1| HOUSE OF REPRESENTATIVES - FLOOR VERSION |
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2| STATE OF OKLAHOMA |
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3| 2nd Session of the 59th Legislature (2024) |
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4|COMMITTEE SUBSTITUTE |
|FOR ENGROSSED |
5|SENATE BILL NO. 1477 By: Treat of the Senate |
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6| and |
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7| McCall of the House |
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8| |
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9| |
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10| |
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11| COMMITTEE SUBSTITUTE |
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12| An Act relating to income tax credit; amending 68 |
| O.S. 2021, Section 205.2, which relates to claims for |
13| deduction of refund; prohibiting claims for deduction |
| from certain tax credit; amending 68 O.S. 2021, |
14| Section 2358, as amended by Section 1, Chapter 377, |
| O.S.L. 2022 (68 O.S. Supp. 2023, Section 2358), which |
15| relates to adjustments to arrive at taxable income; |
| providing exemption for certain tax credits received; |
16| amending Section 2, Chapter 278, O.S.L. 2023 (70 O.S. |
| Supp. 2023, Section 28-101), which relates to the |
17| Oklahoma Parental Choice Tax Credit Act; modifying |
| definitions; altering how to determine combined |
18| adjusted gross income; establishing credit amount for |
| private schools serving certain student populations; |
19| prohibiting offset of credit for certain liabilities; |
| modifying application of caps from a tax year to a |
20| fiscal year; providing for carryover of certain |
| unused credits; exempting certain eligible taxpayers |
21| from providing additional income verification; |
| modifying timing and procedures for application |
22| process; requiring authorization of certain credits; |
| providing dates for installments; modifying priority |
23| of tax credit recipients in certain cases; directing |
| taxpayers to provide notice related to a change in |
24| enrollment status; providing for reallocation of |
| certain credits; modifying reporting of certain |
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1| claimed credits; excluding credits from taxable |
| income; prohibiting issuance of Form 1099s; and |
2| declaring an emergency. |
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3| |
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4| |
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5|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: |
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6| SECTION 1. AMENDATORY 68 O.S. 2021, Section 205.2, is |
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7|amended to read as follows: |
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8| Section 205.2. A. For purposes of this section, a "qualified |
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9|entity" shall mean a: |
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10| 1. State agency; |
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11| 2. Municipal court; |
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12| 3. District court; |
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13| 4. Public housing authority operating pursuant to Section 1062 |
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14|of Title 63 of the Oklahoma Statutes; |
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15| 5. District attorney seeking to collect unpaid court-ordered |
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16|monetary obligations; or |
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17| 6. The designee of an entity described in paragraphs 1 through |
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18|5 of this subsection. |
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19| B. A qualified entity seeking to collect a debt, unpaid |
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20|municipal or district court fines and costs or final judgment of at |
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21|least Fifty Dollars ($50.00) from an individual who has filed a |
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22|state income tax return may file a claim with the Oklahoma Tax |
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23|Commission requesting that the amount owed to the qualified entity |
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24|be deducted from any state income tax refund due to that individual. |
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1| The claim shall be filed electronically in a form prescribed by the |
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2|Tax Commission and shall contain information necessary to identify |
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3|the person owing the debt, including the full name and Social |
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4|Security number of the debtor. |
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5| 1. Upon receiving a claim from a qualified entity, the Tax |
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6|Commission shall deduct the claim amount, plus collection expenses |
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7|as provided in this section, from the tax refund due to the debtor |
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8|and transfer the amount to the qualified entity. Provided, the Tax |
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9|Commission need not report available funds of less than Fifty |
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10|Dollars ($50.00). |
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11| 2. The qualified entity shall send notice to the debtor by |
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12|regular mail at the last-known address of the debtor as shown by the |
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13|records of the Tax Commission when seeking to collect a debt not |
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14|reduced to final judgment. The qualified entity shall send notice |
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15|to the judgment debtor or defendant by first-class mail at the |
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16|last-known address of the judgment debtor or defendant as shown by |
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17|the records of the Tax Commission when seeking to collect a final |
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18|judgment or unpaid court fines and costs. The Tax Commission shall |
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19|provide in an agreed electronic format to the Department of Human |
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20|Services the amount withheld by the Tax Commission, the home address |
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21|and the Social Security number of the taxpayer. The notice shall |
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22|state: |
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23| a. that a claim has been filed with the Tax Commission |
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24| for any portion of the tax refund due to the debtor or |
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1| defendant which would satisfy the debt, unpaid court |
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2| fines and costs, or final judgment in full or in part, |
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3| b. the basis for the claim, |
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4| c. that the Tax Commission has deducted an amount from |
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5| the refund and remitted it to such qualified entity, |
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6| d. that the debtor or defendant has the right to contest |
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7| the claim by sending a written request to the |
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8| qualified entity for a hearing to protest the claim, |
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9| and if the debtor or defendant fails to apply for a |
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10| hearing within sixty (60) days after the date of the |
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11| mailing of the notice, the debtor or defendant shall |
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12| be deemed to have waived his or her opportunity to |
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13| contest the claim. Provided, if the claim was filed |
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14| by the Department of Human Services, the notice shall |
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15| state that the debtor must contest the claim by |
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16| sending a written request to the Department within |
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17| thirty (30) days after the date of the mailing of the |
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18| notice, and |
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19| e. that a collection expense of five percent (5%) of the |
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20| gross proceeds owed to the qualified entity has been |
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21| charged to the debtor or defendant and withheld from |
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22| the refund. |
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23| 3. If the qualified entity determines that a refund is due to |
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24|the taxpayer, the qualified entity shall reimburse the amount |
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1|claimed plus the five-percent collection expense to the taxpayer. |
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2|The qualified entity may request reimbursement of the two-percent |
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3|collection expense retained by the Tax Commission. Such request |
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4|must be made within ninety (90) days of reimbursement to the |
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5|taxpayer. If timely requested, the Tax Commission shall make such |
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6|reimbursement to the qualified entity within ninety (90) days of the |
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7|request. |
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8| 4. In the case of a joint return, the notice shall state: |
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9| a. the name of any taxpayer named in the return against |
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10| whom no debt, no unpaid court fines and costs, or |
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11| final judgment is claimed, |
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12| b. the fact that a debt, unpaid court fines and costs, or |
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13| final judgment is not claimed against the taxpayer, |
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14| c. the fact that the taxpayer is entitled to receive a |
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15| refund if it is due regardless of the debt, court |
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16| fines and costs, or final judgment asserted against |
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17| the debtor or defendant, |
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18| d. that in order to obtain the refund due, the taxpayer |
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19| must apply, in writing, for a hearing with the |
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20| qualified entity named in the notice within sixty (60) |
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21| days after the date of the mailing of the notice. |
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22| Provided, if the claim was filed by the Department of |
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23| Human Services, the notice shall state that the |
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24| taxpayer must apply, in writing, for a hearing with |
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1| the Department within thirty (30) days after the date |
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2| of the mailing of the notice, and |
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3| e. if the taxpayer against whom no debt, no unpaid court |
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4| fines and costs, or final judgment is claimed fails to |
