributors, jobbers and warehousemen which sell cigarettes or tobacco products to the Tribes. See note 4, infra. The current statute has been referred to by the parties without specific citation.

4 Title 68, section 346, Oklahoma Statutes (Supp. 2004) provides:
A. The Legislature finds that:

1. Federal law recognizes the right of Indian tribes or nations to engage in sales of cigarettes and tobacco products to their members free of state taxation;

2. The doctrine of tribal sovereign immunity prohibits the State of Oklahoma from bringing a lawsuit against an Indian tribe or nation to compel the tribe or nation to collect state taxes on sales made in Indian country to either members or nonmembers of the tribe or nation without a waiver of immunity by the tribe or nation or congressional abrogation of the doctrine; and

3. The Supreme Court of the United States, in "Oklahoma Tax Commission v. Citizen Band Pottawatomie Indian Tribe of Oklahoma", suggested that a state may provide other methods of collection of state taxes on sales of cigarettes and tobacco products made by Indian tribes or nations to persons who are not members of the tribe or nation, such as entering into mutually satisfactory agreements with Indian tribes or nations.

B. It is the intent of the Legislature to establish a system of state taxation of sales of cigarettes and tobacco products made by federally recognized Indian tribes or nations or their licensees, other than such tribes or nations which have entered into a compact with the State of Oklahoma pursuant to the provisions of subsection C of this section, under which the rate of payments in lieu of state taxes is less than the rate of state taxes on other sales of cigarettes and tobacco products in order to allow such tribes or nations or their licensees to make sales of cigarettes and tobacco products to tribal members free of state taxation.

C. The Governor is authorized by this enactment to enter into cigarette and tobacco products tax compacts on behalf of the State of Oklahoma with the federally recognized Indian tribes or nations of this state. The compacts shall set forth the terms of agreement between the sovereign parties regulating sale of cigarettes and tobacco products by the tribes or nations or their licensees in Indian country. All sales in Indian country by those compacting tribes or nations and their licensees shall be exempt from the taxes levied pursuant to the provisions of Section 301 et seq., Section 401 et seq. and Section 1350 et seq. of Title 68 of the Oklahoma Statutes and Sections 349 and 425 of this title, subject to the following terms and conditions:

1. A payment in lieu of state sales and excise taxes, as provided for in said compact, shall be paid to the State of Oklahoma by the tribes or nations, their licensees or their wholesalers upon purchase of all cigarettes and tobacco products intended for resale in Indian country by the tribes or nations or their licensees;

2. All cigarettes and tobacco products sold or held for sale to the public, without distinction between member and nonmember sales, shall bear a payment in lieu of tax stamp evidencing that payment in lieu of state taxes has been paid to the state. State and tribal officials may provide for use of a single joint stamp evidencing payment of both the payment in lieu of tax as specified in a compact pursuant to the provisions of this section and any tax levied by a tribe or nation;

3. In the event that a compacting tribe or nation fails to comply with all terms and conditions of the compact including, but not limited to, requirements to include all state taxes required by the terms of the compact to be collected by the tribe or nation in the price of its cigarettes or tobacco products, the tribe or nation shall not be eligible to receive any payment due from the state pursuant to the terms of the compact for the tax-reporting period during which the noncompliance occurred;

4. Records of all sales of cigarettes and tobacco products to the tribes or nations and their licensees shall be kept by all wholesalers doing business in the State of Oklahoma and shall be made available for inspection by state officials on a timely basis. Copies of all invoices of wholesale sales of cigarettes or tobacco products to tribally owned or licensed retail stores shall be forwarded by the wholesaler to the Oklahoma Tax Commission; and

5. For purposes of a compact pursuant to the provisions of this section, the term "tribal licensee" shall only extend to:

a. members of the tribe or nation, and

b. business entities in which the tribe or nation or tribal members have a majority ownership interest.

D. In addition to any other authority granted by law, the Tax Commission shall regularly conduct an audit of wholesalers, distributors, jobbers and warehousemen selling cigarettes or tobacco products to a federally recognized Indian tribe or nation or a tribally owned or licensed store to determine if the correct amount of tax payable under this act has been collected and to determine compliance with any and all compacts.

5 See note 4, supra.

6 This tax rate is known as the "original compact rate." See OAC 710:70-7-8(b)(2), Oklahoma Administrative Code, which provides:

(2) Original compact rate. The original compact rate is 25.75 cents per pack. This rate applies to sales made by tribes or their licensees with an existing compact with the State of Oklahoma in which the tax rate is specified as twenty-five percent (25%) of the rate applied to non-tribal sales.

7 The Compact also provides that the increase in tax under the compact will not be effective until the effective date of the increase in tax for non-tribal retailers.

8 Once the increase is effective, the Tribe shall pay on all sales within 20 miles of the state line the lesser of:

a. Increases enacted by Oklahoma after January 1, 2004; or

b. A sum equal to increase in tobacco taxes by Kansas which are applicable to non-tribal sales in Kansas.

9 See paragraph 3, supra, of this Opinion.

10 See paragraph 3, supra, of this Opinion.

11 Paragraph 16 of the Compact is set out at ?4, supra, of this Opinion.

12 Janine McConville testified in her capacity as a "revenue unit manager" with the OTC. She testified that based on the OTC's receipt of Exhibit 6 and consultation with the Governor's office, the OTC "allowed the Favored Nation clause of the Cherokee [compact] to be used for the Osage, which adjusted several of the Osage shops to - from a 10-mile radius to, I believe it's a 35-mile radius of any tribal outlet that has a better rate from another nation." [emphasis added]. She agreed that Exhibit 6 was treated as an amendment to the Osage Compact.

Counsel for the OTC stated at the hearing: "This shop was, until July 17, an exception rate retailer. It got that exception rate pursuant to the compact by being within a certain distance of an old or original rate location of another tribe. In this case, it was the Pawnee." [emphasis added].

13 The OTC issued a notice to wholesalers on July 25, 2008, advising them that the new Kaw Nation Compact was designated as the "State/Tribal Kansas Border" rate of $0.2575/pack of 20 cigarettes. Feather presented this notice as Plaintiff's Exhibit 2.

14Paragraph 12 of the Compact provides:

12. This agreement shall terminate on June 30, 2013. At the end of said term, this compact shall continue in full force and effect for consecutive terms of one (1) year, unless either party hereto gives to the other written notice that the compact shall terminate at the end of the present term, provided that such notice is given at least six (6) months prior to said termination. Nothing in this Compact shall prevent the parties by mutual agreement from establishing an earlier termination date or otherwise modifying this agreement.

