Oklahoma Municipal League

Champions for Effective Local Government

Municipal Revenue

Latest News

 

KEEP LOCAL SALES TAX AT HOME: HB 1875
The Oklahoma Tax Commission (OTC) and the Oklahoma Municipal League (OML) have verified that cities and towns are subsidizing the state’s sales and use tax enforcement. There is no disagreement on this point.  HB 1875 will correct this inequity.  All local officials are needed to secure passage of this bill.  The Liaison Board will discuss this at OML’s Annual Conference.  Click here for more information about actions you can do.   

OK Rallying for Online Sales Tax - KFOR TV - added 9/23/11

New Tool for Collecting Local Sales Tax Available Now:
An important new tool is available for you to increase collections of your sales and use tax. Your knowledge of your community can now directly be brought to bear for local compliance of municipal and state law, SB750.  Posted 7/12

TASK FORCE UPDATE Tuesday, September 20th, 2012 was the first meeting of the Task Force on Collection, Distribution and Enforcement of Municipal Sales Tax.

2013 Conference: Proactive Steps to Increasing Sales Tax Collection

Posted 8/28/13

The League’s Liaison Board to the Oklahoma Tax Commission (OTC) will conduct an afternoon of training on September 18th to assist you in increasing sales tax collection for your community. This will be a 3-part track at OML’s Annual Conference in Tulsa.  Following appointment by the League Board of Directors in 2010 the Liaison Board has met monthly to identify problems and find solutions with sales and use tax collections and enforcement.  This is your opportunity to exchange practical information with those municipal officials who have engaged the Tax Commission in determining accountability for fees paid to OTC by municipalities, improving contract and reporting and collection methods and involving municipalities in formulating OTC’s policies in enforcement of municipal tax ordinances.
The three sessions are:
Enhancing Municipal Sales Tax:

  • Are you being overcharged for OTC services?  Ross VanderHamm Edmond Finance Director.
  • Using OTC Reports and Resources.  Dana Ratcliff, Weatherford Treasurer, Breck Buchanan, Tulsa Treasury Analyst and Davis Puryear, Oklahoma City Assistant Treasurer.
  • Being Pro Active:  Increasing Sales Tax Revenue.  Bob Ponkilla, Oklahoma City Treasurer, Davis Puryear, Oklahoma City Assistant Treasurer and John Vincent, municipal attorney. Click here to read more. 

Progress Report 8/7/13: OML Liaison Board to Tax Commission

This Board was formed by the OML Board of Directors in April 2010 to further the League’s on-going efforts to increase municipal revenues.  We are pleased to report that much progress has been made in the ensuing three years.  The League wishes to thank those who have worked so hard to make this happen. 

The purpose of the Liaison Board is to identify problems with the Oklahoma Tax Commission (OTC) involving sales and use tax collections and enforcement; the Independent Auditor Program as well as accountability by OTC for the retainage paid by municipalities for enforcement of their sales tax ordinances.  At their first meeting on May 14, 2010, the Liaison Board members developed a list of priority issues which has guided its work to the present.   Following is an annotated form of that list showing the issues and the status to date.   

The Liaison Board is comprised of municipal officials chosen to represent

  • various municipal positions that deal with the Tax Commission,
  • metro and nonmetro municipalities, and
  • all sections of the state.

OML attorneys facilitate the Liaison Board’s meetings and activities.

The Liaison Board has authority to establish mechanisms for:

  • accountability for the retainage fees paid by cities and towns,
  • setting of priorities for OTC collection and enforcement activities,
  • improving the contract terms and reporting methods, and
  • involving municipalities in formulating OTC’s policies and procedures in its enforcement of municipal tax ordinances.

 

OML Municipal Liaison board Initial Issues

Revised June 18, 2010
Annotated July 2013

  • Accountability for Retainage

This issue is being addressed by HB 1875, which is pending in committee for hearing next legislative session.  The basis for the bill is confirmation obtained by the Liaison Board from OTC that cities and towns are paying OTC more than its weighted costs for administering municipal sales and use tax collection contracts.

  • Audits: both by OTC and local authority for audits

Due to various discussions between the Liaison Board and OTC administrative staff, the Tax Commission has directed additional resources to conducting audits.  Also, fully implementing the Independent Audit program has been an on-going effort by the Liaison Board. 

  • Computer Capability

In November 2012, the Tax Commission completed upgrading its computer system for tracking sales and use tax collections and reporting.  The Liaison Board met with the OTC administrator several times prior to the upgrade to obtain a better reporting format to municipalities and request additional reports for local analysis.