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5| apply in writing for a hearing within sixty (60) days |
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6| after the mailing of the notice, the taxpayer shall |
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7| have waived his or her right to a refund. Provided, |
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8| if the claim was filed by the Department of Human |
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9| Services, the notice shall state that if the taxpayer |
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10| fails to apply in writing for a hearing with the |
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11| Department within thirty (30) days after the date of |
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12| the mailing of the notice, the taxpayer shall have |
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13| waived his or her right to a refund. |
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14| C. If the qualified entity asserting the claim receives a |
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15|written request for a hearing from the debtor or taxpayer against |
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16|whom no debt, no court fines and costs, or final judgment is |
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17|claimed, the qualified entity shall grant a hearing according to the |
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18|provisions of the Administrative Procedures Act. It shall be |
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19|determined at the hearing whether the claimed sum is correct or |
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20|whether an adjustment to the claim shall be made. Pending final |
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21|determination at the hearing of the validity of the debt, unpaid |
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22|court fines and costs, or final judgment asserted by the qualified |
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23|entity, no action shall be taken in furtherance of the collection of |
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24|the debt, unpaid court fines and costs, or final judgment. Appeals |
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1|from actions taken at the hearing shall be in accordance with the |
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2|provisions of the Administrative Procedures Act. |
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3| D. Upon final determination at a hearing, as provided for in |
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4|subsection C of this section, of the amount of the debt, unpaid |
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5|court fines and costs, or final judgment, or upon failure of the |
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6|debtor or taxpayer against whom no debt, no unpaid court fines and |
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7|costs, or final judgment is claimed to request such a hearing, the |
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8|qualified entity shall apply the amount of the claim to the debt |
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9|owed. Any amounts held by the qualified entity in excess of the |
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10|final determination of the debt and collection expense shall be |
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11|refunded by the qualified entity to the taxpayer. However, if the |
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12|tax refund due is inadequate to pay the collection expense and debt, |
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13|unpaid court fines and costs, or final judgment, the balance due the |
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14|qualified entity shall be a continuing debt or final judgment until |
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15|paid in full. |
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16| E. Upon receipt of a claim as provided in subsection A of this |
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17|section, the Tax Commission shall: |
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18| 1. Deduct from the refund five percent (5%) of the gross |
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19|proceeds owed to the qualified entity, and distribute it by |
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20|retaining two percent (2%) and transferring three percent (3%) to |
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21|the qualified entity, as an expense of collection. The two percent |
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22|(2%) retained by the Tax Commission shall be deposited in the |
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23|Oklahoma Tax Commission Fund; |
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24| |
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1| 2. Transfer the amount of the claimed debt, unpaid court fines |
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2|and costs, or final judgment or so much thereof as is available to |
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3|the qualified entity; |
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4| 3. Notify the debtor in writing as to how the refund was |
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5|applied; and |
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6| 4. Refund to the debtor any balance remaining after deducting |
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7|the collection expense and debt, unpaid court fines and costs, or |
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8|final judgment. |
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9| F. The Tax Commission shall deduct from any state tax refund |
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10|due to a taxpayer the amount of delinquent state tax and penalty and |
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11|interest thereon, which such taxpayer owes pursuant to any state tax |
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12|law prior to payment of such refund. |
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13| G. The Tax Commission shall have first priority over all other |
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14|qualified entities when the Tax Commission is collecting a debt, |
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15|court fines and costs, or final judgment pursuant to the provisions |
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16|of this section. Subsequent to the Tax Commission priority, a claim |
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17|filed by the Department of Human Services for the collection of |
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18|child support and spousal support shall have priority over all other |
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19|claims filed pursuant to this section. Priority in multiple claims |
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20|by other qualified entities pursuant to the provisions of this |
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21|section shall be in the order in time in which the Tax Commission |
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22|receives the claim from the qualified entities required by the |
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23|provisions of subsection B of this section. |
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24| |
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1| H. The Tax Commission shall prescribe or approve forms and |
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2|promulgate rules and regulations for implementing the provisions of |
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3|this section. |
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4| I. The information obtained by a qualified entity from the Tax |
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5|Commission pursuant to the provisions of this section shall be used |
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6|only to aid in collection of the debt, unpaid court fines and costs, |
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7|or final judgment owed to the qualified entity. Disclosure of the |
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8|information for any other purpose shall constitute a misdemeanor. |
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9|Any employee of a qualified entity or person convicted of violating |
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10|this provision shall be subject to a fine not exceeding One Thousand |
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11|Dollars ($1,000.00) or imprisonment in the county jail for a term |
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12|not exceeding one (1) year, or both fine and imprisonment and, if |
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13|still employed by the qualified entity, shall be dismissed from |
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14|employment. |
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15| J. The Tax Commission may employ the procedures provided by |
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16|this section in order to collect a debt owed to the Internal Revenue |
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17|Service if the Internal Revenue Service requires such procedure as a |
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18|condition to providing information to the Commission concerning |
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19|federal income tax. |
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20| K. The provisions of this section shall not apply to claims |
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21|filed under the provisions of Section 2906 or Section 5011 of this |
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22|title or Section 28-101 of Title 70. |
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23| |
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24| |
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1| SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as |
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2|amended by Section 1, Chapter 377, O.S.L. 2022 (68 O.S. Supp. 2023, |
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3|Section 2358), is amended to read as follows: |
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4| Section 2358. For all tax years beginning after December 31, |
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5|1981, taxable income and adjusted gross income shall be adjusted to |
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6|arrive at Oklahoma taxable income and Oklahoma adjusted gross income |
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7|as required by this section. |
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8| A. The taxable income of any taxpayer shall be adjusted to |
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9|arrive at Oklahoma taxable income for corporations and Oklahoma |
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10|adjusted gross income for individuals, as follows: |
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11| 1. There shall be added interest income on obligations of any |
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12|state or political subdivision thereto which is not otherwise |
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13|exempted pursuant to other laws of this state, to the extent that |
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14|such interest is not included in taxable income and adjusted gross |
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15|income. |
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16| 2. There shall be deducted amounts included in such income that |
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17|the state is prohibited from taxing because of the provisions of the |
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18|Federal Constitution, the State Constitution, federal laws or laws |
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19|of Oklahoma. |
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20| 3. The amount of any federal net operating loss deduction shall |
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21|be adjusted as follows: |
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22| a. For carryovers and carrybacks to taxable years |
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23| beginning before January 1, 1981, the amount of any |
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24| net operating loss deduction allowed to a taxpayer for |
