PUBLIC HEARING AND WORK SESSION

SB 173, SB 220, SB 228

WORK SESSION SB 227

 

TAPE 73 A-B, 74 A

 

HOUSE REVENUE COMMITTEE

MARCH 10, 2003   8:30 AM   STATE CAPITOL BUILDING

 

Members Present:                        Representative Lane Shetterly, Chair

                                                Representative Wayne Scott, Vice Chair

                                                Representative Joanne Verger, Vice Chair

                                                Representative Phil Barnhart

                                                Representative Vicki Berger

                                                Representative Pat Farr

                                                Representative Mark Hass

                                                Representative Elaine Hopson

                                                Representative Max Williams

 

 

Witness Present:                        Brenda Rocklin, Oregon State Lottery

                                                John Phillips, Department of Revenue

                                                Debra Buchanan, Department of Revenue

 

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Dick Yates, Legislative Revenue Office

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Mazen Malik, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 73, SIDE A

 

004

Chair Shetterly

Calls meeting to order at 9:36 a.m.

 

OPENED PUBLIC HEARING SB 173

 

022

Dick Yates

Provided a description and background of SB 173, (Exhibit 1), does not have a revenue impact, does have a fiscal impact.

 

030

Brenda Rocklin

Spoke in favor of SB 173, providing background and intent of the bill, (Exhibit 2).

 

055

Chair Shetterly

This bill applies to prizes awarded on or after January 1, 2003; are you going to catch up on those when this becomes effective?

 

058

Rocklin

Answered affirmatively.

 

062

Chair Shetterly

Closed Public Hearing on SB 173.

 

WORK SESSION SB 173

 

063

Rep. Verger

MOTION:  MOVED SB 173 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION

 

ROLL CALL:  MOTION PASSED 8-0-1

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hopson, Scott, Verger, Williams, Chair Shetterly. EXCUSED:  Hass

 

Rep. Berger will carry the bill.

 

 

OPENED PUBLIC HEARING SB 220

 

088

Lizbeth Martin-Mahar

Description and provided background on SB 220, (Exhibit 3), does not have revenue or fiscal impact.

 

105

Debra Buchanan

Spoke in favor and provided background and intent of SB 220, (Exhibit 4).

 

118

Chair Shetterly

When you say trust, I assume these are commingled trusts?

 

120

Buchanan

Answered affirmatively.

 

124

Chair Shetterly

Why didn’t we connect with this, is it outside the definition of personal taxable income when the changes were made in 1997 at the federal level?  Why didn’t the rolling reconnect pick this up?

 

127

Buchanan

It’s really a change in the filing, like multiple filings for non-resident shareholders of an S Corporation.

 

131

Chair Shetterly

This doesn’t change how much is taxed?

 

133

Buchanan

It should not.

 

135

Rep. Barnhart

This reduce the amount of returns coming to your office and the cost?

 

137

Buchanan

Answered affirmatively.

 

140

Rep. Verger

Who is paying the tax and claiming the income?

 

142

Buchanan

Under current law, the funeral home would take payment, invest it and hold in trust until needed.  Earnings under prior federal law would flow to the person making payment and be reported on an individual return.

 

148

Rep. Shetterly

Under Oregon law, those earnings would be reported by the trust and not by all of the individual trust beneficiaries?

 

150

Buchanan

Answered affirmatively.

 

153

Rep. Barnhart

What assumption do you make about what the tax rate going to be?

 

156

Buchanan

That’s one of the simplification issues in the bill.  The trust is treated as though filing as an individual resident, reporting under the graduated rates.

 

164

Rep. Verger

You said make payments, if make one payment it is payment in full?

 

170

Buchanan

Whatever payments are made by the individual is held in trust until needed.  The amounts held in trust are invested, there is no difference.

 

174

Chair Shetterly

At the Federal level, the brackets for trust are substantially compressed?  Are they paid at trust rates or individual rates.

 

178

Buchanan

Unknown, will find out.

 

181

Chair Shetterly

Oregon treats them as individual?

 

183

Buchanan

Answered affirmatively, true for all the trusts.

 

177

Chair Shetterly

Closed hearing on SB 220.

 

WORK SESSION SB 220

 

188

Rep. Verger

MOTION:  MOVED SB 220 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION

 

ROLL CALL:  MOTION PASSED 9-0-0

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair Shetterly.

 

Rep. Hass will carry the bill.

 

203

Chair Shetterly

Closed Work Session on SB 220

 

PUBLIC HEARING SB 227

 

210

Mazen Malik

Provided a description and background of SB 227, does not have revenue or fiscal impact (Exhibit 5).

 

236

John Phillips

Described policy conflict in the statutes, (Exhibit 6).

 

270

 

Questions and discussion on ORS 311.250, and ORS 306.245.

 

288

 

Discussion on tax rates.

 

310

Chair Shetterly

The language in Section 4 that is being deleted is the comparative view of value and taxes and expresses what the practice is now?

 

315

Phillips

There were two approaches to the concept. 

 

·         Remove the reference to the tax rates.

·         Remove the section since it is covered elsewhere.

 

320

Chair Shetterly

It’s covered in the rule, not statute?

 

322

Phillips

Answered affirmatively. 

 

324

 

Discussion of statutory vs. rule changes in maintaining look back.

 

349

 

Questions and discussion regarding real market vs. total assessed value.

 

367

Rep. Barnhart

In terms of streamlining, makes sense to leave it to the department, rather than statute, the bill is a good idea.

 

375

Chair Shetterly

Felt the comparative assessment information is worthwhile. Important education function that the statement provides.

 

380

Phillips

Review of real property tax statement, (Exhibit 7)

 

Questions and discussion regarding tax statement.

 

 

TAPE 74, SIDE A

 

010

Rep. Verger

Why did you want to this eliminated?

