HB 799 Conference Report will make it even harder for the DOR to fight tax avoidance

April 1st, 2014

Conference report changes to HB 799 fail to address our concerns about limiting the Department of Revenue’s ability to fight tax avoidance. See our initial analysis of the bill here.  

In fact, in many cases the new language will make it even harder for the Department of Revenue to fight tax avoidance.  The bill will virtually gut the Department’s ability to enforce tax law (including sales and income taxes) by limiting the imposition of penalties and damages and even the ability to simply verify income tax refunds. 

Arguments in support of the bill largely center around perceptions of our state and our treatment of corporate tax issues, rather than fair application of the state’s tax laws.  Locally based businesses and individuals cannot shift income out of state to avoid taxation. 

Changing tax laws or, in this case, tax administration, to be perceived as “business friendly” will have a negligible effect on jobs in the long run.  If there are corporations that make investment decisions based on state taxes, which make up a very small portion of their overall costs, they will not be the long term investors in our state’s future.  They will move when the grass is greener somewhere else. 

Finally, gutting tax enforcement measures will result in lost revenue for the things that really work to make us economically competitive, like good schools, a college-educated workforce, and healthy and safe communities. 

-Sara Miller, senior policy analyst

Sara head shot