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1| federal income tax purposes shall be reduced to an |
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2| amount which is the same portion thereof as the loss |
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3| from sources within this state, as determined pursuant |
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4| to this section and Section 2362 of this title, for |
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5| the taxable year in which such loss is sustained is of |
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6| the total loss for such year; |
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7| b. For carryovers and carrybacks to taxable years |
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8| beginning after December 31, 1980, the amount of any |
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9| net operating loss deduction allowed for the taxable |
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10| year shall be an amount equal to the aggregate of the |
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11| Oklahoma net operating loss carryovers and carrybacks |
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12| to such year. Oklahoma net operating losses shall be |
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13| separately determined by reference to Section 172 of |
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14| the Internal Revenue Code, 26 U.S.C., Section 172, as |
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15| modified by the Oklahoma Income Tax Act, Section 2351 |
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16| et seq. of this title, and shall be allowed without |
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17| regard to the existence of a federal net operating |
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18| loss. For tax years beginning after December 31, |
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19| 2000, and ending before January 1, 2008, the years to |
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20| which such losses may be carried shall be determined |
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21| solely by reference to Section 172 of the Internal |
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22| Revenue Code, 26 U.S.C., Section 172, with the |
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23| exception that the terms "net operating loss" and |
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24| "taxable income" shall be replaced with "Oklahoma net |
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1| operating loss" and "Oklahoma taxable income". For |
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2| tax years beginning after December 31, 2007, and |
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3| ending before January 1, 2009, years to which such |
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4| losses may be carried back shall be limited to two (2) |
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5| years. For tax years beginning after December 31, |
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6| 2008, the years to which such losses may be carried |
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7| back shall be determined solely by reference to |
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8| Section 172 of the Internal Revenue Code, 26 U.S.C., |
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9| Section 172, with the exception that the terms "net |
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10| operating loss" and "taxable income" shall be replaced |
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11| with "Oklahoma net operating loss" and "Oklahoma |
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12| taxable income". |
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13| 4. Items of the following nature shall be allocated as |
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14|indicated. Allowable deductions attributable to items separately |
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15|allocable in subparagraphs a, b and c of this paragraph, whether or |
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16|not such items of income were actually received, shall be allocated |
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17|on the same basis as those items: |
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18| a. Income from real and tangible personal property, such |
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19| as rents, oil and mining production or royalties, and |
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20| gains or losses from sales of such property, shall be |
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21| allocated in accordance with the situs of such |
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22| property; |
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23| b. Income from intangible personal property, such as |
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24| interest, dividends, patent or copyright royalties, |
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1| and gains or losses from sales of such property, shall |
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2| be allocated in accordance with the domiciliary situs |
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3| of the taxpayer, except that: |
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4| (1) where such property has acquired a nonunitary |
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5| business or commercial situs apart from the |
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6| domicile of the taxpayer such income shall be |
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7| allocated in accordance with such business or |
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8| commercial situs; interest income from |
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9| investments held to generate working capital for |
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10| a unitary business enterprise shall be included |
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11| in apportionable income; a resident trust or |
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12| resident estate shall be treated as having a |
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13| separate commercial or business situs insofar as |
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14| undistributed income is concerned, but shall not |
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15| be treated as having a separate commercial or |
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16| business situs insofar as distributed income is |
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17| concerned, |
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18| (2) for taxable years beginning after December 31, |
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19| 2003, capital or ordinary gains or losses from |
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20| the sale of an ownership interest in a publicly |
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21| traded partnership, as defined by Section 7704(b) |
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22| of the Internal Revenue Code, shall be allocated |
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23| to this state in the ratio of the original cost |
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24| of such partnership's tangible property in this |
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1| state to the original cost of such partnership's |
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2| tangible property everywhere, as determined at |
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3| the time of the sale; if more than fifty percent |
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4| (50%) of the value of the partnership's assets |
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5| consists of intangible assets, capital or |
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6| ordinary gains or losses from the sale of an |
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7| ownership interest in the partnership shall be |
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8| allocated to this state in accordance with the |
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9| sales factor of the partnership for its first |
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10| full tax period immediately preceding its tax |
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11| period during which the ownership interest in the |
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12| partnership was sold; the provisions of this |
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13| division shall only apply if the capital or |
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14| ordinary gains or losses from the sale of an |
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15| ownership interest in a partnership do not |
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16| constitute qualifying gain receiving capital |
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17| treatment as defined in subparagraph a of |
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18| paragraph 2 of subsection F of this section, |
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19| (3) income from such property which is required to be |
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20| allocated pursuant to the provisions of paragraph |
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21| 5 of this subsection shall be allocated as herein |
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22| provided; |
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23| c. Net income or loss from a business activity which is |
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24| not a part of business carried on within or without |
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1| the state of a unitary character shall be separately |
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2| allocated to the state in which such activity is |
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3| conducted; |
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4| d. In the case of a manufacturing or processing |
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5| enterprise the business of which in Oklahoma this |
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6| state consists solely of marketing its products by: |
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7| (1) sales having a situs without this state, shipped |
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8| directly to a point from without the state to a |
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9| purchaser within the state, commonly known as |
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10| interstate sales, |
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11| (2) sales of the product stored in public warehouses |
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12| within the state pursuant to "in transit" |
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13| tariffs, as prescribed and allowed by the |
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14| Interstate Commerce Commission, to a purchaser |
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15| within the state, |
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16| (3) sales of the product stored in public warehouses |
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17| within the state where the shipment to such |
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18| warehouses is not covered by "in transit" |
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19| tariffs, as prescribed and allowed by the |
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20| Interstate Commerce Commission, to a purchaser |
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21| within or without the state, |
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22| the Oklahoma net income shall, at the option of the |
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23| taxpayer, be that portion of the total net income of |
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24| the taxpayer for federal income tax purposes derived |
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1| from the manufacture and/or processing and sales |
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2| everywhere as determined by the ratio of the sales |
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3| defined in this section made to the purchaser within |
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4| the state to the total sales everywhere. The term |
