PUBLIC HEARING HB 2542

 

TAPES 47-48, A-B, 49 A

 

HOUSE REVENUE COMMITTEE

FEBRUARY 21, 2005   1:00 PM   STATE CAPITOL BUILDING

 

Members Present:                      Rep. Tom Butler, Chair

                                                Rep. Vicki Berger, Vice-Chair

                                                Rep. Mark Hass, Vice-Chair

                                                Rep. Brian Boquist

                                                Rep. Sal Esquivel                                       

                                                Rep. Larry Galizio

                                                Rep. Betty Komp

                                                Rep. Andy Olson                                                                

 

Members Excused:                     Rep. Chuck Riley                            

 

Witnesses Present:                      Rob Douglas, Oregon Society of Certified Public Accountants   

                                                Kim Spaulding, Oregon Society of Certified Public Accountants

                                                Robert Carus, Oregon Society of Certified Public Accountants

                                                Bruce Krohn, Oregon Society of Certified Public Accountants

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Economist

                                                Kristi Bowman, Committee Assistant

                                               

 

TAPE 47, SIDE A

 

 

 

002

Acting Chair Berger

Calls meeting to order at 1:06 p.m.

 

OPENS DISCUSSION FOR HOUSE BILL 2542

 

005

Lizbeth Martin-Mahar

Gives overview of Certified Public Accountants’ (CPA) presentation. Revenue impact will be discussed on Tuesday, 2/22. ORS 316.012 discussion (Exhibit 1) pertaining to needed legislation for reconnecting to Federal tax laws. One of the components of House Bill 2542 is to establish a connection date of 12/31/04 for changes to the Internal Revenue code that are unrelated to the definition of taxable income.

 

 

 

033

Rob Douglas

Gives overview of booklet (Exhibit 2) published by the Oregon Society of Certified Public Accountants. Introduces speakers from Oregon CPA Society.

 

 

 

055

Kim Spaulding

Gives overview of sections: A pertains to various federal tax laws and the recommendations by the Oregon Society of Certified Public Accountants automatically reconnecting Oregon tax laws with federal tax laws. Items in Section A do not need legislative action. Section B pertains to federal credits that do not impact OR tax law. Section C items need legislative action in order to conform to federal law because of enactment dates or they fall outside of taxable income.

 

 

 

070

Spaulding

Begins discussion of Section A, p. 1.

079

Chair Butler

Questions and answers exchanged regarding Section A.

 

145

Robert Carus

Continues with discussion of Section A., beginning with paragraph 244, p. 7.

 

 

 

170

Rep. Boquist

Asks about ownership of railroad tracks referred to in Section 245.

 

 

 

172

Carus

Responds that this section refers to Class II and Class III railroads with multi-state operations.

 

 

 

228

Chair Butler

Questions and answers exchanged regarding Section A recommendations. Rep. Butler has submitted a Legislative Concept on amortization issues.

 

260

Carus

Clarifies use tax imposed on owners of aircraft. (Section 336).

 

 

 

374

Rep. Boquist

Clarifies that Section 901 changes the depreciation period from 7 to 20 years and is related to section 706 regarding natural gas development costs in OR.

 

 

 

TAPE 48, SIDE A

 

 

 

29

Bruce Krohn

Continues discussion of Section A, Sections 101-204, p. 12, pertaining to the Pension Funding Equity Act of 2004.

 

 

 

91

Krohn

Discussion of Section A, Sections 316-408, p. 15, pertaining to the Working Families Tax Relief Act of 2004.

 

 

 

115

Chair Butler

General comments about depreciation and amortization.

 

 

 

121

Rep. Hass

Asks whether the amount stated in section 910, p. 12, is the same amount that was allowed in 2003.

 

 

 

123

Carus

Responds that the cap was reduced slightly to $25,000.

 

 

 

152

Spaulding

Begins discussion of Section C recommendations on p.40 pertaining to OR tax laws that do not automatically connect to federal tax laws

 

 

 

198

Rep. Berger

Asks about dates of enactment that do not automatically connect federal tax laws to OR tax laws.

