New Oklahoma sales tax enforcement measure draws concerns from business owners

The law gives the state Tax Commission the authority to shut down businesses out of compliance with paying state sales taxes. A business is considered noncompliant if for three months during any 24-month period they fail to either report or remit sales taxes.
BY MICHAEL MCNUTT mmcnutt@opubco.com Modified: November 18, 2012 at 7:43 pm •  Published: November 19, 2012
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A new law intended to improve Oklahoma's method of collecting delinquent sales taxes from businesses is drawing criticism as being unfair to small business owners.

Michael Delaney, whose wife owns a pet boarding and day care in Norman, said he's disappointed in the GOP-controlled Legislature and Republican governor who claim to support small businesses but approved the measure that was passed earlier this year.

“Every other word out of their mouth is we are here for small business,” he said.

“That's what sends a chill down my spine — when I see stuff like this. … There are people who are always going to be evading taxes, but now they are bringing it down to a granular level of enforcement that is uncalled for and as far as I'm concerned un-American.”

Paula Ross, a spokeswoman with the Oklahoma Tax Commission, said the measure, Senate Bill 1984, is not intended to harm businesses in the state. The measure is expected to collect about $16.7 million in delinquent sales taxes from businesses this fiscal year, which began July 1. That money is sales tax already being paid by customers, but not being turned into the state by businesses.

“It's an additional enforcement tool,” she said. “Our goal is to keep businesses and all taxpayers in compliance with the state tax laws. All enforcement efforts are just an ongoing thing that we do to keep businesses in compliance so the state can collect taxes so the citizens can have services.”

Before the new law, the Tax Commission had the power to shut down businesses — and did — for failing to pay delinquent sales taxes, Ross said.

The new law gives the agency specific guidelines when closure procedures may begin.

For the most part businesses pay sales taxes monthly.

State law allows for semiannual filing when the tax does not exceed $50 a month.

Customers pay the sales tax when they make a purchase, and the business is to remit the tax to the state.

“That tax isn't something the business should ever keep,” Ross said. “That is always supposed to be remitted back to the state so it can go to local governments or back to the state.”

The law, which was passed and signed into law earlier this year, took effect Nov. 1.

It gives the Tax Commission the authority to shut down businesses out of compliance with paying state sales taxes.

A business is considered noncompliant if for three months during any 24-month period they fail to either report or remit sales taxes.

“That I find a very disturbing, very overreaching, very controlling legislation to pass,” Delaney said.

“I have serious concerns and questions about where our government is going with regards to control over small businesses, why they need such control and why wouldn't it behoove the government to always allow a business to keep its doors open, keep its people employed, and take what existing rules and regulations that are on the books for collecting back taxes.”

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