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5| "public warehouse" as used in this subparagraph means |
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6| a licensed public warehouse, the principal business of |
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7| which is warehousing merchandise for the public; |
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8| e. In the case of insurance companies, Oklahoma taxable |
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9| income shall be taxable income of the taxpayer for |
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10| federal tax purposes, as adjusted for the adjustments |
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11| provided pursuant to the provisions of paragraphs 1 |
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12| and 2 of this subsection, apportioned as follows: |
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13| (1) except as otherwise provided by division (2) of |
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14| this subparagraph, taxable income of an insurance |
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15| company for a taxable year shall be apportioned |
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16| to this state by multiplying such income by a |
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17| fraction, the numerator of which is the direct |
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18| premiums written for insurance on property or |
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19| risks in this state, and the denominator of which |
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20| is the direct premiums written for insurance on |
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21| property or risks everywhere. For purposes of |
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22| this subsection, the term "direct premiums |
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23| written" means the total amount of direct |
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24| premiums written, assessments and annuity |
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1| considerations as reported for the taxable year |
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2| on the annual statement filed by the company with |
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3| the Insurance Commissioner in the form approved |
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4| by the National Association of Insurance |
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5| Commissioners, or such other form as may be |
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6| prescribed in lieu thereof, |
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7| (2) if the principal source of premiums written by an |
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8| insurance company consists of premiums for |
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9| reinsurance accepted by it, the taxable income of |
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10| such company shall be apportioned to this state |
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11| by multiplying such income by a fraction, the |
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12| numerator of which is the sum of (a) direct |
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13| premiums written for insurance on property or |
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14| risks in this state, plus (b) premiums written |
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15| for reinsurance accepted in respect of property |
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16| or risks in this state, and the denominator of |
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17| which is the sum of (c) direct premiums written |
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18| for insurance on property or risks everywhere, |
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19| plus (d) premiums written for reinsurance |
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20| accepted in respect of property or risks |
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21| everywhere. For purposes of this paragraph, |
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22| premiums written for reinsurance accepted in |
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23| respect of property or risks in this state, |
| |
24| whether or not otherwise determinable, may at the |
| |
arsid10121103 SB1477 HFLR Page 17
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1| election of the company be determined on the |
| |
2| basis of the proportion which premiums written |
| |
3| for insurance accepted from companies |
| |
4| commercially domiciled in Oklahoma this state |
| |
5| bears to premiums written for reinsurance |
| |
6| accepted from all sources, or alternatively in |
| |
7| the proportion which the sum of the direct |
| |
8| premiums written for insurance on property or |
| |
9| risks in this state by each ceding company from |
| |
10| which reinsurance is accepted bears to the sum of |
| |
11| the total direct premiums written by each such |
| |
12| ceding company for the taxable year. |
| |
13| 5. The net income or loss remaining after the separate |
| |
14|allocation in paragraph 4 of this subsection, being that which is |
| |
15|derived from a unitary business enterprise, shall be apportioned to |
| |
16|this state on the basis of the arithmetical average of three factors |
| |
17|consisting of property, payroll and sales or gross revenue |
| |
18|enumerated as subparagraphs a, b and c of this paragraph. Net |
| |
19|income or loss as used in this paragraph includes that derived from |
| |
20|patent or copyright royalties, purchase discounts, and interest on |
| |
21|accounts receivable relating to or arising from a business activity, |
| |
22|the income from which is apportioned pursuant to this subsection, |
| |
23|including the sale or other disposition of such property and any |
| |
24|other property used in the unitary enterprise. Deductions used in |
| |
arsid10121103 SB1477 HFLR Page 18
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1|computing such net income or loss shall not include taxes based on |
| |
2|or measured by income. Provided, for corporations whose property |
| |
3|for purposes of the tax imposed by Section 2355 of this title has an |
| |
4|initial investment cost equaling or exceeding Two Hundred Million |
| |
5|Dollars ($200,000,000.00) and such investment is made on or after |
| |
6|July 1, 1997, or for corporations which expand their property or |
| |
7|facilities in this state and such expansion has an investment cost |
| |
8|equaling or exceeding Two Hundred Million Dollars ($200,000,000.00) |
| |
9|over a period not to exceed three (3) years, and such expansion is |
| |
10|commenced on or after January 1, 2000, the three factors shall be |
| |
11|apportioned with property and payroll, each comprising twenty-five |
| |
12|percent (25%) of the apportionment factor and sales comprising fifty |
| |
13|percent (50%) of the apportionment factor. The apportionment |
| |
14|factors shall be computed as follows: |
| |
15| a. The property factor is a fraction, the numerator of |
| |
16| which is the average value of the taxpayer's real and |
| |
17| tangible personal property owned or rented and used in |
| |
18| this state during the tax period and the denominator |
| |
19| of which is the average value of all the taxpayer's |
| |
20| real and tangible personal property everywhere owned |
| |
21| or rented and used during the tax period. |
| |
22| (1) Property, the income from which is separately |
| |
23| allocated in paragraph 4 of this subsection, |
| |
24| shall not be included in determining this |
| |
arsid10121103 SB1477 HFLR Page 19
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1| fraction. The numerator of the fraction shall |
| |
2| include a portion of the investment in |
| |
3| transportation and other equipment having no |
| |
4| fixed situs, such as rolling stock, buses, trucks |
| |
5| and trailers, including machinery and equipment |
| |
6| carried thereon, airplanes, salespersons' |
| |
7| automobiles and other similar equipment, in the |
| |
8| proportion that miles traveled in Oklahoma this |
| |
9| state by such equipment bears to total miles |
| |
10| traveled, |
| |
11| (2) Property owned by the taxpayer is valued at its |
| |
12| original cost. Property rented by the taxpayer |
| |
13| is valued at eight times the net annual rental |
| |
14| rate. Net annual rental rate is the annual |
| |
15| rental rate paid by the taxpayer, less any annual |
| |
16| rental rate received by the taxpayer from |
| |
17| subrentals, |
| |
18| (3) The average value of property shall be determined |
| |
19| by averaging the values at the beginning and |
| |
20| ending of the tax period but the Oklahoma Tax |
| |
21| Commission may require the averaging of monthly |
| |
22| values during the tax period if reasonably |
| |
23| required to reflect properly the average value of |
| |
24| the taxpayer's property; |
| |
arsid10121103 SB1477 HFLR Page 20
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1| b. The payroll factor is a fraction, the numerator of |
| |
2| which is the total compensation for services rendered |
| |
3| in the state during the tax period, and the |
| |
4| denominator of which is the total compensation for |
| |
5| services rendered everywhere during the tax period. |
| |
6| "Compensation", as used in this subsection, means |
| |
7| those paid-for services to the extent related to the |
| |
8| unitary business but does not include officers' |
| |
9| salaries, wages and other compensation. |
| |
10| (1) In the case of a transportation enterprise, the |
| |
11| numerator of the fraction shall include a portion |
| |
12| of such expenditure in connection with employees |
| |
13| operating equipment over a fixed route, such as |
| |
14| railroad employees, airline pilots, or bus |
| |
15| drivers, in this state only a part of the time, |
| |
16| in the proportion that mileage traveled in |
| |
17| Oklahoma this state bears to total mileage |
| |
18| traveled by such employees, |
| |
19| (2) In any case the numerator of the fraction shall |
| |
20| include a portion of such expenditures in |
| |
21| connection with itinerant employees, such as |
| |
22| traveling salespersons, in this state only a part |
| |
23| of the time, in the proportion that time spent in |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 21
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1| Oklahoma this state bears to total time spent in |
| |
2| furtherance of the enterprise by such employees; |
| |
3| c. The sales factor is a fraction, the numerator of |
| |
4| which is the total sales or gross revenue of the |
| |
5| taxpayer in this state during the tax period, and the |
| |
6| denominator of which is the total sales or gross |
| |
7| revenue of the taxpayer everywhere during the tax |
| |
8| period. "Sales", as used in this subsection, does not |
| |
9| include sales or gross revenue which are separately |
| |
10| allocated in paragraph 4 of this subsection. |
| |
11| (1) Sales of tangible personal property have a situs |
| |
12| in this state if the property is delivered or |
| |
13| shipped to a purchaser other than the United |
| |
14| States government, within this state regardless |
| |
15| of the FOB point or other conditions of the sale; |
| |
16| or the property is shipped from an office, store, |
| |
17| warehouse, factory or other place of storage in |
| |
18| this state and (a) the purchaser is the United |
| |
19| States government or (b) the taxpayer is not |
| |
20| doing business in the state of the destination of |
| |
21| the shipment. |
| |
22| (2) In the case of a railroad or interurban railway |
| |
23| enterprise, the numerator of the fraction shall |
| |
24| not be less than the allocation of revenues to |
| |
arsid10121103 SB1477 HFLR Page 22
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1| this state as shown in its annual report to the |
| |
2| Corporation Commission. |
| |
3| (3) In the case of an airline, truck or bus |
| |
4| enterprise or freight car, tank car, refrigerator |
| |
5| car or other railroad equipment enterprise, the |
| |
6| numerator of the fraction shall include a portion |
| |
7| of revenue from interstate transportation in the |
| |
8| proportion that interstate mileage traveled in |
| |
9| Oklahoma this state bears to total interstate |
| |
10| mileage traveled. |
| |
11| (4) In the case of an oil, gasoline or gas pipeline |
| |
12| enterprise, the numerator of the fraction shall |
| |
13| be either the total of traffic units of the |
| |
14| enterprise within Oklahoma this state or the |
| |
15| revenue allocated to Oklahoma this state based |
| |