 

 

 

200

Chair Butler

Responds that any enactments after January 1, 2003, are not connected to federal tax laws.

 

 

 

217

Chair Butler

Questions and answers exchanged regarding amortization.

 

 

 

234

Martin-Mahar

Comments that there may be confusion about what is current law prior to December 2002 regarding capitalization costs and that she has discussed these issues with Linda Spaulding.

 

 

 

343

Rep. Boquist

Comments that the IRS is considering a retroactive increase of the death gratuity for a military member to $100,000. How would that impact this provision? (refer to Section 102, p. 42)

 

360

Martin-Mahar

Responds that if HB 2542 is enacted, the impact would be $12,000, not $97,000 as it is currently.

 

TAPE 47, SIDE B

 

 

 

015

Carus

Continues overview of recommendations for Section C, p. 45.

 

 

 

030

Chair Butler

Suggests including a graph or timeline of the enactment dates of the federal laws discussed in the booklet as an aid to the committee members.

 

 

 

105

Carus

Discusses definitions of S-corporations and needed legislation to tie the definitions to federal law that would result in an automatic reconnect between federal law and OR law.

 

 

 

220

Krohn

Continues overview of recommendations for Section C.

 

 

 

260

Chair Butler

Asks about status of income averaging in OR.

 

 

 

266

Krohn

Responds that currently only farmers can income average. The recommendation in Section 314, p. 49, is to provide equity to fisherman regarding income averaging.

 

 

 

310

Rep. Komp

Provides definition of food products fed to livestock (Section 316, p. 50).

 

 

 

TAPE 48, SIDE B

 

 

 

009

Rep. Hass

Asks what is the goal of the policy stated in Section 335 (p. 52)

 

 

 

020

Rep. Berger

Responds that some whaling activities can be considered a charitable deduction.

 

 

 

026

Rep. Boquist

Asks about how new legislation will be applied to the various provisions stated in the bill.

 

 

 

033

Martin-Mahar

Responds that HB 2542 will connect to a specific date for adjustment purposes on OR tax return.

 

 

 

045

Rep. Boquist

Clarifies purpose of section C recommendations. Questions and answers exchanged with Chair Butler.

 

 

 

060

Spaulding

Comments that there are some provisions discussed in Section C that would not automatically reconnect with Federal law, such as credits or S-corporations.

 

 

 

091

Carus

Continues overview of Section C.

 

 

 

150

Chair Butler

Comments that the foreign earnings issue stated in Section 422, p. 56, will be discussed in depth on 2/22.

 

 

 

214

Carus

Due to committee time constraints, Mr. Carus reads only the titles of the remaining recommendations in Section C beginning at Section 801 (p. 58) to Section 838 (p. 61).

 

 

 

236

Spaulding

Continues reading titles of Sections 838 (p. 61) to 909 (p. 67).

 

 

 

289

Krohn

Reads titles of sections 503 (p. 67) to 314 (p. 73).

 

 

 

361

Krohn

Refers to supplement handout (Exhibit 3) that includes federal legislation that took place after the booklet was published.

 

 

 

399

Chair Butler

Makes general comments about today’s meeting. HB 2542 discussion will be carried over to Tuesday, 2/22.

 

 

 

422

Rep. Komp

General comments about the Working Family Tax Relief Act.

 

 

 

446

Rep. Berger

Asks about the Tsunami Relief section that hasn’t been yet resolved and how taxes are being done currently.

 

 

 

471

Chair Butler

Responds that tax returns affected will be amended.

 

 

 

TAPE 49, SIDE A

 

042

Chair Butler

Adjourns meeting at 2:59 p.m.

 

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

Exhibit Summary:

  1. 1.      HB 2542, Handout: ORS 316.012, Martin-Mahar, 1 pg., 02/21/05
  2. 2.      HB 2542, Booklet: An Analysis of Changes, Oregon Society of Certified Public Accountants,

87 pp., 02/21/05

  1. 3.      HB 2542, Handout: Supplement to booklet, Oregon Society of Certified Public Accountants,

2 pp., 02/21/05