15Section 11 of the Compact is set out in full at paragraph 11 of this Opinion.

 


REIF, J., concurring in part; dissenting in part.

?1 I agree that the majority opinion has focused on the pertinent provisions in the Osage Nation Tobacco Tax Compact that are dispositive of the tax rate dispute between the parties. I likewise agree that the majority opinion has identified the circumstances under which disputes arising under the Compact are subject to arbitration. I disagree, however, with the majority's conclusion that the dispute in question is subject to arbitration as provided in the Compact.

?2 I believe the "dispute" is not subject to arbitration because it is not one "arising in the interpretation or performance of th[e] Compact." I reach this conclusion because the undisputed material facts show that the State, through the actions of the Oklahoma Tax Commission, is simply in breach of the unambiguous "favored nations" provision of the Compact. This provision grants the Osage Nation the "option" to "automatically... incorporate" more favorable terms of a tobacco tax compact with another Indian tribe into the Osage Nation Compact. The State, through the Oklahoma Tax Commission, admits that the Osage Nation exercised this "option" and chose to incorporate the favorable terms of the State's compacts with the Cherokee Nation and Choctaw Nation, inter alia. The Oklahoma Tax Commission recognizes that this action constituted an amendment to the Compact, including the "exception rate" of $.58 per carton. Nothing in the Compact ties or burdens such amendment of the Compact to the continuation of any comparable terms that may have been previously incorporated from another compact, like the Pawnee Compact in question.

?3 In my opinion, there is no uncertainty about the meaning of any term in the Compact, nor any doubt about the performance due under any term. There is simply unjustified refusal of the Oklahoma Tax Commission to perform its ministerial duties under the Compact and a suit in district court for injunctive relief is one of the appropriate remedies for such a breach of contract. Under the record presented, I do not believe the trial court either exceeded its jurisdiction or abused its discretion in issuing the injunction.

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710:65-3-1 - Reports, payments, and penalties

710:65-3-1. Reports, payments, and penalties

(a) Monthly reporting. Every vendor, except as noted in (b), (c) and (d) of this Section, shall file with the Commission on or before the 20th day of each month, a report on forms to be obtained from the Commission, covering sales for the previous calendar month.

(b) Semiannual reporting. Any vendor who is classified as a Group Three vendor or whose total tax liability for any one (1) month does not exceed Fifty Dollars ($50.00) must notify the Commission of its intent to file a Semiannual return and remittance in lieu of a monthly return and remittance, provided the vendor qualifies.

(1) Qualification. To qualify, the vendor must substantiate that the vendor is in business making sales incidental to that business, or is seasonal or transient, or makes sales through peddlers, solicitors or other salesmen without an established place of business. Otherwise, to qualify, filing records will have to substantiate the fact that the vendor's sales tax liability, for the past six (6) consecutive months immediately preceding the date of the application, has not exceeded Fifty Dollars ($50.00) in any one month. Requests to file semiannually should be directed to the Registration Section of the Taxpayer Assistance Division, P.O. Box 269057, Oklahoma City, Oklahoma 73126-9057 or by FAX at (405) 521-3826.

(2) Commencement of semiannual reporting. It should be clearly understood that semiannual filing should not be commenced until the Commission notifies taxpayer, in writing, that Commission records have been amended to reflect semiannual filing status. Failure to follow this procedure may result in taxpayer receiving assessments, adjustments, etc. for the months of February through June and August through December.

(3) Semiannual reporting due dates. When the application for semiannual filing has been approved, returns shall be filed on or before the 20th day of January and July of each year for the preceding six (6) months' period.

(4) Revocation of authorization.

(A) Conditions that could cause revocation of the authorization to report semiannually are:

(i) In the event that the vendor filing the return on a semiannual basis becomes delinquent in either the filing of the return or the payment of the taxes due thereon, or

(ii) In the event that the liability of a vendor, who has been authorized to file returns and to make payments on a semiannual basis, exceeds Fifty Dollars ($50.00) in sales tax for any one month, or

(iii) In the event that the Commission determines that any semiannual filing or return or any payment of tax due thereon would unduly jeopardize the proper administration of the Oklahoma Sales Tax Law.

(B) If the Commission decides it is necessary to revoke the authorization to file semiannually in relation to any of the conditions in (A) of this paragraph, the taxpayer will be required to file returns and to pay the tax due on a monthly basis.

(c) Semimonthly electronic reporting. Persons owing an average of Two Thousand Five Hundred Dollars ($2,500.00) or more, per month, in total sales taxes for the previous fiscal year shall remit the tax due and shall participate in the Tax Commission's electronic funds transfer and electronic data interchange program, according to the following schedule:

(1) For sales from the first (1st) day through the fifteenth (15th) day of each month, the tax shall be due and payable on the twentieth (20th) day of the month, and remitted to the Tax Commission by electronic funds transfer. A taxpayer will be considered to have complied with the requirements of this paragraph if, on or before the twentieth (20th) day of each month, the taxpayer paid at least ninety (90) percent of the liability for that fifteen-day period, or at least fifty (50) percent of the liability incurred during the immediate preceding calendar year for the same month; and

(2) For sales from the sixteenth (16th) day through the end of each month, the tax shall be due and payable on the twentieth (20th) day of the following month, and remitted to the Tax Commission by electronic funds transfer; [See: 68 O.S. § 1365(D)(2)]

(d) Electronic reporting. Beginning June 1, 2007, all new sales tax registrants required to report and remit sales tax shall file their monthly sales tax report in accordance with the Tax Commission's electronic funds transfer and electronic data interchange program unless the vendor receives an exception to the electronic filing requirement pursuant to OAC 710:65-3-4(c).

(e) Electronic reporting; due dates; delinquency dates. Persons required to remit the tax due pursuant to subsection (c) and (d) shall file a monthly sales tax report in accordance with the Tax Commission's electronic data interchange program on the twentieth (20th) day of the month following that in which the sales occurred. Taxes not paid on or before the due dates specified in subsection (c) shall be delinquent from such dates.

(f) Payment. Remittances covering the sales tax liability reported shall accompany the sales tax return. Sales taxes will be considered delinquent and interest as provided by law will be charged, if payment is not received or postmarked by the date the return is due.

(g) Interest. Interest at the rate provided by law will be imposed on all liability not paid at the time when required to be paid. Said interest will be imposed and collected on the delinquent tax at the statutory rate from the date the tax is delinquent until paid.