16| upon miles moved, at the option of the taxpayer, |
| |
17| and the denominator of which shall be the total |
| |
18| of traffic units of the enterprise or the revenue |
| |
19| of the enterprise everywhere as appropriate to |
| |
20| the numerator. A "traffic unit" is hereby |
| |
21| defined as the transportation for a distance of |
| |
22| one (1) mile of one (1) barrel of oil, one (1) |
| |
23| gallon of gasoline or one thousand (1,000) cubic |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 23
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1| feet of natural or casinghead gas, as the case |
| |
2| may be. |
| |
3| (5) In the case of a telephone or telegraph or other |
| |
4| communication enterprise, the numerator of the |
| |
5| fraction shall include that portion of the |
| |
6| interstate revenue as is allocated pursuant to |
| |
7| the accounting procedures prescribed by the |
| |
8| Federal Communications Commission; provided that |
| |
9| in respect to each corporation or business entity |
| |
10| required by the Federal Communications Commission |
| |
11| to keep its books and records in accordance with |
| |
12| a uniform system of accounts prescribed by such |
| |
13| Commission, the intrastate net income shall be |
| |
14| determined separately in the manner provided by |
| |
15| such uniform system of accounts and only the |
| |
16| interstate income shall be subject to allocation |
| |
17| pursuant to the provisions of this subsection. |
| |
18| Provided further, that the gross revenue factors |
| |
19| shall be those as are determined pursuant to the |
| |
20| accounting procedures prescribed by the Federal |
| |
21| Communications Commission. |
| |
22| In any case where the apportionment of the three factors |
| |
23|prescribed in this paragraph attributes to Oklahoma this state a |
| |
24|portion of net income of the enterprise out of all appropriate |
| |
arsid10121103 SB1477 HFLR Page 24
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1|proportion to the property owned and/or business transacted within |
| |
2|this state, because of the fact that one or more of the factors so |
| |
3|prescribed are not employed to any appreciable extent in furtherance |
| |
4|of the enterprise; or because one or more factors not so prescribed |
| |
5|are employed to a considerable extent in furtherance of the |
| |
6|enterprise; or because of other reasons, the Tax Commission is |
| |
7|empowered to permit, after a showing by taxpayer that an excessive |
| |
8|portion of net income has been attributed to Oklahoma this state, or |
| |
9|require, when in its judgment an insufficient portion of net income |
| |
10|has been attributed to Oklahoma this state, the elimination, |
| |
11|substitution, or use of additional factors, or reduction or increase |
| |
12|in the weight of such prescribed factors. Provided, however, that |
| |
13|any such variance from such prescribed factors which has the effect |
| |
14|of increasing the portion of net income attributable to Oklahoma |
| |
15|this state must not be inherently arbitrary, and application of the |
| |
16|recomputed final apportionment to the net income of the enterprise |
| |
17|must attribute to Oklahoma this state only a reasonable portion |
| |
18|thereof. |
| |
19| 6. For calendar years 1997 and 1998, the owner of a new or |
| |
20|expanded agricultural commodity processing facility in this state |
| |
21|may exclude from Oklahoma taxable income, or in the case of an |
| |
22|individual, the Oklahoma adjusted gross income, fifteen percent |
| |
23|(15%) of the investment by the owner in the new or expanded |
| |
24|agricultural commodity processing facility. For calendar year 1999, |
| |
arsid10121103 SB1477 HFLR Page 25
___________________________________________________________________________
1|and all subsequent years, the percentage, not to exceed fifteen |
| |
2|percent (15%), available to the owner of a new or expanded |
| |
3|agricultural commodity processing facility in this state claiming |
| |
4|the exemption shall be adjusted annually so that the total estimated |
| |
5|reduction in tax liability does not exceed One Million Dollars |
| |
6|($1,000,000.00) annually. The Tax Commission shall promulgate rules |
| |
7|for determining the percentage of the investment which each eligible |
| |
8|taxpayer may exclude. The exclusion provided by this paragraph |
| |
9|shall be taken in the taxable year when the investment is made. In |
| |
10|the event the total reduction in tax liability authorized by this |
| |
11|paragraph exceeds One Million Dollars ($1,000,000.00) in any |
| |
12|calendar year, the Tax Commission shall permit any excess over One |
| |
13|Million Dollars ($1,000,000.00) and shall factor such excess into |
| |
14|the percentage for subsequent years. Any amount of the exemption |
| |
15|permitted to be excluded pursuant to the provisions of this |
| |
16|paragraph but not used in any year may be carried forward as an |
| |
17|exemption from income pursuant to the provisions of this paragraph |
| |
18|for a period not exceeding six (6) years following the year in which |
| |
19|the investment was originally made. |
| |
20| For purposes of this paragraph: |
| |
21| a. "Agricultural commodity processing facility" means |
| |
22| building buildings, structures, fixtures and |
| |
23| improvements used or operated primarily for the |
| |
24| processing or production of marketable products from |
| |
arsid10121103 SB1477 HFLR Page 26
___________________________________________________________________________
1| agricultural commodities. The term shall also mean a |
| |
2| dairy operation that requires a depreciable investment |
| |
3| of at least Two Hundred Fifty Thousand Dollars |
| |
4| ($250,000.00) and which produces milk from dairy cows. |
| |
5| The term does not include a facility that provides |
| |
6| only, and nothing more than, storage, cleaning, drying |
| |
7| or transportation of agricultural commodities, and |
| |
8| b. "Facility" means each part of the facility which is |
| |
9| used in a process primarily for: |
| |
10| (1) the processing of agricultural commodities, |
| |
11| including receiving or storing agricultural |
| |
12| commodities, or the production of milk at a dairy |
| |
13| operation, |
| |
14| (2) transporting the agricultural commodities or |
| |
15| product before, during or after the processing, |
| |
16| or |
| |
17| (3) packaging or otherwise preparing the product for |
| |
18| sale or shipment. |
| |
19| 7. Despite any provision to the contrary in paragraph 3 of this |
| |
20|subsection, for taxable years beginning after December 31, 1999, in |
| |
21|the case of a taxpayer which has a farming loss, such farming loss |
| |
22|shall be considered a net operating loss carryback in accordance |
| |
23|with and to the extent of the Internal Revenue Code, 26 U.S.C., |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 27
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1|Section 172(b)(G). However, the amount of the net operating loss |
| |
2|carryback shall not exceed the lesser of: |
| |
3| a. Sixty Thousand Dollars ($60,000.00), or |
| |
4| b. the loss properly shown on Schedule F of the Internal |
| |
5| Revenue Service Form 1040 reduced by one-half (1/2) of |
| |
6| the income from all other sources other than reflected |
| |
7| on Schedule F. |
| |
8| 8. In taxable years beginning after December 31, 1995, all |
| |
9|qualified wages equal to the federal income tax credit set forth in |
| |
10|26 U.S.C.A., Section 45A, shall be deducted from taxable income. |
| |
11|The deduction allowed pursuant to this paragraph shall only be |
| |
12|permitted for the tax years in which the federal tax credit pursuant |
| |
13|to 26 U.S.C.A., Section 45A, is allowed. For purposes of this |
| |
14|paragraph, "qualified wages" means those wages used to calculate the |
| |
15|federal credit pursuant to 26 U.S.C.A., Section 45A. |
| |
16| 9. In taxable years beginning after December 31, 2005, an |
| |
17|employer that is eligible for and utilizes the Safety Pays OSHA |
| |
18|Consultation Service provided by the Oklahoma Department of Labor |
| |
19|shall receive an exemption from taxable income in the amount of One |
| |
20|Thousand Dollars ($1,000.00) for the tax year that the service is |
| |
21|utilized. |
| |
22| 10. For taxable years beginning on or after January 1, 2010, |
| |
23|there shall be added to Oklahoma taxable income an amount equal to |
| |
24|the amount of deferred income not included in such taxable income |
| |
arsid10121103 SB1477 HFLR Page 28
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1|pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986 |
| |
2|as amended by Section 1231 of the American Recovery and Reinvestment |
| |
3|Act of 2009 (P.L. No. 111-5). There shall be subtracted from |
| |
4|Oklahoma taxable income an amount equal to the amount of deferred |
| |
5|income included in such taxable income pursuant to Section 108(i)(1) |
| |
6|of the Internal Revenue Code by Section 1231 of the American |
| |
7|Recovery and Reinvestment Act of 2009 (P.L. No. 111-5). |
| |
8| 11. For taxable years beginning on or after January 1, 2019, |
| |
9|there shall be subtracted from Oklahoma taxable income or adjusted |
| |
10|gross income any item of income or gain, and there shall be added to |
| |
11|Oklahoma taxable income or adjusted gross income any item of loss or |
| |
12|deduction that in the absence of an election pursuant to the |
| |
13|provisions of the Pass-Through Entity Tax Equity Act of 2019 would |
| |
14|be allocated to a member or to an indirect member of an electing |
| |
15|pass-through entity pursuant to Section 2351 et seq. of this title, |
| |
16|if (i) the electing pass-through entity has accounted for such item |
| |
17|in computing its Oklahoma net entity income or loss pursuant to the |
| |
18|provisions of the Pass-Through Entity Tax Equity Act of 2019, and |
| |
19|(ii) the total amount of tax attributable to any resulting Oklahoma |
| |
20|net entity income has been paid. The Oklahoma Tax Commission shall |
| |
21|promulgate rules for the reporting of such exclusion to direct and |
| |
22|indirect members of the electing pass-through entity. As used in |
| |
23|this paragraph, "electing pass-through entity", "indirect member", |
| |
24|and "member" shall be defined in the same manner as prescribed by |
| |
arsid10121103 SB1477 HFLR Page 29
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1|Section 2355.1P-2 of this title. Notwithstanding the application of |
| |
2|this paragraph, the adjusted tax basis of any ownership interest in |
| |
3|a pass-through entity for purposes of Section 2351 et seq. of this |
| |
4|title shall be equal to its adjusted tax basis for federal income |
| |
5|tax purposes. |
| |
6| B. 1. The taxable income of any corporation shall be further |
| |
7|adjusted to arrive at Oklahoma taxable income, except those |
| |
8|corporations electing treatment as provided in subchapter S of the |
| |
9|Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section |
| |
10|2365 of this title, deductions pursuant to the provisions of the |
| |
11|Accelerated Cost Recovery System as defined and allowed in the |
| |
12|Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C., |
| |
13|Section 168, for depreciation of assets placed into service after |
| |
14|December 31, 1981, shall not be allowed in calculating Oklahoma |
| |
15|taxable income. Such corporations shall be allowed a deduction for |
| |
16|depreciation of assets placed into service after December 31, 1981, |
| |
17|in accordance with provisions of the Internal Revenue Code, 26 |
| |
18|U.S.C., Section 1 et seq., in effect immediately prior to the |
| |
19|enactment of the Accelerated Cost Recovery System. The Oklahoma tax |
| |
20|basis for all such assets placed into service after December 31, |
| |
21|1981, calculated in this section shall be retained and utilized for |
| |
22|all Oklahoma income tax purposes through the final disposition of |
| |
23|such assets. |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 30
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1| Notwithstanding any other provisions of the Oklahoma Income Tax |
| |
2|Act, Section 2351 et seq. of this title, or of the Internal Revenue |
| |
3|Code to the contrary, this subsection shall control calculation of |
| |
4|depreciation of assets placed into service after December 31, 1981, |
| |
5|and before January 1, 1983. |
| |
6| For assets placed in service and held by a corporation in which |
| |
7|accelerated cost recovery system the Accelerated Cost Recovery |
| |
8|System was previously disallowed, an adjustment to taxable income is |
| |
9|required in the first taxable year beginning after December 31, |
| |
10|1982, to reconcile the basis of such assets to the basis allowed in |
| |
11|the Internal Revenue Code. The purpose of this adjustment is to |
| |
12|equalize the basis and allowance for depreciation accounts between |
| |