  • Information Sharing, including confidence building measures

The Liaison Board meets frequently with OTC Administrator Tony Mastin and other OTC staff to discuss issues.  Since 2010, the relationship between the Liaison Board and OTC has improved and provided a mechanism to resolve problems and share information.

  • Local Enforcement

This issue has been enhanced in several ways through the work of the Liaison Board.  OTC has cooperated with municipalities that decide to prosecute noncompliant sellers in municipal court.  Additionally, the Liaison Board and OTC continue their work to fully implement legislation authorizing municipalities to engage in local compliance activities as agents of the Tax Commission.

  • OTC procedures

The Liaison Board discusses processes and procedures on a regular basis with OTC. 

  • Reports:  both form and content

OTC has developed new reports and/or report forms due to discussion with the Liaison Board.  This includes making municipal reports available as an excel spreadsheet for easier analysis by each municipality.

  • Sourcing, including out-of-state sales and use taxes

The Liaison Board discussed the sourcing process with OTC early in its existence.  This is an on-going monitoring issue as circumstances arise.  The Liaison Board also actively analyzes Oklahoma’s streamlined sales and use tax collections and monitors progress of federal legislation to collect sales and use tax on remote sales.

  • Verifying Tax amounts

This again is an on-going monitoring task.  The Liaison Board’s suggested changes to OTC’s reports were aimed at addressing this concern.

  • Vendor discount

Vendors retain a percentage of sales taxes they collect. This “discount” was lowered by legislation in the 2010 session.  The Liaison Board continues to monitor subsequent bills that would again increase the discount.  Board members also continue to analyze the impact of the discount.

  • Contract language

 

Although last on the priority list, revision of the contract between municipalities and OTC was the first major project for the Liaison Board.  This led to numerous meetings with OTC staff and many frank conversations.  A new contract was developed beginning with FY 2011-12.  This contract provided, among other things, for a larger compliance role at the option of each municipality, enhanced information sharing, and better reporting to cities and towns.

Municipal Revenue in Oklahoma – Facts You Should Know

  • OTC Contract: The Municipal Liaison Board has negotiated a new sales and use tax agreement for cities and towns.  The Oklahoma Tax Commission recently sent notification of this new agreement.  The Liaison Board provides this Overview of changes and is developing an annotated version of the new contract. 

 

Helpful Funding Resource Tools for Municipalities from OML and Other Sources

OTC Contract Amendments

Revenue Generating Tools
Includes: - Managing Your Limited Resources Without Outside Help: A few practical ideas
              - Cities Mean Business 
              - Municipal Warrant Intercept Registration Form

Municipal Liaison Board        
Includes: - Report on Liaison Board Activities
              -Role of Liaison Board
              -Best Practices Powerpoint for Working with OTC
              -Municipal Enforcement Options
                      Bartlesville
                      Choctaw
                      Muskogee

Task Force Begins Examination of Municipal Finance Issues

Municipal Finance & Revenue Efficiencies in Oklahoma
Includes: - Developments on Telecommunication Industry Inclusion in Streamline Sales Tax
              -Municipal Fiscal Task Force Created by HB 2653
              -HB 2359 Detailed Summary
              -Streamlined Sales Tax (SST)

Municipal Innovations for Enhancing Revenue
Choctaw - Sample Delinquent Sales Tax Information

Sapulpa - Insurance Billing

Lawton - Idling Security Policy and Annexes

Muskogee - Tax Prosecutions

Municipal Finance & Revenue Issues in the News
Cities Complain Theyre Being Shortchanged by the Tax Commission
Unpaid sales taxes add up for Tulsa, analysis shows


Municipal Fiscal Impact Act

Impact of Sales Tax Exemptions

Sales Tax Options 
Includes - Healthy Cities Need Healthy Funding Sources
             - Healthy Cities Power Point Presentation
             - The Use Tax and You
             - Critics Assail Governor Henry’s Internet Tax Compliance Ideas
             - State Could Save $259 Million by Eliminating Some Tax Credits and Exemptions
             - Muskogee Tax Prosecution

OTC Contract Amendments

Liaison Board’s contract amendments sent to Tax Commission.

