INFORMATIONAL MEETING

OVERVIEW OF COLLECTION PROCESS

 

TAPES 19 A-B, 20 A

 

SENATE REVENUE COMMITTEE

FEBRUARY 1, 2005 9:00 AM STATE CAPITOL BUILDING

 

Members Present:                  Senator Ryan Deckert, Chair

                                                Senator Charles Starr, Vice Chair

                                                Senator Rick Metsger

                                                Senator Floyd Prozanski

                                                                       

Members Excused:                 Senator Gary George

 

Witnesses Present:                Elizabeth Harchenko, Oregon Department of Revenue

                                                Susan Browning, Oregon Department of Revenue  

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Barbara Guardino, Committee Assistant

 

TAPE 19, SIDE A

004

Chair Deckert

Calls meeting to order at 9:00 a.m. Introduces issue of Department of Revenue tax compliance and collection process, and an overview of governor’s budget for compliance. Will discuss a number of proposals on Wednesday, and California’s tax compliance program. On Thursday a committee bill will be introduced.

 

INFORMATIONAL MEETING

040

Elizabeth Harchenko

Directs members’ attention to Department of Revenue information packet (EXHIBIT 1).

 

051

Harchenko

Begins presentation with Agency Overview: Mission, pages 4-5. Program History, page 6. 2005-07 Governor’s Balanced Budget, page 7.

 

071

Harchenko

Page 8: Personal Income and Corporation Taxes.

 

095

Harchenko

Page 9, Services Paid for With Oregon Income Tax Dollars

 

099

Harchenko

Page 10, Property Taxes, Projected 2005-2007 Department of Revenue Administration

 

116

Harchenko

Page 11: Services Paid for With Oregon Property Tax Dollars

 

 

Page 12: Cigarette and Other Tobacco Taxes

 

125

Harchenko

Page 13: Services Paid for With Oregon Cigarette and Other Tobacco Tax Dollars

 

132

Harchenko

Pages 14-15, Other taxes, projected 2005-2007

 

 

Page 16, Partnerships, projected 2005-2007

 

150

Harchenko

Page 17, Assistance Programs, projected 2005-2007

 

165

Susan Browning

Page 18, 2003-07 Agency Business Plan Executive Summary.

New this tax season are credit card tax payment, online refund status check and Web site for ORMAP.

 

210

Sen. Prozanski

Asks whether credit card payment is an option or mandatory.

 

215

Browning

Yes, it is voluntary through a third party.

 

222

Browning

Page 19: The Balanced Approach to Healthy Income Tax Programs.

Page 20: Income Tax Programs “Our Business is Compliance” – Education, Assistance, Enforcement

 

245

Chair Deckert

Asks questions concerning educating people where their dollars go.

 

250

Browning

People are not always aware how much tax money goes toward education.

 

287

Browning

Continues comments on helping taxpayers comply.

 

299

Browning

Page 21: Revenue Flow, Education and Assistance, Enforcement

 

313

Chair Deckert

Asks, what percentage doesn’t voluntarily report?

 

327

Browning

It’s hard to determine, but about 9% of total dollars.

 

335

Browning

Page 22: How Oregon Collects Income Tax Dollars – Personal Income Tax

 

347

Browning

Page 23: Quality in Compliance Code of Conduct for DOR employees

 

358

Browning

Page 24: Taxpayer Assistance in Revenue’s Offices

 

382

Chair Deckert

Asks if DOR has enough employees trained to help with education and compliance.

 

391

Browning

DOR emphasizes training, partners with local communities and schools to keep administrative costs low. The training is good but there are still challenges. DOR does not need additional staff.

 

434

Harchenko

One challenge for DOR is growing at a rate in which it can absorb the growth. DOR plans classes to train auditors and collectors. DOR is reaching limits of the building, so to add staff would require more space.

 

TAPE 20, SIDE A

030

Harchenko

 Concludes comments on how to maximize effectiveness of staff.