(h) Audit; refund/credit for overpayment; assessment inclusive of interest due. When, in the course of an audit, it is found that the tax being audited was overpaid for any period included in the audit, and the taxpayer has not filed a verified claim for refund of the overpayment, the overpayment may be allowed as a credit against the total liability established during the audit. The overpayment shall be applied to the liability as of the date of the overpayment. Whenever an assessment is made for any delinquent tax, the amount of interest due thereon at the time the assessment is made shall be included in the assessment.

(i) Liability for tax, penalty, interest; interest computation. Any taxpayer responsible for the payment of any tax levied by any state tax law shall be liable for payment of interest at the rate set by statute on any amount of tax not paid before it becomes delinquent. Interest shall be computed for each day of delinquency from the date the tax becomes delinquent until it is paid.

(j) Penalty for failure to file and remit. Penalties - A vendor who fails to file a return and remit the full amount of the tax within fifteen (15) days after the tax is due shall be subject to a penalty of ten (10) percent of the amount of tax due.

(k) Penalty for failure or refusal to file after demand. In the case of failure or refusal to file within ten (10) days after written demand has been served upon the taxpayer by the Commission, a penalty of twenty-five (25) percent may be assessed and collected.

(l) Penalty for fraud. If any portion of the deficiency is due to fraud with intent to evade tax, a penalty of fifty (50) percent shall be added, collected, and paid.

(m) Waiver of penalty; interest. At the discretion of the Commission, the interest or penalty, or both, may be waived provided the taxpayer can demonstrate that the failure to pay the tax when due is satisfactorily explained, or that the failure resulted from a mistake by the taxpayer of either law or fact, or that the taxpayer is unable to pay the interest or penalty due to insolvency. Requests for waiver or remission must be made in writing and must include all pertinent facts to support the request. [See: 68 O.S. §§ 217, 1365, 1405]

Amended at 11 Ok Reg 3521, eff 6-26-94; Amended at 18 Ok Reg 2823, eff 6-25-01; Amended at 19 Ok Reg 1859, eff 6-13-02; Amended at 21 Ok Reg 2581, eff 6-25-04; Amended at 24 Ok Reg 2397, eff 6-25-07; Amended at 29 Ok Reg 542, eff 5-11-12

The following state regulations pages link to this page.



Sours: https://www.law.cornell.edu/regulations/oklahoma/Okla-Admin-Code-SS-710-65-3-1
Form 511NR Oklahoma Nonresident Part Year Income Tax Return

Resources

The Oklahoma Tax Commission has followed the guidance issued by the Internal Revenue Service to allow individual taxpayers to defer up to $1 million of income tax payments due on April 15, 2020, until July 15, 2020, without penalties or interest. Corporate taxpayers will be granted a similar deferment of up to $10 million of income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest.

In an emergency meeting on March 19, 2020, the Oklahoma Tax Commission issued Order 2020-03-19-04 providing relief to income tax payments due on April 15, 2020 for tax year 2019 and estimated income tax payments also due on April 15, 2020. The order does not extend payments deadlines for other tax types such as sales and use taxes, withholding income taxes, and gross production taxes.

Like the guidance from the Internal Revenue Service, the Order does not change the April 15 filing deadline for tax returns or informational returns. No automatic extension for filing is granted under the Order without the filing of an application for extension (Form 504-I for individuals and Form 504-C for corporations, partnerships and fiduciaries). The Oklahoma Tax Commission has an administrative policy of honoring the automatic federal extension, when no additional state tax is due, as an extension of time to file the Oklahoma return.

Any penalty and/or interest accruing for non-payment of income tax from April 15, 2020 through July 15, 2020 are waived pursuant to the Order upon filing of the required returns and paying all taxes due. Waivers of penalty and interest in excess of $25,000 will require approval of Oklahoma County District Court as currently provided by statute.

Sours: https://www.mcafeetaft.com/oklahoma-tax-commission-defers-tax-payments-due-to-covid-19/

Commission request waiver tax oklahoma

IRS gives Oklahomans tax relief after severe winter storm

OKLAHOMA CITY (KFOR)— Oklahomans have a bit more time to file state and federal taxes due to the historic winter storm in February.

Following a federal emergency declaration, the federal filing deadline was extended to June 15.

Oklahoma’s Tax Commission waived penalties and interest for returns filed after the normal filing deadline in April which basically moves the state filing deadline.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty. For information on services currently available, visit the IRS operations and services page at IRS.gov/coronavirus.

The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Latest News

Sours: https://kfor.com/news/irs-gives-oklahomans-tax-relief-after-severe-winter-storm/
How to Verify Your Identity with the Oklahoma Tax Commission

2014 Oklahoma Statutes
Title 68. Revenue and Taxation
§68-220. Waiver or remission of interest or penalties.

68 OK Stat § 68-220 (2014) What's This?

A. The interest or penalty or any portion thereof ordinarily accruing by reason of a taxpayer's failure to file a report or return or failure to file a report or return in the correct form as required by any state tax law or by this Code or to pay a state tax within the statutory period allowed for its payment may be waived or remitted by the Oklahoma Tax Commission or its designee provided the taxpayer's failure to file a report or return or to pay the tax is satisfactorily explained to the Tax Commission or such designee, or provided such failure has resulted from a mistake by the taxpayer of either the law or the facts subjecting him to such tax, or inability to pay such interest or penalty resulting from insolvency.

B. The waiver or remission of all or any part of any such interest or penalties in excess of Ten Thousand Dollars ($10,000.00) shall not become effective unless approved by one of the judges of the district court of Oklahoma County after a full hearing thereon.

The application for the approval of such waiver or remission shall be filed in the office of the court clerk of the court at least twenty (20) days prior to the entry of the order of the judge finally approving or disapproving the waiver or remission. The order so entered shall be a final order of the district court of the county.

Added by Laws 1965, c. 414, § 2, emerg. eff. July 7, 1965. Amended by Laws 1989, c. 249, § 10, eff. July 1, 1989; Laws 1993, c. 146, § 10; Laws 1997, c. 294, § 9, eff. July 1, 1997; Laws 2005, c. 362, § 3, eff. Nov. 1, 2005.

Disclaimer: These codes may not be the most recent version. Oklahoma may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

Sours: https://law.justia.com/codes/oklahoma/2014/title-68/section-68-220/

You will also be interested:

The following is a summary of some of the changes in Oklahoma law on state taxation and fees enacted by the Oklahoma Legislature in 2017.

