For a good summary of what the bill will do and answers to some commonly asked questions, click here.
On April 21, the Alabama House of Representatives voted 88-0 to pass HB427 , Rep. Paul DeMarco’s Taxpayer Bill of Rights. HB 427 / SB 347 has been endorsed by the Alabama State Bar, the Business Associations’ Tax Coalition, the Business Council of Alabama, the Alabama Retail Association, the Alabama Society of CPAs, the Birmingham Business Alliance, the Council On State Taxation (“COST”) and the Tax Executives Institute (“TEI”). Below is a good summary of what the bill will do:
- If it Ain’t Broke…. The Appearance of Fairness – by creating the Alabama Tax Appeals Commission (“ATAC”), this bill eliminates the cloak of unfairness that exists when a taxpayer’s case is decided by an employee of the Department of Revenue, or the local city or county government or its bounty hunter firm, which was the same entity that issued the assessment. And to illustrate that, the current ALJ nearly lost his job and was audited by the Commissioner of Revenue when the judge ruled against the Department for the taxpayer. He was even threatened at knifepoint and had to hire an attorney to resolve the matter.
- Critical for Economic Development/State’s Reputation – Alabama is now in the distinct minority of states that lack an independent tax appeals tribunal and we continually receive a “D” on the annual State Tax Due Process Scorecard issued by COST, primarily for this reason. (Send them the COST endorsement letter if you think this would help.) The creation of an independent tax appeals process and extending the appeal deadlines from 30 to 60 days will greatly improve Alabama’s rank among neighboring states competing for the same scarce jobs. Heck, even MS and LA have enacted independent tax commissions in the last year! [Note–Cam Ward and Phil Williams are both involved in econ. development]
- “It will cost the State money.” The Legislative Fiscal Office has scored the bill as revenue neutral. We are merely carving out the ALD and creating a separate agency to house the same people. No increase in pay. We may need a second judge in 2 years or so when taxpayers can start appealing final assessments from self-administered localities, but that will be a Godsend to taxpayers.
- Helps not Harms Small Businesses – No filings fees are imposed by ATAC. No attorney is needed—just as under current practice. Ask Judge Thompson. Plus, taxpayers may appeal final assessments of sales, use, rental and lodgings taxes from self-administered cities and countries (and their private auditing firms) to the ATAC, unless the governing body of the city or county opts-out. Instead of being faced with filing separate appeals in numerous cities and counties at one time, or facing a hearing officer hired/paid by RDS/AlaTax, taxpayers may appeal to ONE independent agency with specialized tax expertise—without paying the tax or posting an expensive surety bond up front. The ability to appeal all state and local tax disputes to one agency is a huge step towards simplifying compliance Alabama’s “unique” system that allows all local governments to collect their own taxes or contract out that function. No other state is like this.
- “The bill is too long” – Yes, it is a long bill but part of that is due to the requirement that we include the entire statute in the bill even when we are amending only one sentence; and about half of it relates to creating ATAC. It addresses a long list of problems with the current tax procedures and updates several procedures to conform to federal law.
- Implements Important Updates to Certain Procedures, including ELIMINATING the $50 failure to file penalty when an individual taxpayer is due an income tax refund and expands the innocent spouse relief available to Alabama residents consistent with recent federal changes.
- Overrules Rheem and levels the playing field by clarifying that the ATAC may consider any arguments that may be raised by the taxpayer regarding their refund claim, just as the Department of Revenue may conduct a second audit of a taxpayer in response to their refund claims. AEA totally misrepresented the result of that case and even the facts.
- The AEA is opposed to it – so that should tell the Senators something. The ADOR is opposed only to the ATAC provisions because they don’t want lose control over the appointment process (even though the Governor will effectively control it under the bill and the Commissioner IS ON THE NOMINATING COMMITTEE, too).
- Endorsements – BATC, BCA, ARA, ASCPA, the Council On State Taxation (COST), and the American Bar Association have endorsed the entire bill, while ALEC, NCSL, and even the National Taxpayers Union have endorsed the ATAC provisions.
Things are moving right along in Montgomery. Last Tuesday, the Alabama House passed the Education Budget (HB123)–that’s the earliest a budget’s been passed in a very long time. The Senate passed bills:
- prohibiting gassing as a method of euthanasia for cats and dogs (SB172),
- allowing for election expense reimbursement from the state (SB139),
- creating a crime of threatening harm or violence against a judicial system officer or employee (SB146), and
- creating the crime of filing a false lien against a public officer or employee (SB197),
Wednesday was a busy day in committee. Several good pieces of legislation passed out including:
- HB25 Rep. Paul DeMarco’s Fiscal Transparency Act which will improve the state’s Open Alabama website by requiring the Finance Department to post monthly financial reports.