13|that reported to the Internal Revenue Service and that reported to |
| |
14|Oklahoma this state. |
| |
15| 2. For tax years beginning on or after January 1, 2009, and |
| |
16|ending on or before December 31, 2009, there shall be added to |
| |
17|Oklahoma taxable income any amount in excess of One Hundred |
| |
18|Seventy-five Thousand Dollars ($175,000.00) which has been deducted |
| |
19|as a small business expense under Internal Revenue Code, Section 179 |
| |
20|as provided in the American Recovery and Reinvestment Act of 2009. |
| |
21| C. 1. For taxable years beginning after December 31, 1987, the |
| |
22|taxable income of any corporation shall be further adjusted to |
| |
23|arrive at Oklahoma taxable income for transfers of technology to |
| |
24|qualified small businesses located in Oklahoma this state. Such |
| |
arsid10121103 SB1477 HFLR Page 31
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1|transferor corporation shall be allowed an exemption from taxable |
| |
2|income of an amount equal to the amount of royalty payment received |
| |
3|as a result of such transfer; provided, however, such amount shall |
| |
4|not exceed ten percent (10%) of the amount of gross proceeds |
| |
5|received by such transferor corporation as a result of the |
| |
6|technology transfer. Such exemption shall be allowed for a period |
| |
7|not to exceed ten (10) years from the date of receipt of the first |
| |
8|royalty payment accruing from such transfer. No exemption may be |
| |
9|claimed for transfers of technology to qualified small businesses |
| |
10|made prior to January 1, 1988. |
| |
11| 2. For purposes of this subsection: |
| |
12| a. "Qualified small business" means an entity, whether |
| |
13| organized as a corporation, partnership, or |
| |
14| proprietorship, organized for profit with its |
| |
15| principal place of business located within this state |
| |
16| and which meets the following criteria: |
| |
17| (1) Capitalization of not more than Two Hundred Fifty |
| |
18| Thousand Dollars ($250,000.00), |
| |
19| (2) Having at least fifty percent (50%) of its |
| |
20| employees and assets located in Oklahoma this |
| |
21| state at the time of the transfer, and |
| |
22| (3) Not a subsidiary or affiliate of the transferor |
| |
23| corporation; |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 32
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1| b. "Technology" means a proprietary process, formula, |
| |
2| pattern, device or compilation of scientific or |
| |
3| technical information which is not in the public |
| |
4| domain; |
| |
5| c. "Transferor corporation" means a corporation which is |
| |
6| the exclusive and undisputed owner of the technology |
| |
7| at the time the transfer is made; and |
| |
8| d. "Gross proceeds" means the total amount of |
| |
9| consideration for the transfer of technology, whether |
| |
10| the consideration is in money or otherwise. |
| |
11| D. 1. For taxable years beginning after December 31, 2005, the |
| |
12|taxable income of any corporation, estate or trust, shall be further |
| |
13|adjusted for qualifying gains receiving capital treatment. Such |
| |
14|corporations, estates or trusts shall be allowed a deduction from |
| |
15|Oklahoma taxable income for the amount of qualifying gains receiving |
| |
16|capital treatment earned by the corporation, estate or trust during |
| |
17|the taxable year and included in the federal taxable income of such |
| |
18|corporation, estate or trust. |
| |
19| 2. As used in this subsection: |
| |
20| a. "qualifying gains receiving capital treatment" means |
| |
21| the amount of net capital gains, as defined in Section |
| |
22| 1222(11) of the Internal Revenue Code, included in the |
| |
23| federal income tax return of the corporation, estate |
| |
24| or trust that result from: |
| |
arsid10121103 SB1477 HFLR Page 33
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1| (1) the sale of real property or tangible personal |
| |
2| property located within Oklahoma this state that |
| |
3| has been directly or indirectly owned by the |
| |
4| corporation, estate or trust for a holding period |
| |
5| of at least five (5) years prior to the date of |
| |
6| the transaction from which such net capital gains |
| |
7| arise, |
| |
8| (2) the sale of stock or on the sale of an ownership |
| |
9| interest in an Oklahoma company, limited |
| |
10| liability company, or partnership where such |
| |
11| stock or ownership interest has been directly or |
| |
12| indirectly owned by the corporation, estate or |
| |
13| trust for a holding period of at least three (3) |
| |
14| years prior to the date of the transaction from |
| |
15| which the net capital gains arise, or |
| |
16| (3) the sale of real property, tangible personal |
| |
17| property or intangible personal property located |
| |
18| within Oklahoma this state as part of the sale of |
| |
19| all or substantially all of the assets of an |
| |
20| Oklahoma company, limited liability company, or |
| |
21| partnership where such property has been directly |
| |
22| or indirectly owned by such entity owned by the |
| |
23| owners of such entity, and used in or derived |
| |
24| from such entity for a period of at least three |
| |
arsid10121103 SB1477 HFLR Page 34
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1| (3) years prior to the date of the transaction |
| |
2| from which the net capital gains arise, |
| |
3| b. "holding period" means an uninterrupted period of |
| |
4| time. The holding period shall include any additional |
| |
5| period when the property was held by another |
| |
6| individual or entity, if such additional period is |
| |
7| included in the taxpayer's holding period for the |
| |
8| asset pursuant to the Internal Revenue Code, |
| |
9| c. "Oklahoma company", "limited liability company", or |
| |
10| "partnership" means an entity whose primary |
| |
11| headquarters have been located in Oklahoma this state |
| |
12| for at least three (3) uninterrupted years prior to |
| |
13| the date of the transaction from which the net capital |
| |
14| gains arise, |
| |
15| d. "direct" means the taxpayer directly owns the asset, |
| |
16| and |
| |
17| e. "indirect" means the taxpayer owns an interest in a |
| |
18| pass-through entity (or chain of pass-through |
| |
19| entities) that sells the asset that gives rise to the |
| |
20| qualifying gains receiving capital treatment. |
| |
21| (1) With respect to sales of real property or |
| |
22| tangible personal property located within |
| |
23| Oklahoma this state, the deduction described in |
| |
24| this subsection shall not apply unless the |
| |
arsid10121103 SB1477 HFLR Page 35
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1| pass-through entity that makes the sale has held |
| |
2| the property for not less than five (5) |
| |
3| uninterrupted years prior to the date of the |
| |
4| transaction that created the capital gain, and |
| |
5| each pass-through entity included in the chain of |
| |
6| ownership has been a member, partner, or |
| |
7| shareholder of the pass-through entity in the |
| |
8| tier immediately below it for an uninterrupted |
| |
9| period of not less than five (5) years. |
| |
10| (2) With respect to sales of stock or ownership |
| |
11| interest in or sales of all or substantially all |
| |
12| of the assets of an Oklahoma company, limited |
| |
13| liability company, or partnership, the deduction |
| |
14| described in this subsection shall not apply |
| |
15| unless the pass-through entity that makes the |
| |
16| sale has held the stock or ownership interest or |
| |
17| the assets for not less than three (3) |
| |
18| uninterrupted years prior to the date of the |
| |
19| transaction that created the capital gain, and |
| |
20| each pass-through entity included in the chain of |
| |
21| ownership has been a member, partner or |
| |
22| shareholder of the pass-through entity in the |
| |
23| tier immediately below it for an uninterrupted |
| |
24| period of not less than three (3) years. |
| |
arsid10121103 SB1477 HFLR Page 36
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1| E. The Oklahoma adjusted gross income of any individual |
| |
2|taxpayer shall be further adjusted as follows to arrive at Oklahoma |
| |
3|taxable income: |
| |
4| 1. a. In the case of individuals, there shall be added or |
| |
5| deducted, as the case may be, the difference necessary |
| |
6| to allow personal exemptions of One Thousand Dollars |
| |
7| ($1,000.00) in lieu of the personal exemptions allowed |
| |
8| by the Internal Revenue Code. |
| |
9| b. There shall be allowed an additional exemption of One |
| |
10| Thousand Dollars ($1,000.00) for each taxpayer or |
| |
11| spouse who is blind at the close of the tax year. For |
| |
12| purposes of this subparagraph, an individual is blind |
| |
13| only if the central visual acuity of the individual |
| |
14| does not exceed 20/200 in the better eye with |
| |
15| correcting lenses, or if the visual acuity of the |
| |
16| individual is greater than 20/200, but is accompanied |
| |
17| by a limitation in the fields of vision such that the |
| |
18| widest diameter of the visual field subtends an angle |
| |
19| no greater than twenty (20) degrees. |
| |
20| c. There shall be allowed an additional exemption of One |
| |
21| Thousand Dollars ($1,000.00) for each taxpayer or |
| |
22| spouse who is sixty-five (65) years of age or older at |
| |
23| the close of the tax year based upon the filing status |
| |
24| and federal adjusted gross income of the taxpayer. |
| |
arsid10121103 SB1477 HFLR Page 37
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1| Taxpayers with the following filing status may claim |
| |
2| this exemption if the federal adjusted gross income |
| |
3| does not exceed: |
| |
4| (1) Twenty-five Thousand Dollars ($25,000.00) if |
| |
5| married and filing jointly; |
| |
6| (2) Twelve Thousand Five Hundred Dollars ($12,500.00) |
| |
7| if married and filing separately; |
| |
8| (3) Fifteen Thousand Dollars ($15,000.00) if single; |
| |
9| and |
| |
10| (4) Nineteen Thousand Dollars ($19,000.00) if a |
| |
11| qualifying head of household. |
| |
12| Provided, for taxable years beginning after December |
| |
13| 31, 1999, amounts included in the calculation of |
| |
14| federal adjusted gross income pursuant to the |
| |
15| conversion of a traditional individual retirement |
| |
16| account to a Roth individual retirement account shall |
| |
17| be excluded from federal adjusted gross income for |
| |
18| purposes of the income thresholds provided in this |
| |
19| subparagraph. |
| |
20| 2. a. For taxable years beginning on or before December 31, |
| |
21| 2005, in the case of individuals who use the standard |
| |
22| deduction in determining taxable income, there shall |
| |
23| be added or deducted, as the case may be, the |
| |
24| difference necessary to allow a standard deduction in |
| |
arsid10121103 SB1477 HFLR Page 38
___________________________________________________________________________
1| lieu of the standard deduction allowed by the Internal |
| |
2| Revenue Code, in an amount equal to the larger of |
| |
3| fifteen percent (15%) of the Oklahoma adjusted gross |
| |
4| income or One Thousand Dollars ($1,000.00), but not to |
| |
5| exceed Two Thousand Dollars ($2,000.00), except that |
| |
6| in the case of a married individual filing a separate |
| |
7| return such deduction shall be the larger of fifteen |
| |
8| percent (15%) of such Oklahoma adjusted gross income |
| |
9| or Five Hundred Dollars ($500.00), but not to exceed |
| |
10| the maximum amount of One Thousand Dollars |
| |
11| ($1,000.00). |
| |
12| b. For taxable years beginning on or after January 1, |
| |
13| 2006, and before January 1, 2007, in the case of |
| |
14| individuals who use the standard deduction in |
| |
15| determining taxable income, there shall be added or |
| |
16| deducted, as the case may be, the difference necessary |
| |
17| to allow a standard deduction in lieu of the standard |
| |
18| deduction allowed by the Internal Revenue Code, in an |
| |
19| amount equal to: |
| |
20| (1) Three Thousand Dollars ($3,000.00), if the |
| |
21| filing status is married filing joint, head of |
| |
22| household or qualifying widow; or |
| |
23| (2) Two Thousand Dollars ($2,000.00), if the filing |
| |
24| status is single or married filing separate. |
| |
arsid10121103 SB1477 HFLR Page 39
___________________________________________________________________________
1| c. For the taxable year beginning on January 1, 2007, |
| |
2| and ending December 31, 2007, in the case of |
| |
3| individuals who use the standard deduction in |
| |
4| determining taxable income, there shall be added or |
| |
5| deducted, as the case may be, the difference necessary |
| |
6| to allow a standard deduction in lieu of the standard |
| |
7| deduction allowed by the Internal Revenue Code, in an |
| |
8| amount equal to: |
| |
9| (1) Five Thousand Five Hundred Dollars ($5,500.00), |
| |