INCOME TAX

Oklahoma Standard Deduction Decoupled from Federal Standard Deduction

For taxable years beginning on or after Jan. 1, 2017, for individuals who use the standard deduction in determining taxable income, there shall be added or deducted the difference that is necessary to allow an Oklahoma income tax standard deduction in lieu of the federal income tax standard deduction allowed by the Internal Revenue Code. The amounts of the Oklahoma standard deduction resulting from this change are to be: $6,350 for single or married filing separately, $12,700 for married filing jointly or qualifying widower with dependent child and $9,350 for head of household, irrespective of the standard deduction allowed for federal income tax purposes.1

Note: At the time of submission of this section note, an action challenging the constitutionality of enactment of HB 2348 to make this statutory change was filed and pending in the Supreme Court of Oklahoma, in Gary L. Richardson v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116162, filed June 28, 2017, arguing that HB 2348 is a revenue bill subject to Article V, §33 of the Oklahoma Constitution and enactment of the bill did not meet the requirements of that provision of the Constitution.

Zero-Emission Electricity Generation Credit Limited for Wind Facilities

The Oklahoma income tax credit allowed for electricity generated by zero-emission facilities was amended to provide that it will be allowed with respect to electricity generated by wind only for a facility placed in operation no later than July 1, 2017.2

Oklahoma 4.85 Percent Top Individual Income Tax Rate Implementation Repealed

The statute authorizing a “trigger” to implement a top marginal individual income tax rate of 4.85 percent in Oklahoma was repealed; and actions of the State Board of Equalization with respect to implementation of that rate were declared null and void.3

Individual Income Tax Returns

For tax years beginning on or after Jan. 1, 2017, every resident individual whose gross income exceeds the sum of the Oklahoma individual standard deduction and personal exemption must file an Oklahoma income tax return. Resident individuals not required to file a federal income tax return must attach a completed federal income tax return to the Oklahoma income tax return to show how adjusted gross income and deductions were determined if their gross income is more than their adjusted gross income. The Oklahoma income tax return must show the taxable income and, where necessary, the adjusted gross income and modifications required by the Oklahoma Income Tax Act, and any other information the Oklahoma Tax Commission (tax commission) may require. Every nonresident individual having Oklahoma gross income for the taxable year of $1,000 or more must file an Oklahoma income tax return.4

Oklahoma Equal Opportunity Education Scholarship Credits

The Oklahoma income tax credit allowed for contributions made to eligible scholarship-granting organizations and educational improvement-granting organizations pursuant to the Oklahoma Equal Opportunity Education Scholarship Act was amended to modify the manner in which the statewide cap on annual credits is to be allocated and applied.5

Aerospace Industry Credits

The period during which Oklahoma income tax credits for the aerospace industry may be claimed was extended to be for taxable years ending before Jan. 1, 2026.6

Withholding from Royalty Owners

The statute providing for withholding of income tax from royalty owners was amended to add an exception for which withholding is not required. The withholding requirement shall not apply to payments which are made to a publicly traded partnership that is treated as a partnership for federal tax purposes under the Internal Revenue Code or its publicly traded partnership affiliates.  For this purpose a “publicly traded partnership affiliate” shall include any limited liability company or limited partnership of which at least 80 percent of the limited liability member interests or limited partnership interests are owned directly or indirectly by the publicly traded partnership.7

Volunteer Firefighter Credit

The Oklahoma income tax credit allowed to volunteer firefighters was amended with re-spect to qualification requirements.8

Contributions to Folds of Honor Scholarship Program

The income tax return check-off procedure for charitable contributions of refunds due to a taxpayer to the Folds of Honor Scholarship Program will not be subject to the rule that can result in removal of a charity from being listed on income tax return forms. The rule that a charity that has been designated to receive funds through contributions made on Oklahoma income tax return forms will be removed from such forms if such contributions to the charity do not equal $15,000 or more for three consecutive years but will not apply to the Folds of Honor Scholarship Program.9

Donations to the Oklahoma Wildlife Diversity Program

An income tax return refund contribution was reauthorized for contributions from a tax refund for the benefit of the Oklahoma Wildlife Diversity Program.10

Donations to Oklahoma Emergency Responders Assistance Program

For tax years beginning in 2017, tax returns will contain a provision allowing a donation from a tax refund for the benefit of the Oklahoma Emergency Responders Assistance Program.11

SALES AND USE TAX

State Sales Tax on Motor Vehicle Sales

The state sales tax exemption allowed for the sale of a motor vehicle or any optional equipment or accessories attached to motor vehicles on which the Oklahoma Motor Vehicle Excise Tax is levied was amended to provide that the exemption shall not apply to a portion of the levy of state sales tax equal to 1.25 percent of the gross receipts of motor vehicle sales. However, sales of motor vehicles shall not be subject to any sales and use taxes levied by cities, counties or other jurisdictions of the state.12

Note: At the time of submission of this section note, actions challenging the constitutionality of enactment of HB 2433 to levy sales tax on motor vehicle sales were filed and pending in the Supreme Court of Oklahoma, in Oklahoma Automobile Dealers Association, et al. v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116143, filed June 23, 2017, and in Gary L. Richardson v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116162, filed June 28, 2017, arguing that HB 2433 is a revenue bill subject to Article V, §33 of the Oklahoma Constitution, and its enactment did not meet the requirements of that provision of the Constitution.

Vendor Sales and Use Tax Deduction to Compensate for Record Keeping and Tax Remittance Repealed

The sales tax code and use tax code provisions allowing a seller or vendor a deduction of 1 percent of the tax due, not exceeding $2,500 per month per sales tax permit, for the purpose of compensating the seller or vendor for keeping sales and use tax records, filing reports and remitting the tax when due, were repealed.13

Oklahoma Tourism Development Act; Sales Tax Credits

An Oklahoma Tourism Development Act was enacted to provide sales tax credits as inducement for the creation or expansion of tourism attraction projects within the state. The act provides for business entities operating or intending to operate a tourism attraction project within the state that meets certain standards to enter into an agreement with the executive director of the Oklahoma Tourism and Recreation Department providing for the completion and operation of the project. The act specifies such qualification standards, criteria and requirements; and also procedures for review and approval of projects and agreements and for the application, claiming and timing of credits.

The sales tax credit allowed may only offset increased sales tax liability of the company resulting from sales to customers at the tourism attraction in excess of reported sales tax liability for sales in the same month in the calendar year preceding the certification of the project approving it for sales tax credit inducements under the act. The tax commission shall provide an approved company with forms and instructions to claim the sales tax credit inducement allowed under the act.