2011 OTC Contract May

2011 OTC Contract May Markup

Revenue Generating Tools

Municipal Liaison Board to the Oklahoma Tax Commission

Report on Liaison Board Activities

Role of Liaison Board

Following discussions between OTC and OML staff about concerns with collection and enforcement of municipal sales and use taxes, both parties agreed to establish a method for regular input from cities and towns.  In response, the OML Board of Directors created the Municipal Liaison Board to the Oklahoma Tax Commission.  Members are:  Altus Finance Director JoeDon Dunham, Bartlesville City Manager Ed Gordon, Bixby City Manager Doug Enevoldsen, Edmond Finance Director Ross VanderHamm, Muskogee City Attorney John Vincent, Oklahoma City Treasurer Robert Ponkilla, Piedmont Mayor Mike Fina, Tulsa Treasury Manager Stan Jones and Woodward Finance Director Doug Haines.  We thank these gentlemen for agreeing to be leaders in this effort.

The Liaison Board met with OTC in forthright discussion about OTC’s procedures for collecting, auditing, pursuing delinquent taxpayers, providing useful reports and the desire for transparency in OTC operations and financial expenditures.  The Liaison Board is meeting monthly to establish a blueprint for continuing dialogue with OTC about areas of cooperation and accountability under the municipal contracts.  In other activity, the Board has reviewed bills from the 2010 session, studied Streamline Sales Tax, written a paper for the Oklahoma Academy, and started developing a best practices guide for enhancing revenues and dealing with OTC. 

Best Practices for Working With the Tax Commission Power Point Presentation (.ppt)

Municipal Enforcement Options:

            Bartlesville – Sales Tax Enforcement Ordinance(.pdf)

            Choctaw – Sample Delinquent Sale Tax Information 

            Muskogee – Sales Tax Prosecutions 

Task Force Begins Examination of Municipal Finance Issues 

Author: Shawn Ashley, eCapitol, Date: 09/16/2010

(OK) Members of a task force charged with examining the law governing municipal finance said they are concerned local governments are too reliant on sales tax revenue for their operation, as the panel began its work Thursday.

"One of my biggest concerns is the lack of diversification of revenue sources and the over reliance on the sales tax to provide revenues to municipalities' general funds," Oklahoma City Assistant City Manager Cathy O'Connor said.

O'Connor is one of the nine members of the Task Force on Municipal Finance. Other members include:

• Carolyn Stager, with the Oklahoma Municipal League;

• Terry Simonson, chief of staff and general counsel to Tulsa Mayor Dewey Bartlett;

• Joe Don Dunham, financial director for the city of Altus;

• Lawrence Mitchell, Lawton city manager;

• Dawn Cash, director of tax policy for the Oklahoma Tax Commission;

• Michael Clingman, Office of State Finance director;

• Sen. Patrick Anderson, R-Enid; and

• Rep. Daniel Sullivan, R-Tulsa.

Sullivan was the House author of HB 2653. The bill, which was sponsored in the Senate by Sen. Brian Crain, R-Tulsa, created the nine-member Task Force on Municipal Finance to examine the laws governing municipal finance for all forms of municipal government. It states that the task force is exempt from the Oklahoma Open Meeting Act and the Oklahoma Open Records Act. It requires the task force to submit a report to the House speaker, Senate president pro tempore and governor by Jan. 31, 2011. It states that the task force is to terminate effective Feb. 1, 2011.

Sullivan was elected chairman of the task force and Anderson was elected vice chairman.

Sullivan the idea for the bill resulted from a discussion with Simonson and other Tulsa officials concerning ways of improving municipal finance. Generally, Sullivan and the other panel members noted, municipalities must rely on sales tax revenue for operational expenditures. Their access to property tax revenue is limited to the city's sinking fund, which is used to make certain bond payments and legal settlements. Mitchell said Oklahoma was the only state in the nation that required municipalities to rely almost exclusively on sales tax collections for operations.

"The purpose of this task force it to come up with ideas of what the Legislature could do to assist municipalities with their financial struggles," Sullivan said.

The municipal representatives and Stager agreed with O'Connor that local governments were forced to be overly reliant on sales tax revenue. That, O'Connor noted, can be problematic because of changes in the state's overall economy where more money is spent on services, most of which are exempt from sales tax, than on goods. And, O'Connor noted, the growth of sales tax exemptions on both goods and services has negatively impacted municipal revenues.

"(The sales tax) is not the diverse source of revenue it was 25 or 30 years ago," she said.

The over reliance on sales tax revenue, O'Connor added, has created a competition for the revenue that she called unfortunate.

"The Oklahoma City suburbs are chasing after every grocery and big box store because they need the sales tax revenue," she said.

Dunham noted that municipalities also must compete with county governments, school districts and other political subdivisions for sales tax revenues as more of them seek to tap the funding source. Mitchell agreed, saying, "Not only is it a question of municipality versus municipality, but we are also seeing other entities trying to use the sales tax to fund their projects."