10| if the filing status is married filing joint or |
| |
11| qualifying widow; or |
| |
12| (2) Four Thousand One Hundred Twenty-five Dollars |
| |
13| ($4,125.00) for a head of household; or |
| |
14| (3) Two Thousand Seven Hundred Fifty Dollars |
| |
15| ($2,750.00), if the filing status is single or |
| |
16| married filing separate. |
| |
17| d. For the taxable year beginning on January 1, 2008, |
| |
18| and ending December 31, 2008, in the case of |
| |
19| individuals who use the standard deduction in |
| |
20| determining taxable income, there shall be added or |
| |
21| deducted, as the case may be, the difference necessary |
| |
22| to allow a standard deduction in lieu of the standard |
| |
23| deduction allowed by the Internal Revenue Code, in an |
| |
24| amount equal to: |
| |
arsid10121103 SB1477 HFLR Page 40
___________________________________________________________________________
1| (1) Six Thousand Five Hundred Dollars ($6,500.00), |
| |
2| if the filing status is married filing joint or |
| |
3| qualifying widow, or |
| |
4| (2) Four Thousand Eight Hundred Seventy-five Dollars |
| |
5| ($4,875.00) for a head of household, or |
| |
6| (3) Three Thousand Two Hundred Fifty Dollars |
| |
7| ($3,250.00), if the filing status is single or |
| |
8| married filing separate. |
| |
9| e. For the taxable year beginning on January 1, 2009, |
| |
10| and ending December 31, 2009, in the case of |
| |
11| individuals who use the standard deduction in |
| |
12| determining taxable income, there shall be added or |
| |
13| deducted, as the case may be, the difference necessary |
| |
14| to allow a standard deduction in lieu of the standard |
| |
15| deduction allowed by the Internal Revenue Code, in an |
| |
16| amount equal to: |
| |
17| (1) Eight Thousand Five Hundred Dollars ($8,500.00), |
| |
18| if the filing status is married filing joint or |
| |
19| qualifying widow, or |
| |
20| (2) Six Thousand Three Hundred Seventy-five Dollars |
| |
21| ($6,375.00) for a head of household, or |
| |
22| (3) Four Thousand Two Hundred Fifty Dollars |
| |
23| ($4,250.00), if the filing status is single or |
| |
24| married filing separate. |
| |
arsid10121103 SB1477 HFLR Page 41
___________________________________________________________________________
1| Oklahoma adjusted gross income shall be increased by |
| |
2| any amounts paid for motor vehicle excise taxes which |
| |
3| were deducted as allowed by the Internal Revenue Code. |
| |
4| f. For taxable years beginning on or after January 1, |
| |
5| 2010, and ending on December 31, 2016, in the case of |
| |
6| individuals who use the standard deduction in |
| |
7| determining taxable income, there shall be added or |
| |
8| deducted, as the case may be, the difference necessary |
| |
9| to allow a standard deduction equal to the standard |
| |
10| deduction allowed by the Internal Revenue Code, based |
| |
11| upon the amount and filing status prescribed by such |
| |
12| Code for purposes of filing federal individual income |
| |
13| tax returns. |
| |
14| g. For taxable years beginning on or after January 1, |
| |
15| 2017, in the case of individuals who use the standard |
| |
16| deduction in determining taxable income, there shall |
| |
17| be added or deducted, as the case may be, the |
| |
18| difference necessary to allow a standard deduction in |
| |
19| lieu of the standard deduction allowed by the Internal |
| |
20| Revenue Code, as follows: |
| |
21| (1) Six Thousand Three Hundred Fifty Dollars |
| |
22| ($6,350.00) for single or married filing |
| |
23| separately, |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 42
___________________________________________________________________________
1| (2) Twelve Thousand Seven Hundred Dollars |
| |
2| ($12,700.00) for married filing jointly or |
| |
3| qualifying widower with dependent child, and |
| |
4| (3) Nine Thousand Three Hundred Fifty Dollars |
| |
5| ($9,350.00) for head of household. |
| |
6| 3. a. In the case of resident and part-year resident |
| |
7| individuals having adjusted gross income from sources |
| |
8| both within and without the state, the itemized or |
| |
9| standard deductions and personal exemptions shall be |
| |
10| reduced to an amount which is the same portion of the |
| |
11| total thereof as Oklahoma adjusted gross income is of |
| |
12| adjusted gross income. To the extent itemized |
| |
13| deductions include allowable moving expense, proration |
| |
14| of moving expense shall not be required or permitted |
| |
15| but allowable moving expense shall be fully deductible |
| |
16| for those taxpayers moving within or into Oklahoma |
| |
17| this state and no part of moving expense shall be |
| |
18| deductible for those taxpayers moving without or out |
| |
19| of Oklahoma this state. All other itemized or |
| |
20| standard deductions and personal exemptions shall be |
| |
21| subject to proration as provided by law. |
| |
22| b. For taxable years beginning on or after January 1, |
| |
23| 2018, the net amount of itemized deductions allowable |
| |
24| on an Oklahoma income tax return, subject to the |
| |
arsid10121103 SB1477 HFLR Page 43
___________________________________________________________________________
1| provisions of paragraph 24 of this subsection, shall |
| |
2| not exceed Seventeen Thousand Dollars ($17,000.00). |
| |
3| For purposes of this subparagraph, charitable |
| |
4| contributions and medical expenses deductible for |
| |
5| federal income tax purposes shall be excluded from the |
| |
6| amount of Seventeen Thousand Dollars ($17,000.00) as |
| |
7| specified by this subparagraph. |
| |
8| 4. A resident individual with a physical disability |
| |
9|constituting a substantial handicap to employment may deduct from |
| |
10|Oklahoma adjusted gross income such expenditures to modify a motor |
| |
11|vehicle, home or workplace as are necessary to compensate for his or |
| |
12|her handicap. A veteran certified by the Department of Veterans |
| |
13|Affairs of the federal government as having a service-connected |
| |
14|disability shall be conclusively presumed to be an individual with a |
| |
15|physical disability constituting a substantial handicap to |
| |
16|employment. The Tax Commission shall promulgate rules containing a |
| |
17|list of combinations of common disabilities and modifications which |
| |
18|may be presumed to qualify for this deduction. The Tax Commission |
| |
19|shall prescribe necessary requirements for verification. |
| |
20| 5. a. Before July 1, 2010, the first One Thousand Five |
| |
21| Hundred Dollars ($1,500.00) received by any person |
| |
22| from the United States as salary or compensation in |
| |
23| any form, other than retirement benefits, as a member |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 44
___________________________________________________________________________
1| of any component of the Armed Forces of the United |
| |
2| States shall be deducted from taxable income. |
| |
3| b. On or after July 1, 2010, one hundred percent (100%) |
| |
4| of the income received by any person from the United |
| |
5| States as salary or compensation in any form, other |
| |
6| than retirement benefits, as a member of any component |
| |
7| of the Armed Forces of the United States shall be |
| |
8| deducted from taxable income. |
| |
9| c. Whenever the filing of a timely income tax return by a |
| |
10| member of the Armed Forces of the United States is |
| |
11| made impracticable or impossible of accomplishment by |
| |
12| reason of: |
| |
13| (1) absence from the United States, which term |
| |
14| includes only the states and the District of |
| |
15| Columbia; |
| |
16| (2) absence from the State of Oklahoma this state |
| |
17| while on active duty; or |
| |
18| (3) confinement in a hospital within the United |
| |
19| States for treatment of wounds, injuries or |
| |
20| disease, |
| |
21| the time for filing a return and paying an income tax |
| |
22| shall be and is hereby extended without incurring |
| |
23| liability for interest or penalties, to the fifteenth |
| |
24| day of the third month following the month in which: |
| |
arsid10121103 SB1477 HFLR Page 45
___________________________________________________________________________
1| (a) Such individual shall return to the United |
| |
2| States if the extension is granted pursuant |
| |
3| to subparagraph a of this paragraph, return |
| |
4| to the State of Oklahoma this state if the |
| |
5| extension is granted pursuant to |
| |
6| subparagraph b of this paragraph or be |
| |
7| discharged from such hospital if the |
| |
8| extension is granted pursuant to |
| |
9| subparagraph c of this paragraph; or |
| |
10| (b) An executor, administrator, or conservator |
| |
11| of the estate of the taxpayer is appointed, |
| |
12| whichever event occurs the earliest. |
| |
13| Provided, that the Tax Commission may, in its discretion, grant |
| |
14|any member of the Armed Forces of the United States an extension of |
| |
15|time for filing of income tax returns and payment of income tax |
| |
16|without incurring liabilities for interest or penalties. Such |
| |
17|extension may be granted only when in the judgment of the Tax |
| |
18|Commission a good cause exists therefor and may be for a period in |
| |
19|excess of six (6) months. A record of every such extension granted, |
| |
20|and the reason therefor, shall be kept. |
| |
21| 6. Before July 1, 2010, the salary or any other form of |
| |
22|compensation, received from the United States by a member of any |
| |
23|component of the Armed Forces of the United States, shall be |
| |
24|deducted from taxable income during the time in which the person is |
| |
arsid10121103 SB1477 HFLR Page 46
___________________________________________________________________________
1|detained by the enemy in a conflict, is a prisoner of war or is |
| |
2|missing in action and not deceased; provided, after July 1, 2010, |
| |
3|all such salary or compensation shall be subject to the deduction as |
| |
4|provided pursuant to paragraph 5 of this subsection. |
| |
5| 7. a. An individual taxpayer, whether resident or |
| |
6| nonresident, may deduct an amount equal to the federal |
| |
7| income taxes paid by the taxpayer during the taxable |
| |
8| year. |
| |
9| b. Federal taxes as described in subparagraph a of this |
| |
10| paragraph shall be deductible by any individual |
| |
11| taxpayer, whether resident or nonresident, only to the |
| |
12| extent they relate to income subject to taxation |
| |
13| pursuant to the provisions of the Oklahoma Income Tax |
| |
14| Act. The maximum amount allowable in the preceding |
| |
15| paragraph shall be prorated on the ratio of the |
| |
16| Oklahoma adjusted gross income to federal adjusted |
| |
17| gross income. |
| |
18| c. For the purpose of this paragraph, "federal income |
| |
19| taxes paid" shall mean federal income taxes, surtaxes |
| |
20| imposed on incomes or excess profits taxes, as though |
| |
21| the taxpayer was on the accrual basis. In determining |
| |
22| the amount of deduction for federal income taxes for |
| |
23| tax year 2001, the amount of the deduction shall not |
| |
24| be adjusted by the amount of any accelerated ten |
| |
arsid10121103 SB1477 HFLR Page 47
___________________________________________________________________________
1| percent (10%) tax rate bracket credit or advanced |
| |
2| refund of the credit received during the tax year |
| |
3| provided pursuant to the federal Economic Growth and |
| |
4| Tax Relief Reconciliation Act of 2001, P.L. No. |
| |
5| 107-16, and the advanced refund of such credit shall |
| |
6| not be subject to taxation. |
| |
7| d. The provisions of this paragraph shall apply to all |
| |
8| taxable years ending after December 31, 1978, and |
| |
9| beginning before January 1, 2006. |
| |
10| 8. Retirement benefits not to exceed Five Thousand Five Hundred |
| |
11|Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five |
| |
12|Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand |
| |
13|Dollars ($10,000.00) for the 2006 tax year and all subsequent tax |
| |
14|years, which are received by an individual from the civil service of |
| |
15|the United States, the Oklahoma Public Employees Retirement System, |
| |
16|the Teachers' Retirement System of Oklahoma, the Oklahoma Law |
| |
17|Enforcement Retirement System, the Oklahoma Firefighters Pension and |
| |
18|Retirement System, the Oklahoma Police Pension and Retirement |
| |
19|System, the employee retirement systems created by counties pursuant |
| |
20|to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the |
| |
21|Uniform Retirement System for Justices and Judges, the Oklahoma |
| |
22|Wildlife Conservation Department Retirement Fund, the Oklahoma |
| |
23|Employment Security Commission Retirement Plan, or the employee |
| |
24|retirement systems created by municipalities pursuant to Section |
| |
arsid10121103 SB1477 HFLR Page 48
