Legislature(1993 - 1994)
04/21/1993 01:45 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATOR TAYLOR introduced SB 185 (LIMITATIONS PERIOD FOR TAX ASSESSMENTS) as the first order of business. LARRY MEYERS, Director, Income & Excise Audit Division, Department of Revenue, stated the department's support for SB 185. Number 040 SENATOR TAYLOR asked Mr. Meyers what currently is the oldest unresolved tax case. LARRY MEYERS responded that the oldest unresolved tax case in the Income & Excise Audit Division was approximately ten years old. Number 075 PAUL SULLIVAN, General Tax Counsel, Exxon Company, U.S.A., stated the company's strong opposition to SB 185. Mr. Sullivan said the committee is being asked to consider a bill containing statements of "legislative findings and purpose" that are clearly incorrect and not factually supported. He said the facts are: (1) This bill is merely an after the fact administrative interpretation of the current assessment deadline statute. The interpretation is an issue the department has flip-flopped on since 1978. (2) The department's prior interpretation of the assessment deadline statute is not correct and the Alaska Court has told the department so. (3) The department's ability to audit tax returns is not constrained by its audit resources. (4) Taxpayers did not contribute to any delay in the period required to issue tax assessments. (5) Arguments that substantial public revenues are at risk in pending litigation cannot be substantiated. (6) The statement that the decisions reached by the Superior Court in the Exxon and Tesoro Petroleum Corporation cases are inconsistent is not supportable; in fact they're not even related. (7) Three years is enough time to analyze a taxpayer's return and determine the taxes due the state. In addition, the statute allows for further written extensions if necessary. Exxon has always granted division requests for extensions. Mr. Sullivan said that there should be no doubt that this legislative proposal attempts to completely change the statute under which taxpayers have conducted their business for the last 17 years. He said Exxon has had a long-standing interpretation and practice with respect to the existing statute. The difference between Exxon's interpretation and that state's is that Exxon's has been reviewed by the Alaska Court and accepted, while the state's interpretation, first revealed in May of 1989, was reviewed and has been rejected. Mr. Sullivan outlined the following reasons why SB 185 is bad legislation: (1) It removes any incentive for the division to bring cases to final resolution while they try to create new ways to extract more money from the taxpayers that will ultimately not be supportable. (2) It leaves taxpayers at the whim of the division and never able to finally resolve their tax years in Alaska. (3) It will increase an already over burdensome litigation situation on tax issues in Alaska since taxpayers will be required to defend against some entirely new and perhaps misdirected interpretation embodied in an assessment that could be issued 15, 20 or more years after the fact. Referring to testimony at a previous hearing on SB 185, Mr. Sullivan said it was suggested that the Texas statute on assessments was similar to SB 185. He said that is not true. Texas has a four-year period for assessments, except in the case of taxpayer refund claims. No new assessments may be made after the four-year period, the only exception being taxpayer refund claims. Concluding his testimony, Mr. Sullivan urged rejection of SB 185. Number 415 ATTORNEY GENERAL CHARLES COLE, Department of Law, stated he disagreed with Mr. Sullivan's testimony. Attorney General Cole said Exxon was incorrect in stating that the assessment may not be amended if there is an administrative appeal. He noted an assistant attorney general had spoken to the Texas comptroller earlier in the day and she was assured that the theory of the Alaska proposed statute, which was before the committee, was applicable in Texas. Attorney General Cole said one of reasons that the state wants to have SB 185 enacted is so that there won't be any misunderstanding or confusion in the Alaska Supreme Court about what the law of this state should be as declared by the legislature. He said they ask by virtue of this legislation to make clear to the Alaska Supreme Court as to what the legislative policy is in Alaska. Attorney General Cole declared that SB 185 is not changing the substantive law of taxation in the State of Alaska, as was indicated by Exxon. He said it is only a situation where it affects tax law dealing with the statute of limitations. Attorney General Cole said it is a uncontroverted fact that the resources of the Department of Revenue to audit the returns in this area have been constrained. In addition, resolving these cases takes so long because Exxon and other taxpayers and producers string them out themselves. They can quickly ask for a formal hearing, a formal hearing can be held and the issue can be resolved expeditiously. In his closing comments, Attorney General Cole reiterated that the State of Texas has the very same statute that is being sought in SB 185. TAPE 93-47, SIDE B Number 005 SENATOR LITTLE asked Attorney General Cole why is was a good idea to have the bill retroactive. ATTORNEY GENERAL COLE answered that first it all it is constitutional, and in the state's view the issue should be clarified that the Legislature intended that if the taxpayer appeals from an assessment during the administrative appeal process and the judicial appeal process, that the department may raise as well as lower the assessment so that the assessments need not be litigated through the courts for the next ten or fifteen years to resolve this issue. SENATOR LITTLE asked if the state would be in the position of gaining additional revenues if the bill passes and changes were made by the Department of Revenue in the amount owed in the assessment. ATTORNEY GENERAL COLE answered that it is conceivable that if the legislation is not enacted, the Alaska Supreme Court could get confused and it would be very costly to the state. Number 145 PAUL SULLIVAN said Exxon has kept their books and records and they continue to keep them with respect to known assessments. His concern is 20 years down the road when the people who were involved in the transactions are no longer there or can't remember, particularly when you have legislation which is retroactive 17 years. Number 175 There being no further testimony on SB 185, SENATOR TAYLOR closed the public hearing.
| Document Name | Date/Time | Subjects |
|---|