 

015

Phillips

Discussed DOR’s position on bill.

 

030

 

045

 

Discussion of ORS 311.250 requirements for tax statements. 

 

Discussed ORS 306.245 requirements for tax statements.

 

052

Rep. Scott

Does SB 227 change the tax statement at all?

 

060

Chair Shetterly

SB 227 will no longer statutorily require “last years assessed value” to be part of the statement, but it will be under administrative rule.

 

064

Rep. Berger

Understood differently, it is rate that is not on the tax statement.  A taxpayer couldn’t multiply the rate even if it were there because there are several different rate and it would be confusing.

 

073

Phillips

Answered affirmatively.

 

083

 

 

 

 

093

Chair Shetterly

 

 

 

 

Chair Shetterly

Questioned if the Committee wanted to recede from statutory requirement to have comparative information as to value and taxes be deleted and left to rule.  Another option would be to amend 311.250 to include look back information as to value and taxes imposed so it is all in one statute.

 

Expressed discomfort in deleting the legislative requirement for look back in statute.

 

100

Phillips

To clarify, it is the will of the Committee to remove Section 4 from Chapter 306 and place a requirement for prior years assessed and real market values into ORS 311.250?

 

123

Chair Shetterly

And include the taxes imposed.

 

128

Chair Shetterly

Closed Public Hearing on SB 227.

 

OPEN PUBLIC HEARING SB 228

 

138

Malik

Described intent and background of SB 228, (Exhibit 8).

 

157

Phillips

Provided background on Section 1, and testified in support of SB 228, allows for discussion with lessor and lessee regarding valuation of a property without violating confidentiality laws, (Exhibit 9).

 

213

 

Questions and discussion regarding definitions and clarifying language by Legislative Counsel’s Office?

 

233

Rep. Verger

Why does, a power of attorney, create difficulty or confusion?

 

238

Phillips

It’s authority to talk to person other than taxpayer, regarding a property tax account, not power of attorney.

 

258

 

Questions and discussion on lessor, lessee authority to appeal tax values?

 

269

Buchanan

Provided background on Sections 2-5 which deals with unintended consequences of 1999 legislation, (Exhibit 10).  Provided examples about representation which limits the ability of the DOR to disclose information or talk about a tax return with anyone not on file as an authorized representative under statute.

 

306

 

Questions and discussion regarding power of attorney.

 

352

Rep. Williams

With the new bill, how are you going to police the level of designation.  How do you know the person on the phone is who they say they are?

 

367

Buchanan

If the person gives enough information to indicate they are aware of situation, information off the tax return, or billing notice, can assume some sort of communication from the taxpayer, although could be wrong.

 

390

Chair Shetterly

Clarified balance, rules are also for protection of the taxpayer.

 

387

 

Questions and discussion regarding signature on tax return for parent/minor.

 

400

Rep. Williams

Before Legislature made change which led to the inadvertent problem, did the department have rules for disclosure and verification?

 

424

Buchanan

Generally DOR requested authorization to represent to have on file. If a person called and could determine this person had permission, DOR would talk to them.

 

444

Rep. Verger

For the protection of DOR, there is nothing wrong with written confirmation, it also provides protection for the taxpayer.

 

 

TAPE 73, SIDE B

 

010

Berger

Appreciate what the DOR is trying to do when a person is trying to help a relative.  Also concerned about vulnerability.  What would someone be trying to do that would be nefarious?

 

018

Buchanan

Discussed scenario of a wealthy mother who is going to get a very large refund, person calls and asks when a refund will be sent, and then intercepts the refund.  DOR exercises caution in disclosing information.  Bill is an effort to operate as a good business to help taxpayers get information they need to comply with tax laws.

 

032

Rep. Williams

Have reservations, but recognize DOR has a customer service issue, and need for flexibility to help constituents.  Would support with some reservation, but would like to see administrative rules for management.

 

070

Rep. Farr

Even if the paperwork is filed, you still don’t know with whom you are speaking.  The customer service issue outweighs the downside.

 

087

Chair Shetterly

Discussed language “or by implication” of concern to the Committee.  Isn’t there a place on the form which includes a person you may contact about the filing, short of formal filing of a power of attorney?

 

108

Buchanan

Used prior to this law, an “Authorization to Represent”.  DOR is prohibited by law from disclosing confidential information and the penalties are Class C felony, $100,000 fine and loss of employment.

 

120

Chair Shetterly

Willing to move if Committee is comfortable.

 

127

Chair Shetterly

Closed Public Hearing on SB 228.

 

WORK SESSION ON SB 228

 

144

Rep. Farr

MOTION:  MOVED SB 228 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION

 

148

Rep. Barnhart

Concerned words “by implication” may be too broad, may need amendment that takes care of mother/child and similar common situations.

 

159

Rep. Farr

WITHDRAWAL:  REP. FARR WITHDREW THE MOTION TO MOVE SB 228 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

172

Chair Shetterly

Closed Work Session on SB 228.

 

175

Chair Shetterly

Meeting adjourned at 9:43 a.m.

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Yates, “Staff Measure Summaries SB 173, Fiscal Impact SB 173”, 3 pages

2.       Rocklin, “Testimony SB 173”, 1 page

3.       Martin-Mahar, “Staff Measure Summaries SB 220”, 2 pages

4.       Buchanan, “Testimony SB 220”, 1 page

5.       Malik, “Staff Measure Summaries SB 227”, 2 pages

6.       Phillips, “Testimony 227”, 2 pages

7.       Phillips, “Property Tax Statement”, 1 page

8.       Malik, “Staff Measure Summaries SB 228”, 2 pages

9.       Phillips, “Testimony SB 228”, 2 pages

10.   Buchanan, “Testimony SB 228”, 1 page