An approved company that certifies that it has expended approved costs of more than $500,000 for a tourism attraction project but less than $1 million shall be issued a tax credit memorandum by the tax commission granting a sales tax credit in the amount of up to 10 percent of the approved costs. An approved company that has expended approved costs in excess of $1 million for a tourism attraction project shall be issued a tax credit memorandum by the tax commission granting a sales tax credit in the amount of up to 25 percent of the approved costs. The credits shall be limited to the percent of the approved costs that will result in the project being revenue neutral to the state as determined by the tax commission. An approved company receiving a credit shall be entitled to use only a specified part of the credit to offset increased sales tax liability during each calendar year, which is 10 percent each calendar year for projects with approved costs in excess of $1 million and 20 percent each calendar year of projects with approved costs less than $1 million.

No sales tax credit authorized by the act shall be granted on or after Jan. 1, 2021; provided, that an approved company that has entered into a tourism attraction project agreement with the Oklahoma Tourism and Recreation Department prior to Jan. 1, 2021, shall continue to be entitled to claim any sales tax credit authorized pursuant to the act and as contemplated by the tourism project agreement.14

Collaborative Model Connecting Community Agencies Exemption

A sales tax exemption was enacted to be effective Nov. 1, 2017, to exempt from sales tax the sale of tangible personal property or services to an organization which is exempt from taxation pursuant to the provisions of the section 501(c)(3) of the Internal Revenue Code and operates as a collaborative model which connects community agencies in one location to serve individuals and families affected by violence and where victims have access to services and advocacy at no cost to the victim.15

Sales to Tourism and Recreation Department Contractors Exemption

The sales tax exemption related to Oklahoma Tourism and Recreation Department promotional materials was amended to provide an exemption for sales of tangible personal property or services to any person with whom the department has entered into a public contract necessary to assist the department in the development and production of advertising, promotion, publicity and public relations programs.16

National Guard Association of Oklahoma Exemption

A sales tax exemption was enacted to be effective July 1, 2018, to exempt sales of tangible personal property or services to or by an association which is exempt from taxation pursuant to the provisions of the Internal Revenue Code, and which is known as the National Guard Association of Oklahoma.17

Marine Corps League of Oklahoma Exemption

A sales tax exemption was enacted to be effective July 1, 2018, to exempt sales of tangible personal property or services to or by an association which is exempt from taxation pursuant to the provisions of the Internal Revenue Code, and which is known as the Marine Corps League of Oklahoma.18

Sales Tax Noncompliant Taxpayer Closings

The provisions of the Sales Tax Code authorizing the tax commission to close the business of a noncompliant taxpayer for failure to file reports or remit tax due was modified, providing that a taxpayer operating under a sales tax permit shall not be deemed “noncompliant” for nonpayment of income taxes; and providing for clarification as to failure to file reports required for sales taxes.19

AD VALOREM TAX

Delay of Five-Year New Manufacturing Facility Exemption Until Expiration of Local Development Act Tax Exemption

New manufacturing facilities applying for the five-year ad valorem tax exemption under 68 O.S. §2902 on or after Nov. 1, 2017, that meet specified requirements shall be eligible to delay the beginning of the five-year period of exemption from ad valorem taxes under 68 O.S. §2902 until after the expiration or termination of an ad valorem exemption, abatement or other incentive provided to the taxpayer through a tax incentive district established pursuant to the Local Development Act.

In order to delay the exemption this way a manufacturing facility must 1) create at least 100 new jobs at the state index wage provided for in 68 O.S. §3604(F)(2) and 2) invest at least 10 times the investment cost in new depreciable property required for the five-year new manufacturing facilities exemption in 68 O.S. §2902 (B)(1), presumably meaning an investment of at least $2.5 million. The delay of the exemption shall not be available for any job creation or investment of new depreciable property that occurred prior to Nov. 1, 2017, or the date of the creation of the tax incentive district under the Local Development Act, whichever is later.

The application process and procedures for a taxpayer to be able to delay the beginning of the five-year ad valorem tax exemption under 68 O.S. §2902 shall involve approvals, actions and notification of and by the governing body creating a tax incentive district in a city or county under the Local Development Act, the tax commission and the Oklahoma Department of Commerce. If an application for an exemption is approved, the five-year period of exemption from ad valorem taxes for a qualifying manufacturing facility under 68 O.S. §2902 shall begin on Jan. 1 following the expiration or termination of the ad valorem exemption, abatement or other incentive provided through the tax incentive district under the Local Development Act. This allowance of such a delay shall not apply to electric power generation facilities, and they shall not qualify to delay the exemption from ad valorem taxes following the expiration or termination of the ad valoremexemption, abatement or other incentive provided through the tax incentive district pursuant to the Local Development Act.20

Paper Product Manufacturing Facility Exemption Repealed

The statute separately providing for a five-year new manufacturing facility exemption for a facility engaged in pulp, paper, tissue and paper board manufacturing if it meets specific minimum capital improvements and wage per employee requirements was repealed.21

Manufactured Home Tax Delinquency Notices

The ad valorem tax procedure governing delinquent taxes was amended to provide that if personal property taxes become delinquent on a manufactured home which is located on property not owned by the owner of the manufactured home, the county treasurer shall send a notice to the taxpayer of delinquency to the owner of the manufactured home as generally authorized and required, and such notice shall also be sent to the last known address of the owner of the real property on which the manufactured home is located.22

GROSS PRODUCTION TAX

Horizontally Drilled Wells; Rate Increase

The gross production tax rate for certain production of oil and gas was adjusted to provide for a higher rate, to apply prospectively. For production commenced on or after July 1, 2011, and prior to July 1, 2015, the reduced gross production tax rate of 1 percent levied on the production of oil, gas, or oil and gas from a horizontally drilled well for a period of 48 months from the month of initial production, was increased to 4 percent for production occurring on or after July 1, 2017, for the remainder of the 48-month period involved.23

Elimination of Previously Enacted Exemptions

The Oklahoma gross production tax was amended to limit and eliminate certain gross production tax exemptions allowed for specified time periods as incentives for projects begun before July 1, 2015. The exemptions for specified production from secondary recovery projects, tertiary recovery projects, re-established inactive wells, production enhancement projects, wells drilled to a specified depth, new discovery wells and three-dimensional seismic shoot wells were amended to provide that the exemptions shall not apply to production occurring on or after July 1, 2017. The limitation period for claiming rebates and refunds for allowed exemptions was changed, and refunds are to be paid in deferred installment payments. The exemption allowed for economically at-risk oil or gas leases was amended to limit its application to production from specified calendar years, to change the time for claiming refund, and provide for deferred installment payment of refunds.24

FRANCHISE TAX AND FEE

Franchise Tax Reporting

Oklahoma franchise tax payment and reporting requirements were amended. For those taxpayers that remitted the maximum amount of tax pursuant to 68 O.S. §1205 for the preceding tax year, the franchise tax shall become due and payable on May 1 of each year, and if not paid on or before the ensuing June 1, penalties shall apply. A taxpayer that so remitted the maximum amount of tax for the preceding tax year must file a return no later than June 1.25

