5 questions with Sheppard Miers Jr., GableGotwals tax attorney
BY LAURIE WINSLOW World Staff Writer
Friday, December 21, 2012
12/21/12 at 5:04 AM
Sheppard Miers Jr., a shareholder in the Tulsa office of the GableGotwals law firm, practices in the areas of federal and state taxation. He serves as state liaison for the Taxation Law Section of the Oklahoma Bar Association.
1: What are one or two of the biggest tax changes that Oklahomans can expect as a result of state legislation enacted this year?
One change affecting Oklahoma taxpayers, particularly businesses, is the approval of State Question 766 by voters in November. It amended the Oklahoma Constitution exemption of intangible personal property from ad valorem tax. The exemption will now apply to all intangible personal property. This is a clarification of the exemption as it existed for many years before being judicially narrowed by an Oklahoma Supreme Court interpretation in 2009.
A less-publicized 2012 change in Oklahoma tax law has increased powers of the Oklahoma Tax Commission if a business falls behind in filing reports and making payments of Oklahoma sales tax. It authorizes the Tax Commission to close a business even if it has only partially failed to report and pay in collected sales tax.
2: How will businesses potentially be affected by these state tax changes?
The revision of the Oklahoma property tax exemption of all intangibles - to assure that items such as customer lists and relationships, databases, goodwill, patented technology, trademarks, trade names and software will not be subject to property tax - is a positive change for business. It will resolve all uncertainty on the scope and effect of the exemption. Further controversy and litigation will be avoided. That simplifies compliance and avoids the potential for large long-term tax increases for some taxpayers.
The other new law, which authorizes the Tax Commission to shut down a business, can be applied to any failure to file three sales tax reports or make three payments within a 24-month period, after notice from the commission. This could be a severe sanction of a business caught in a market downturn or having other compliance difficulty, even if it has filed and made most reports and payments in that period.
3: How will legislative changes made to the state's economic development incentive affect businesses that are enrolled in the Oklahoma Quality Jobs Program?
A business that has qualified for cash payments for creating new jobs under the Oklahoma Quality Jobs Program Act can now lose entitlement to the payments by failing to submit claims required by the act. If a business establishment files at least one claim with the Oklahoma Tax Commission under the program but then fails to file another claim within two years of the most recent claim, the commission may dismiss the establishment from the program.
The Legislature also amended the act to add entities engaged in drilling oil and gas wells as being eligible for the incentives
4: The Oklahoma Bar Association's proposal to create a state tax protest hearings office independent of the Oklahoma Tax Commission was not adopted. Why did the OBA advocate for such an office?
Providing a level playing field for taxpayers at the trial hearing of a protest is the objective. Under present Oklahoma law, a taxpayer's protest is heard by an administrative law judge employed by the Tax Commission who recommends findings to the commission, and it makes the final administrative decision.
But the Tax Commission also administers the audit, assessment and enforcement functions involved. A taxpayer gets an independent review of a Tax Commission proposed assessment of additional tax only by appealing to the Oklahoma Supreme Court.
5: What is the best thing individuals can do to prepare for federal tax changes that could occur if no action is taken before the end of December to extend tax cuts that were put in place some 10 years ago?
Individuals can try to prepare by considering authoritative publications that accurately explain potential effects in 2013 if the Bush tax cuts are not extended. A simple list of potential changes affecting federal income tax rates, and tax deductions and credits allowable, should be prepared. The calculation of Oklahoma individual income tax is linked to the federal income tax, so federal income tax changes in 2013 could flow through and affect Oklahoma income tax liability.
Getting expert advice is recommended before making a decision involving a significant amount of money or that substantially deviates from usual management of personal finances.
MATT BARNARD/Tulsa World