"The sales tax," Dunham added, "does not go far enough to cover our infrastructure needs, so municipalities need something more than the sales tax."

Dunham also said smaller communities, such as his, often lose retail sales to neighboring larger communities when people drive there to shop rather than making their purchases from local merchants.

"When they do that, the sales tax revenue goes to that other community," Dunham said.

Municipal Finance & Revenue Efficiencies in Oklahoma

Municipality Registration for Warrant Intercept

The Oklahoma Tax Commission (OTC) has completed the “warrant intercept registration” process that was enacted into law by HB 1800 during the 2009 legislative session with clean-up and implementation language enacted by HB 3166 during the 2010 legislative session.  The intent of this legislation is to allow a municipality to file a claim with the OTC for any portion of a tax refund due to a municipal court defendant to satisfy the debt, unpaid municipal fines and costs, or final judgment in full or in part.

Attachments include:   Memo from OTC; Warrant Intercept Registration Form; and Applicable portion of the enacted legislation.(.pdf)

The Oklahoma Municipal League (OML) is also exploring an enhancement to this program that could possibly simplify this process even more.

If you have any questions, please direct them to Sharissa Fisher---Manager Warrant Intercept Program:   [email protected]

Sample Delinquent Sales Tax Information - Choctaw

(Thanks to Robert Floyd, Choctaw City Manager)

- OTC Delinquent Notice (.doc) Letter that is sent out by the city of Choctaw for delinquent payments and the certificate that must be signed by the OTC on behalf of that business.
- Choctaw Cover Letter (.doc) OML cover letter for the Choctaw sales tax collection packet.
- Choctaw law on Sales Tax Collection (.doc)

Insurance Billing - Sapulpa

Sapulpa Fire Department Collection (.pdf) - Sapulpa’s ordinance and resolutions, one for fire collections to homeowners insurance and the other for city collections.

City of Lawton Idling Securing Policy and Annexes

Thank you to the City of Lawton for their innovative thinking and information.  The administrative policy basically directs the City to adopt an “idling policy” and the “annexes” are specific compliance requirements for each department.

IDLING SECURING POLICY 3 25.doc‎(39KB)

City Clerk Annex.doc‎(31KB)‎                        Community Services Annex.doc‎(32KB)‎ 

Finance Annex.doc‎(33KB)‎                           Fire Department Annex.doc‎(29KB)‎ 

Human Resources Annex.doc‎(31KB)‎  ‎          Library Annex.doc‎(32KB)‎ 

Municipal Court Annex.doc‎(32KB)‎                Parks & Recreation Annex.doc‎(119KB)‎ 

Police Annex.doc‎(35KB)‎                              Public Works Annex.doc‎(117KB)‎  

Tax Prosecutions - Muskogee

Information on how the city of Muskogee prosecutes businesses who fail to file their sales tax reports.  

Sec. 74-34.  Failure to file; fraudulent returns; penalties.

In addition to all civil penalties provided by this article, the willful failure or refusal of any taxpayer to make reports and remittances herein required, or the making of any false and fraudulent report for the purpose of avoiding or escaping payment of any tax or portion thereof rightfully due under this article shall be an offense, and upon conviction thereof, the offending taxpayer shall be subject to punishment according to a schedule of fines, as shall be modified from time to time by the council, and made available for public viewing in the office of the clerk of court, as provided in section 1-14.

(Code 1993, § 10-221)

State law references:  Failure to file, 68 O.S.§240; fraudulent returns, 68 O.S.§240.1. 

Fill In Information (.pdf)

Fill in Affidavit (.pdf)

Cities Complain Theyre Being Shortchanged by the Tax Commission

OKLAHOMA CITY -- If you live in Oklahoma, you've probably felt the effects of budget cuts in your town. That's because the budgets in most cities and towns are funded by sales tax revenue, which has plummeted in the last couple of years. Some cities are pointing a finger at the Oklahoma Tax Commission, saying it's not doing a good job collecting the taxes.

To read more of this article, go to the News9 website here.

Unpaid sales taxes add up for Tulsa, analysis shows

MUNICIPAL FISCAL IMPACT ACT

HB 3054 by Speaker Benge and Sen. Mazzei creates the Municipal Fiscal Impact Act requiring a fiscal impact statement for a bill the legislative committee wishes to consider or approve.  This will slow down legislative enactments of unfunded mandates.  The bill goes into effect on November 1, 2010.

Governor Signed Version of the bill (.pdf)

Impact of Sales Tax Exemptions

Sales Tax Options

Other Links