Reinstatement Fee Increase

The reinstatement fee required to be paid after the issuance of an order of suspension and forfeiture of the charter or organizational document and rights thereunder for failure to file a report and pay franchise tax was increased from $15 to $150.26

CIGARETTE FEE/TAX

$1.50 Charge Per Pack of Cigarettes

On May 26, 2017, the Legislature passed SB 845 titled “Smoking Cessation and Prevention Act of 2017,” and it was signed by the governor on May 31, 2017. The act provides for a $1.50 charge on cigarettes to be assessed by the tax commission and remitted to the tax commission by every wholesaler. The charge is to be $1.50 per 20 cigarette package, and a proportionate rate on fractions thereof. For purposes of the act “cigarette” and “wholesaler” shall have the same meaning as in 68 O.S. §301 that applies to the Oklahoma cigarette stamp tax.

The tax commission is authorized to promulgate rules to implement the assessment. The act contains an uncodified provision stating that for the purpose of ensuring maximum wholesaler compliance with remittance of the charge, the tax commission shall not sell cigarette excise tax stamps to any wholesaler in excess of the amount of the monthly average amount of such excise tax stamps sold to such wholesaler during the preceding calendar year prior to the effective date of the act, but that a wholesaler may purchase in excess of the monthly average purchased during the preceding calendar year upon providing documentation to the tax commission’s satisfaction of probable sales greater than the wholesaler’s sales in the preceding calendar year.27

Note: At the time of submission of this section note, an action challenging the constitutionality of enactment of SB 845 was filed and pending in the Supreme Court of Oklahoma, in Naifeh v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116102, filed June 7, 2017, arguing that SB 845 does not impose a “fee” but is instead a “revenue bill” subject to Article V, §33 of the Oklahoma Constitution, and enactment of the bill did not meet the requirements of that provision of the Constitution.  Attorneys from the author’s firm, GableGot-wals, are representing several of the petitioners in that action.

MOTOR FUEL TAX

Motor Fuel Tax Remittance Increase

The provisions of the Motor Fuel Tax Code for pre-collection and tax remittance by suppliers and bonded importers was amended to change the percentage basis as to amounts of tax due for gasoline from 98.4 percent to 100 percent, and change the remittance percentage basis for diesel fuel from 98.1 percent to 100 percent,  on July 1, 2022.28

MOTOR VEHICLE TAX AND/OR FEES

Electric-Drive and Hybrid-Drive Motor Vehicle Registration

Electric-drive motor vehicle and hybrid-drive motor vehicle registration fees were en-acted.  Beginning Jan. 1, 2018, a motor fuels tax fee is to be levied and shall be paid to the tax commission of 1) $100 for every electric-drive motor vehicle to be registered and 2) $30 on every hybrid-drive motor vehicle to be registered. The fees shall accrue, and shall be collectible under the same circumstances, and be payable in the same manner and times as other vehicle registrations under the Oklahoma Vehicle License and Registration Act. However, the fees shall be paid in full for the then current year at the time any such vehicle is first registered in a calendar year. The collection and payment of the fees shall be a prerequisite to licensing or registration of such vehicles. The statute provides definitions of “electric-drive motor vehicle” and “hybrid-drive motor vehicle.”29

Note: At the time of submission of this section note, an action challenging the constitutionality of enactment of HB 1449 providing for motor fuels tax registration fees was filed and pending in the Supreme Court of Oklahoma, in Gary L. Richardson v. State of Oklahoma, ex rel. Oklahoma Tax Commission, Case No. 116162, filed June 28, 2017, arguing that HB 1449 is a revenue bill subject to Article V, §33 of the Oklahoma Constitution, and enactment of the bill did not meet the requirements of that provision of the Constitution.

PROFESSIONAL SPORTING EVENT ADMISSION FEE

Initial Ticket Sale Fee

A fee shall be assessed on the initial sale of tickets in Oklahoma for admission to professional sporting events involving ice hockey, baseball, basketball, football, arena football or soccer. The fee shall be $1 on each ticket priced less than $50 and $2 on each ticket priced equal to or greater than $50. The fee shall be remitted monthly to the tax commission on forms prescribed by it.  The tax commission is to publish rules as necessary to implement and administer assessment of the fee.30

ESTATE TAX

Expiration and Release of Lien

The Oklahoma estate tax lien statute was amended to provide that for deaths of decedents occurring before Jan. 1, 2010, any lien related to estate tax shall be extinguished subsequent to the lapse of 10 years after the date of death of a decedent and no order exempting estate tax liability shall be necessary to authorize release of such property or for the title of real property to be marketable.31

TAX ADMINISTRATION, PRACTICE AND PROCEDURE

Establishment of Out-of-State Collections Enforcement Division of Tax Commission

An Out-of-State Tax Collections Enforcement Act of 2017 was enacted providing that for the purpose of collecting taxes owed to the state, the tax commission may establish and maintain a division to be known as the “Out-of-State Tax Collections Enforcement Division.” The tax commission may contract with out-of-state private auditors or audit firms and may require any person performing an audit to be first approved by the tax commission.

The Tax Commission may employ full-time, unclassified, out-of-state tax auditors or full-time-equivalent contracted auditors to staff the Out-of-State Tax Collections Enforcement Division. The audit staff shall perform audit functions related to enhancing sales and use tax collections related to sales or transactions involving residents of Oklahoma and out-of-state vendors with a nexus to the state of Oklahoma; and collections of any other unpaid taxes owed the state of Oklahoma by out-of-state individuals, firms and corporations.

For purposes of the act the term “audit function” includes, but is not limited to, the auditing of the books of individuals, firms and corporations which the tax commission believes may owe the state additional tax monies. The tax commission shall annually submit a report to the governor, president pro tempore of the Senate and speaker of the House of Representatives listing the number of individuals, firms and corporations audited, the types of taxes audited, the amount of taxes assessed and the amount of taxes collected as the result of such audits.32

Taxpayer Voluntary Disclosure Initiative; Sept. 1, 2017 – Nov. 30, 2017

A statute was added to the Uniform Tax Procedure Code providing that to encourage voluntary disclosure and payment of taxes, the tax commission is authorized and directed to establish a Voluntary Disclosure Initiative (initiative) for certain “eligible taxes” in 2017. Pursuant to the initiative, a taxpayer shall be entitled to a waiver of penalty, interest and other collection fees due on such eligible taxes if the taxpayer voluntarily files delinquent tax returns and pays the taxes due during the initiative. The time period of the initiative in which a voluntary payment of tax liability may be made (or the taxpayer may enter into a payment program and agreement acceptable to the tax commission) is limited to the period beginning Sept. 1, 2017, and ending Nov. 30, 2017.