- HB427 Rep. Paul DeMarco’s Taxpayer Bill of Rights which will enhance the protections taxpayers have against tax assessments handed down by the state.
- SB196 Sen. Paul Bussman’s Alabama Children and Families Act which will change the presumption in child custody cases where two fit parents are involved to a 50/50 split.
Also on Wednesday, there was a very contentious public hearing on Sen. Trip Pittman’s proposed Teacher Tenure Reform (SB310).
Yesterday, the House passed the controversial Forever Wild reauthorization (HB126). They also debated HB6 which is Rep. John Merrill’s bill to lower the mandatory school age from 7 to 6 years of age. Due to some Republican dissent, Rep. Merrill carried his bill over and a vote wasn’t taken. Eagle Forum is strongly opposed to this legislation because we believe parents should retain the right to decide if their 6-year-old son or daughter is ready for first grade. The House also passed HB230 which creates income tax credits for employers who create jobs.
The Alabama Senate spent most of Thursday working on Sunset Laws.
The Alabama Legislature had another busy week. The Alabama House passed several sunset bills along with the following:
Rep. Paul DeMarco’s HB25 Fiscal Transparency Legislation requiring the State Finance Department to produce monthly financial reports for the General Fund and the Education Trust Fund, and to publish them in a prominent place on the department’s website. This increased transparency will allow government agencies and the public to monitor the condition of the state’s budgets, making it easier to prepare for budget cuts, should they become necessary.
Rep. Wes Long’s HB8 which amends the definition of “child” to include the unborn. It also creates a rebuttable presumption of exposing a child in utero to a controlled substance if both the mother and the child test positive for the same controlled substance not prescribed by a physician.
Rep. Jim McClendon’s HB102 ban on texting while driving.
Next week, the House will consider teacher tenure and the education budget.
The Alabama Senate saw a lot of action this week as well. They had a few lively committee hearings on legislation:
SB140 Sen. Scott Beason’s reauthorization of the Forever Wild program
SB256 Sen. Scott Beason’s immigration reform legislation
SB236 Sen. Arthur Orr’s legislation to authorize furloughs for state employees
Next week, the Senate Health Committee will meet to consider several pieces of pro-life legislation.
Most states have websites where their state checkbook, budget, etc is posted online. Alabama’s version of that site is called Open Alabama. The problem is that Open Alabama isn’t all that open. Like the state’s online legislative information system, it is incredibly difficult for the average person to navigate and use. Most people without a degree in accounting aren’t going to be able to read and understand the data.
In an effort to address this problem and thus increase transparency regarding state spending, Rep. Paul DeMarco has introduced H.B. 25 the Fiscal Transparency Act. The press release below gives a good overview of what H.B. 25 does and why.
STATE REPRESENTATIVE PAUL DEMARCO
FOR IMMEDIATE RELEASE: MONDAY, MARCH 7, 2011
Rep. DeMarco Introduces Fiscal Transparency Act to Mandate Better Reporting of State’s Finances
BIRMINGHAM – State Representative Paul DeMarco today announced the introduction of the Alabama Fiscal Transparency Act, a bill that will require more accurate and timely reporting of the state’s fiscal situation by the state Finance Department.
Currently, reporting of the state’s finances lacks proper transparency, Representative DeMarco said.
“State Agencies, local school systems and the general public have no official source of information to monitor budget conditions and provide early warning whenever proration becomes likely,” Representative DeMarco said. “In other states, official monthly financial reports exist to meet this need. It’s time our state Finance Department provide transparent monthly reporting of budget conditions within state government.”
At the start of the annual budget process, the Finance Department and the Legislative Fiscal Office each estimate the revenues available for expenditure from the General Fund and the Education Trust Fund. These forecasts are used to developing the final budgets, which are required by law to be balanced. However, these estimates are not updated periodically thereafter to track whether actual revenues, and those expected, are sufficient to finance all of the appropriations enacted for the year.
House Bill 25 remedies this shortcoming by requiring the State Finance Department to produce monthly financial reports for the General Fund and the Education Trust Fund, and to publish them in a prominent place on the department’s website. This increased transparency will allow government agencies and the public to monitor the condition of the state’s budgets, making it easier to prepare for budget cuts, should they become necessary.
While this proposed legislation amounts to advanced accountability, it will not be expensive to administer, Representative DeMarco said.
“Appropriations are already monitored to maintain control over expenditure authorizations, and expenditures are monitored as they are made,” he said. “A number of these detailed reports already are posted monthly, but there is no straightforward report that brings the complicated details together to focus on the overall condition of the General Fund and Education Trust Fund. The Alabama Fiscal Transparency Act will cure this oversight by requiring such reports every month.”
The bill is scheduled to be before the House State Government Committee on Wednesday at 3:00 p.m. in Room 601 of the Alabama State House.