March 20, 2006 |
2006-R-0253 | |
PROGRAM REVIEW BILL REPORTED TO FINANCE | ||
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By: Judith Lohman, Chief Analyst | ||
You asked for a brief summary of the bill the Program Review and Investigations Committee reported favorably to the Finance Committee.
SHB 5491—AA IMPLEMENTING THE RECOMMENDATIONS OF THE LEGISLATIVE PROGRAM REVIEW AND INVESTIGATIONS COMMITTEE RELATING TO CONNECTICUT'S TAX SYSTEM
§ 1—Additional Report on State Mandates
The bill requires the Advisory Commission on Intergovernmental Relations to submit an additional report to the General Assembly that (1) identifies and describes each unfunded and partly funded state mandate on local governments, (2) identifies its actual cost to local governments, and (3) analyzes the effect of eliminating or reducing it. The first report is due early in the 2007 legislative session, the second in 2010, and subsequent reports every four years.
EFFECTIVE DATE: October 1, 2006
§ 2—DRS Reports and Strategic Plan
The bill requires the DRS commissioner to compile certain information and submit annual reports with the information to the Appropriations and Finance, Revenue and Bonding committees starting December 31, 2008. The commissioner must:
1. periodically estimate the difference between the state taxes owed assuming full compliance with all state tax laws and those voluntarily paid, whether it results from failure to file tax returns, underreporting liability, or failure to pay taxes owed (“tax gap”);
2. develop a strategy to discourage tax avoidance and promote compliance;
3. conduct an annual cost-benefit analysis of each major compliance initiative, including amnesty programs; and
4. annually report information, after consulting the OPM secretary, on local property tax collections for the most recent available five-year period.
It also requires that, starting by July 1, 2007, the commissioner annually update and publish a strategic plan for the department, including its mission, measurable goals for accomplishing the mission, strategies to achieve the goals, and a timetable for measuring progress.
EFFECTIVE DATE: October 1, 2006
§ 3—Study of Requiring Tax Compliance As A Condition Of Doing Business With The State
The bill requires the DRS commissioner to study the effect of requiring every person or entity doing business with the state to be in compliance with all tax laws. The study must:
1. assess methods available for DRS to verify tax compliance to state agencies before they issue grants or contracts;
2. review legal issues, including those arising out of statutory definitions of compliance and confidentiality;
3. consider the possibility of delays in awarding contracts and the effect of those delays; and
4. estimate resources needed to implement such a requirement.
The commissioner must report the study to the Finance, Revenue and Bonding and Government Administration and Elections committees by January 1, 2007.
EFFECTIVE DATE: July 1, 2006
§§ 4 & 5—Property Tax Information Report
The bill requires the OPM secretary, in his annual statistical report on property tax assessments and collections during the preceding year, to include:
1. information on local property values and tax trends, such as the average and median single-family residence tax bills and the percentage changes in these bills over time;
2. town-by-town information on availability and use of local-option property tax exemptions; and
3. measures of the accuracy and uniformity of local revaluations.
It also requires local tax collectors to report this additional information in their annual reports to OPM.
EFFECTIVE DATES: October 1, 2006 for the OPM report; July 1, 2006 for the reports from local tax collectors.
§§ 6-9—Interest Rates on Delinquent Taxes
The bill changes the interest rate on delinquent payments of certain taxes, makes it an annual rather than a monthly rate, and allows the rates to fluctuate. Instead of 1% per month, the bill sets the rate at the annual federal short-term interest rate as of July 1, as determined by the IRS, plus three percentage points. Since the current annual federal short-term interest rate is 3. 45%, if the bill were in effect, the delinquent tax interest rate would be 6. 45% per year instead of 12%.
The new rate applies to delinquent corporation, sales and use, and personal income tax payments and to those of any other tax that has no statutory interest rate.
EFFECTIVE DATE: October 1, 2006 and applicable to taxes due and payable on or after that date.
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