Upon payment of the eligible taxes under the initiative, the tax commission shall abate and not seek to collect any interest, penalties or collection fees that would otherwise be applicable. The eligible taxes include the taxes that were due and payable for any tax period or periods ending prior to the taxpayer and tax commission entering into a voluntary disclosure agreement as provided in the initiative. The “eligible taxes” for which such abatement can be allowed are 1) mixed beverage tax levied; 2) gasoline and diesel tax; 3) gross production and petroleum excise tax; 4) sales tax; 5) use tax; 6) income tax, for tax periods ending prior to Jan. 1, 2016; 7) and withholding tax.

To be eligible to participate in the initiative and receive abatement of any interest, penalties and collection fees, taxpayers must not have outstanding tax liabilities other than those reported pursuant to the initiative, not have been contacted by the tax commission, or third party acting on behalf of the tax commission, with respect to the taxpayer’s potential or actual obligation to file a return or make a payment to the state; not have collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes; and not have, within the preceding three years, entered into a voluntary disclosure agreement  for the type of tax owed. If the tax commission agrees with the proposed terms for payment of the principal amount of tax due and owing, the penalties and interest otherwise imposed by law upon the principal amount shall be waived by operation of law and no further action by the tax commission or by the taxpayer shall be required for the waiver of such penalty and applicable interest.

The tax commission is to limit the period for which additional taxes may be assessed to three taxable years for annually filed taxes or 36 months for taxes that do not have an annual filing frequency. Taxpayers who meet all of the qualifications for eligibility except those who have collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes, may enter into a modified voluntary disclosure agreement. The provisions of a modified voluntary disclosure agreement shall be the same as a voluntary disclosure agreement except the waiver of interest shall not apply except as may be optionally granted at the discretion of the tax commission, and the period for which taxes must be reported and remitted or assessed is extended beyond the three-year or 36-month period and to include all periods in which tax has been collected but not remitted.

The waiver of penalty and interest provided for under the initiative is fully effective provided taxpayer continues payment or collection and remittance of applicable taxes, as required by law, for a period of one year after the tax period(s) for which taxes were paid pursuant to the initiative. The tax commission is authorized to publicly advertise, assist in the collection of eligible taxes and administer the initiative. The tax commission is authorized to publish rules detailing the terms and other conditions of this program.33

Tax Commission/Taxpayer Voluntary Disclosure Agreements; Modified Voluntary Disclosure Agreements

The provisions of the Uniform Tax Procedure Code generally providing for waiver of interest or penalty by the tax commission were also amended to provide for the tax commission to enter into voluntary disclosure agreements (UTPC voluntary disclosure agreement) with taxpayers under specified conditions. Taxpayers will be allowed to enter into a UTPC voluntary disclosure agreement if they 1) do not have outstanding tax liabilities other than those reported pursuant to a UTPC voluntary disclosure agreement, 2) have not been contacted by the Oklahoma Tax Commission with respect to the taxpayer’s potential or actual obligation to file a return or make a payment to the state, 3) have not collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes, and 4) have not within the preceding three years entered into a UTPC voluntary disclosure agreement for the type of tax owed by the taxpayer.

If the tax commission agrees with the proposed terms for payment of the principal amount of tax due and owing, the penalty otherwise imposed by law upon the principal amount of tax shall be waived by operation of law and no further action by the tax commission or by the taxpayer shall be required for the waiver of such penalty amount and 50 percent of the otherwise applicable interest amount shall be waived by operation of law and no further action by the tax commission or by the taxpayer shall be required for the waiver of such interest amount. The tax commission shall limit the period for which additional taxes may be assessed (the lookback period) to three taxable years for annually filed taxes or 36 months for taxes that do not have an annual filing frequency.

UTPC voluntary disclosure agreements may be denied or nullified by the tax commission if a taxpayer’s failure to report or pay is determined to be the result of a pattern of intentional or gross negligence regarding compliance with the laws. Taxpayers who meet all of the qualifications specified for such a UTPC voluntary disclosure agreement, except they have collected taxes from others, such as sales and use taxes or payroll taxes, and not reported those taxes, may enter into a modified voluntary disclosure agreement (UTPC modified voluntary disclosure agreement.)

The provisions of a UTPC modified voluntary disclosure agreement shall be the same as a UTPC voluntary disclosure agreement except that 1) waiver of interest shall not apply except as may be optionally granted at the discretion of the Tax Commission, and 2) the period for which taxes must be reported and remitted is extended beyond the three-year or 36-month period (as generally provided for in UTPC voluntary disclosure agreements) to include all periods in which tax has been collected but not remitted.34

District Court Approval of Tax Commission Waiver of Interest and Penalty Exceeding $25,000

The statute providing for district court approval of tax commission waivers of interest or penalties was amended. The statute will now provide that waiver or remission of all or any part of interest or penalties by the tax commission in excess of $25,000 shall not become effective unless approved by one of the judges of the district court of Oklahoma County after a full hearing thereon. (Pre-existing law provided for required district court approval of a waiver of interest or penalties in excess of $10,000).35

Tax Commission Business Registration and Reporting Program

The tax commission shall establish a program that focuses on educating businesses, as well as identifying and registering businesses who are actively selling or leasing tangible personal property in Oklahoma without a permit as required under 68 O.S. §1364. The tax commission shall monitor and provide education to business owners of their state tax responsibilities. The program shall include the establishment of teams of tax commission employees conducting visits to nonresidential retail businesses to determine the existence of a sales tax permit and other required permits and licenses; verify accuracy and validity of licenses and permits; determine if the business is reporting and remitting taxes properly; and provide information and assistance to the business owner on tax reporting responsibilities. The tax commission shall conduct such visits in a manner that shall not disrupt the operations of a business location.36

Tax Commission Taxpayer Assistance Program

The tax commission shall be authorized to expend necessary available funds, to publicly advertise the programs and assistance available for the filing of returns and the payment of taxes and education of the tax laws of Oklahoma, including advertising that focuses on social networking services.37