 

042

Browning

Page 25: How We Work to Improve Compliance – Enforcement

 

050

Browning

Page 26: Corporation Excise and Income Tax

 

056

Chair Deckert

Asks questions on possible legislation for closing of tax shelters.

 

066

Harchenko

Oregon is partnering with other states to learn about use and abuse of tax shelters. California and New York have taken lead in educating the other states, sharing data bases and applications to identify shelter vehicles. Will provide more detail tomorrow.

 

091

Sen. Metsger

Comments on the ability of public utility districts to convert tax dollars into profits. PUC regulation allows utilities to collect tax dollars and those dollars never get to the state treasury.

 

120

Harchenko

Responds to Metzger’s concerns.

 

150

Harchenko

Notes, separate accounting states lose revenue. DOR has spoken with PUC during interim on issue of fair return.

 

173

Sen. Metsger

Notes, Sen. Vicki Walker will introduce a bill relating to this issue.

 

196

Chair Deckert

PUC Chairman Lee Beyer is working on a draft to address this issue.

 

208

Browning

Continues discussion with Program Efficiencies and Effectiveness, Income Tax Programs. Page 28: Processing Center Quick Facts

 

225

Harchenko

Property Tax Program: Creating Partnerships

Page 30: Policy Direction: A Statewide Partnership

 

245

Harchenko

Page 31: Oregon’s Property Tax History. Discusses before and after Measure 5

 

267

Harchenko

Pages 32-33: Department Property Tax Functions; County Property Tax Functions

 

284

Harchenko

Page 36: Property Tax Quick Facts – centrally assessed and industrial properties

 

299

Harchenko

Page 37: Mapping. DOR provides services to 14 counties.

 

311

Harchenko

Pages 38-39: Oregon Map Project; Assessors Map Status summary

 

 

 

324

Harchenko

Skips tobacco taxes, moves to Policy Issues. Page 44: Policy Option Packages. Governor has recommended giving $1.6 million of additional resources to shut down tax shelters, increase auditing.

 

344

Chair Deckert

Asks questions concerning receivables, amnesty program.

 

360

Harchenko

Most states have held amnesty programs last 4 years. Issues to consider are whether those dollars would be collected anyway and how much might be generated.

 

380

Chair Deckert

Comment, California brought in excess of what was predicted.

390

Harchenko

California’s Voluntary Compliance Initiative was a targeted effort toward high income individuals and businesses. They estimated 1/10 of what they collected. Other amnesties have been more general.

 

445

Harchenko

Oregon has no sales tax, so focus will be different from other states with sales, property and income taxes. Questions and discussion.

 

 

 

TAPE 19, SIDE B

037

Harchenko

Page 45: Multistate Tax Commission, overview and MTC programs

 

065

Sen. Prozanski

Will submit a set of questions from citizens’ tax groups to DOR staff.

 

080

Chair Deckert

Asks how the DOR deals with collecting a delinquent account.

 

088

Browning

Gives examples of dealing with non-payers. DOR will ask for payment in full. If the taxpayer can’t pay in full, DOR will set up a program. If that doesn’t work DOR will take legal action.

 

154

Browning

A taxpayer who misses filing three years in a row is subject to 100% penalty. DOR can waive that if a person comes forward.

 

168

Chair Deckert

Spoke with a group of CPAs who say people who don’t file year after year have gotten comfortable with not filing.

 

190

Browning

There are heavy ramifications for these non-filers. DOR works with CPAs to bring these people into compliance. DOR does a lot of data-matching with IRS and other sources.

 

225

Chair Deckert

Implication is, these non-filers are mainly S-Corporations.

 

232

Browning

CPAs have an obligation to ensure compliance. Small businesses have an ability to hide their taxes.

 

245

Chair Deckert

Requests data on how often DOR has taken businesses to court.

 

257

Browning

Will get this information.

 

317

Paul Warner

Legislative Revenue Office has a tax compliance bill prepared.

 

327

Chair Deckert

Adjourns meeting at 10:18 a.m.

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant                               Reviewed by Kim Taylor James

 

Exhibit Summary:

1.      Informational, Department of Revenue, Harchenko, 46 pp.