TAX AND FISCAL POLICY

Tax Incidence Impact Analysis

A statute authorizing analysis of tax incidence of legislation and changes of Oklahoma taxation by the tax commission was enacted. It provides that at the request of the chair of the Finance Subcommittee of the House Appropriations and Budget Committee or the Senate Finance Committee, the tax commission shall prepare an incidence impact analysis of a bill or a proposal to change the Oklahoma tax system which increases, decreases or redistributes taxes by more than $20 million. To the extent data is available on the changes in the distribution of the tax burden that are affected by a bill or proposal, the analysis shall report on the incidence effects that would result if the bill were enacted. The report may present information using system wide measures, such as indexes, by income classes, taxpayer characteristics or other relevant categories. The report may include analyses of the effect of a bill or proposal on representative taxpayers. The analysis must include a statement of the incidence assumptions that were used in computing the burdens. The incidence analyses must use the broadest measure of economic income for which reliable data is available.38

Incentive Evaluation Act Reporting and Rulemaking

The Incentive Evaluation Act was amended to provide that if the tax commission votes to modify an incentive evaluation provided by the Incentive Evaluation Commission, such modification and the original evaluation of the Incentive Evaluation Commission shall be documented and included in the annual written report of the Incentive Evaluation Commission on its evaluation of tax incentives. The evaluation criteria developed by the Incentive Evaluation Commission shall be through the administrative rule making process pursuant to the Oklahoma Administrative Procedures Act.39

Tax Commission Employee Background Checks

The tax commission shall be authorized to require tax commission employees in positions that have access to federal tax information and data to supply all information and documentation required in order to be subjected to a criminal history search by the Oklahoma State Bureau of Investigation, as well as to be fingerprinted for submission of the fingerprints through the Oklahoma State Bureau of Investigation to the Federal Bureau of Investigation for a national criminal history check. The tax commission shall be the recipient of the results of the record check to include a national criminal record with a fingerprint analysis.40

ABOUT THE AUTHOR
Sheppard F. Miers Jr. is a shareholder in the Tulsa office of GableGotwals and practices in the areas of federal and state taxation. The author acknowledges information and assistance he received on the subject of this article from Joanie Raff, legislative analyst of the Oklahoma Senate staff.

1. HB 2348, amending 68 O.S. Supp. 2016 §2358; effective Jan. 1, 2017.
2. HB 2298, amending 68 O.S. Supp. 2016, §2357.32A; effective July 1, 2017.
3. SB 170, repealing 68 O.S. Supp. 2016 §2355.1 G.; effective Nov. 1, 2017.
4. HB 2348, amending 68 O.S. Supp. 2016, §2368; effective Jan. 1, 2017.
5. SB 445, amending 68 O.S. Supp. 2016, §2357.206; effective Nov. 1, 2017.
6. SB 120, amending 68 O.S. Supp. 2016, §§2357.302-2357.304; effective Nov. 1, 2017.
7. SB 225, amending 68 O. S 2011, §2385.26, effective Nov. 1, 2017.
8. HB 1833, amending 68 O.S. Supp. 2016 §2358.7; effective July 1, 2017.
9. HB 1423, amending 68 O.S. 2011, §2368.2, and 68 O.S. Supp. 2016, §2368.19; effective Nov. 1, 2017.
10. HB 1392, amending 29 O.S. Supp. 2016, §3-310; effective Nov. 1, 2017.
11. HB 1392, adding 68 O.S. Supp. 2017, §2368.30; effective Nov. 1, 2017.
12. HB 2433, amending 68 O.S. Supp. 2016, §§1355, 1361, 68 O.S. 2011, §§2106, 1402, 1404; effective July 1, 2017.
13. HB 2367, repealing 68 O.S. Supp. 2016, §1367.1, 68 O.S. 2011, §1410.1; effective July 1, 2017.
14. HB 2131, adding 68 O.S. Supp. 2017, §§2391-2397; effective Nov. 1, 2017.
15. SB 189, SB 353, amending 68 O.S. Supp. 2016, §1356; effective Nov. 1, 2017.
16. SB 353, amending 68 O.S. Supp. 2016, §1356; effective July 1, 2017.
17. HB 353, amending 68 O.S. Supp. 2016, §1356; effective July 1, 2017.
18. HB 353, amending 68 O.S. Supp. 2016, §1356; effective July 1, 2017.
19. HB 2343, amending 68 O.S. Supp. 2016, §1368.3; effective July 1, 2017.
20. HB 2351, adding 68 O.S. Supp. 2017, §2902.5; effective Nov. 1, 2017.
21. SB 293, repealing 68 O.S. §2011, §2902.4; effective Jan. 1, 2018.
22. SB 91, amending 68 O.S. 2011, §3106; effective Nov. 1, 2017.
23. HB 2429, amending 68 O.S. Supp. 2016, §1001(E)(3); effective July 1, 2017.
24. HB 2377, amending 68 O.S. Supp. 2016, §§1001, 1001. 3a; effective July 1, 2017.
25. HB 2356, amending 68 O.S. Supp. 2016, §1208, 68 O.S. 2011, §1210; effective Nov. 1, 2017.
26. HB 2357, amending 68 O.S. 2011, §1212; effective July 1, 2017.
27. SB 845, adding 63 O.S. Supp. 2017 §§1-1525, and 1-1528 – 1-1532; effective Aug. 25, 2017.
28. HB 2358, amending 68 O.S. 2011, §500.22, effective Nov. 1, 2017.
29. HB 1449, adding 47 O.S. Supp. 2017, §1132.7; effective Nov. 1, 2017.
30. HB 2361, adding 68 O.S. Supp. 2017, §1515; effective July 1, 2017.
31. HB 1327, amending 68 O.S. 2011, §804.1; effective Nov. 1, 2017.
32. HB 1427, adding 68 O.S. Supp. 2017, §120; effective Nov. 1, 2017.
33. HB 2380, adding 68 O.S. Supp. 2017, §216.4; effective July 1, 2017.
34. HB 2252, amending 68 O.S. 2011, §220; effective Nov. 1, 2017.
35. HB 2252, amending 68 O.S. 2011, §220; effective Nov. 1, 2017.
36. HB 2380, adding 68 O.S. Supp. 2017, §256.1; effective July 1, 2017.
37. HB 2380, amending 68 O.S. 2011, §256; effective July 1, 2017.
38. HB 2209, adding 68 O.S. Supp. 2017, §291; effective Nov. 1, 2017.
39. SB 154, amending 62 O.S. Supp. 2016, §7005; effective Aug. 25, 2017.
40. SB 292, adding 74 O.S. Supp. 2017, §150.9.1; effective Nov. 1, 2017.

 

Originally published in the Oklahoma Bar Journal -- OBJ 88 pg. 1555 (Aug. 19, 2017)

Sours: https://www.okbar.org/barjournal/aug2017/obj8821miers/


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