___________________________________________________________________________
1|48-101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt |
| |
2|from taxable income. |
| |
3| 9. In taxable years beginning after December 3l, 1984, Social |
| |
4|Security benefits received by an individual shall be exempt from |
| |
5|taxable income, to the extent such benefits are included in the |
| |
6|federal adjusted gross income pursuant to the provisions of Section |
| |
7|86 of the Internal Revenue Code, 26 U.S.C., Section 86. |
| |
8| 10. For taxable years beginning after December 31, 1994, |
| |
9|lump-sum distributions from employer plans of deferred compensation, |
| |
10|which are not qualified plans within the meaning of Section 401(a) |
| |
11|of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which |
| |
12|are deposited in and accounted for within a separate bank account or |
| |
13|brokerage account in a financial institution within this state, |
| |
14|shall be excluded from taxable income in the same manner as a |
| |
15|qualifying rollover contribution to an individual retirement account |
| |
16|within the meaning of Section 408 of the Internal Revenue Code, 26 |
| |
17|U.S.C., Section 408. Amounts withdrawn from such bank or brokerage |
| |
18|account, including any earnings thereon, shall be included in |
| |
19|taxable income when withdrawn in the same manner as withdrawals from |
| |
20|individual retirement accounts within the meaning of Section 408 of |
| |
21|the Internal Revenue Code. |
| |
22| 11. In taxable years beginning after December 31, 1995, |
| |
23|contributions made to and interest received from a medical savings |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 49
___________________________________________________________________________
1|account established pursuant to Sections 2621 through 2623 of Title |
| |
2|63 of the Oklahoma Statutes shall be exempt from taxable income. |
| |
3| 12. For taxable years beginning after December 31, 1996, the |
| |
4|Oklahoma adjusted gross income of any individual taxpayer who is a |
| |
5|swine or poultry producer may be further adjusted for the deduction |
| |
6|for depreciation allowed for new construction or expansion costs |
| |
7|which may be computed using the same depreciation method elected for |
| |
8|federal income tax purposes except that the useful life shall be |
| |
9|seven (7) years for purposes of this paragraph. If depreciation is |
| |
10|allowed as a deduction in determining the adjusted gross income of |
| |
11|an individual, any depreciation calculated and claimed pursuant to |
| |
12|this section shall in no event be a duplication of any depreciation |
| |
13|allowed or permitted on the federal income tax return of the |
| |
14|individual. |
| |
15| 13. a. In taxable years beginning after December 31, 2002, |
| |
16| nonrecurring adoption expenses paid by a resident |
| |
17| individual taxpayer in connection with: |
| |
18| (1) the adoption of a minor, or |
| |
19| (2) a proposed adoption of a minor which did not |
| |
20| result in a decreed adoption, |
| |
21| may be deducted from the Oklahoma adjusted gross |
| |
22| income. |
| |
23| |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 50
___________________________________________________________________________
1| b. The deductions for adoptions and proposed adoptions |
| |
2| authorized by this paragraph shall not exceed Twenty |
| |
3| Thousand Dollars ($20,000.00) per calendar year. |
| |
4| c. The Tax Commission shall promulgate rules to |
| |
5| implement the provisions of this paragraph which shall |
| |
6| contain a specific list of nonrecurring adoption |
| |
7| expenses which may be presumed to qualify for the |
| |
8| deduction. The Tax Commission shall prescribe |
| |
9| necessary requirements for verification. |
| |
10| d. "Nonrecurring adoption expenses" means adoption fees, |
| |
11| court costs, medical expenses, attorney fees and |
| |
12| expenses which are directly related to the legal |
| |
13| process of adoption of a child including, but not |
| |
14| limited to, costs relating to the adoption study, |
| |
15| health and psychological examinations, transportation |
| |
16| and reasonable costs of lodging and food for the child |
| |
17| or adoptive parents which are incurred to complete the |
| |
18| adoption process and are not reimbursed by other |
| |
19| sources. The term "nonrecurring adoption expenses" |
| |
20| nonrecurring adoption expenses shall not include |
| |
21| attorney fees incurred for the purpose of litigating a |
| |
22| contested adoption, from and after the point of the |
| |
23| initiation of the contest, costs associated with |
| |
24| physical remodeling, renovation and alteration of the |
| |
arsid10121103 SB1477 HFLR Page 51
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1| adoptive parents' home or property, except for a |
| |
2| special needs child as authorized by the court. |
| |
3| 14. a. In taxable years beginning before January 1, 2005, |
| |
4| retirement benefits not to exceed the amounts |
| |
5| specified in this paragraph, which are received by an |
| |
6| individual sixty-five (65) years of age or older and |
| |
7| whose Oklahoma adjusted gross income is Twenty-five |
| |
8| Thousand Dollars ($25,000.00) or less if the filing |
| |
9| status is single, head of household, or married filing |
| |
10| separate, or Fifty Thousand Dollars ($50,000.00) or |
| |
11| less if the filing status is married filing joint or |
| |
12| qualifying widow, shall be exempt from taxable income. |
| |
13| In taxable years beginning after December 31, 2004, |
| |
14| retirement benefits not to exceed the amounts |
| |
15| specified in this paragraph, which are received by an |
| |
16| individual whose Oklahoma adjusted gross income is |
| |
17| less than the qualifying amount specified in this |
| |
18| paragraph, shall be exempt from taxable income. |
| |
19| b. For purposes of this paragraph, the qualifying amount |
| |
20| shall be as follows: |
| |
21| (1) in taxable years beginning after December 31, |
| |
22| 2004, and prior to January 1, 2007, the |
| |
23| qualifying amount shall be Thirty-seven Thousand |
| |
24| Five Hundred Dollars ($37,500.00) or less if the |
| |
arsid10121103 SB1477 HFLR Page 52
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1| filing status is single, head of household, or |
| |
2| married filing separate, or Seventy-five Thousand |
| |
3| Dollars ($75,000.00) or less if the filing status |
| |
4| is married filing jointly or qualifying widow, |
| |
5| (2) in the taxable year beginning January 1, 2007, |
| |
6| the qualifying amount shall be Fifty Thousand |
| |
7| Dollars ($50,000.00) or less if the filing status |
| |
8| is single, head of household, or married filing |
| |
9| separate, or One Hundred Thousand Dollars |
| |
10| ($100,000.00) or less if the filing status is |
| |
11| married filing jointly or qualifying widow, |
| |
12| (3) in the taxable year beginning January 1, 2008, |
| |
13| the qualifying amount shall be Sixty-two Thousand |
| |
14| Five Hundred Dollars ($62,500.00) or less if the |
| |
15| filing status is single, head of household, or |
| |
16| married filing separate, or One Hundred |
| |
17| Twenty-five Thousand Dollars ($125,000.00) or |
| |
18| less if the filing status is married filing |
| |
19| jointly or qualifying widow, |
| |
20| (4) in the taxable year beginning January 1, 2009, |
| |
21| the qualifying amount shall be One Hundred |
| |
22| Thousand Dollars ($100,000.00) or less if the |
| |
23| filing status is single, head of household, or |
| |
24| married filing separate, or Two Hundred Thousand |
| |
arsid10121103 SB1477 HFLR Page 53
___________________________________________________________________________
1| Dollars ($200,000.00) or less if the filing |
| |
2| status is married filing jointly or qualifying |
| |
3| widow, and |
| |
4| (5) in the taxable year beginning January 1, 2010, |
| |
5| and subsequent taxable years, there shall be no |
| |
6| limitation upon the qualifying amount. |
| |
7| c. For purposes of this paragraph, "retirement benefits" |
| |
8| means the total distributions or withdrawals from the |
| |
9| following: |
| |
10| (1) an employee pension benefit plan which satisfies |
| |
11| the requirements of Section 401 of the Internal |
| |
12| Revenue Code, 26 U.S.C., Section 401, |
| |
13| (2) an eligible deferred compensation plan that |
| |
14| satisfies the requirements of Section 457 of the |
| |
15| Internal Revenue Code, 26 U.S.C., Section 457, |
| |
16| (3) an individual retirement account, annuity or |
| |
17| trust or simplified employee pension that |
| |
18| satisfies the requirements of Section 408 of the |
| |
19| Internal Revenue Code, 26 U.S.C., Section 408, |
| |
20| (4) an employee annuity subject to the provisions of |
| |
21| Section 403(a) or (b) of the Internal Revenue |
| |
22| Code, 26 U.S.C., Section 403(a) or (b), |
| |
23| |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 54
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1| (5) United States Retirement Bonds which satisfy the |
| |
2| requirements of Section 86 of the Internal |
| |
3| Revenue Code, 26 U.S.C., Section 86, or |
| |
4| (6) lump-sum distributions from a retirement plan |
| |
5| which satisfies the requirements of Section |
| |
6| 402(e) of the Internal Revenue Code, 26 U.S.C., |
| |
7| Section 402(e). |
| |
8| d. The amount of the exemption provided by this paragraph |
| |
9| shall be limited to Five Thousand Five Hundred Dollars |
| |
10| ($5,500.00) for the 2004 tax year, Seven Thousand Five |
| |
11| Hundred Dollars ($7,500.00) for the 2005 tax year and |
| |
12| Ten Thousand Dollars ($10,000.00) for the tax year |
| |
13| 2006 and for all subsequent tax years. Any individual |
| |
14| who claims the exemption provided for in paragraph 8 |
| |
15| of this subsection shall not be permitted to claim a |
| |
16| combined total exemption pursuant to this paragraph |
| |
17| and paragraph 8 of this subsection in an amount |
| |
18| exceeding Five Thousand Five Hundred Dollars |
| |
19| ($5,500.00) for the 2004 tax year, Seven Thousand Five |
| |
20| Hundred Dollars ($7,500.00) for the 2005 tax year and |
| |
21| Ten Thousand Dollars ($10,000.00) for the 2006 tax |
| |
22| year and all subsequent tax years. |
| |
23| 15. In taxable years beginning after December 31, 1999, for an |
| |
24|individual engaged in production agriculture who has filed a |
| |
arsid10121103 SB1477 HFLR Page 55
___________________________________________________________________________
1|Schedule F form with the taxpayer's federal income tax return for |
| |
2|such taxable year, there shall be excluded from taxable income any |
| |
3|amount which was included as federal taxable income or federal |
| |
4|adjusted gross income and which consists of the discharge of an |
| |
5|obligation by a creditor of the taxpayer incurred to finance the |
| |
6|production of agricultural products. |
| |
7| 16. In taxable years beginning December 31, 2000, an amount |
| |
8|equal to one hundred percent (100%) of the amount of any scholarship |
| |
9|or stipend received from participation in the Oklahoma Police Corps |
| |
10|Program, as established in Section 2-140.3 of Title 47 of the |
| |
11|Oklahoma Statutes shall be exempt from taxable income. |
| |
12| 17. a. In taxable years beginning after December 31, 2001, |
| |
13| and before January 1, 2005, there shall be allowed a |
| |
14| deduction in the amount of contributions to accounts |
| |
15| established pursuant to the Oklahoma College Savings |
| |
16| Plan Act. The deduction shall equal the amount of |
| |
17| contributions to accounts, but in no event shall the |
| |
18| deduction for each contributor exceed Two Thousand |
| |
19| Five Hundred Dollars ($2,500.00) each taxable year for |
| |
20| each account. |
| |
21| b. In taxable years beginning after December 31, 2004, |
| |
22| each taxpayer shall be allowed a deduction for |
| |
23| contributions to accounts established pursuant to the |
| |
24| Oklahoma College Savings Plan Act. The maximum annual |
| |
arsid10121103 SB1477 HFLR Page 56
___________________________________________________________________________
1| deduction shall equal the amount of contributions to |
| |
2| all such accounts plus any contributions to such |
| |
3| accounts by the taxpayer for prior taxable years after |
| |
4| December 31, 2004, which were not deducted, but in no |
| |
5| event shall the deduction for each tax year exceed Ten |
| |
6| Thousand Dollars ($10,000.00) for each individual |
| |
7| taxpayer or Twenty Thousand Dollars ($20,000.00) for |
| |
8| taxpayers filing a joint return. Any amount of a |
| |
9| contribution that is not deducted by the taxpayer in |
| |
10| the year for which the contribution is made may be |
| |
11| carried forward as a deduction from income for the |
| |
12| succeeding five (5) years. For taxable years |
| |
13| beginning after December 31, 2005, deductions may be |
| |
14| taken for contributions and rollovers made during a |
| |
15| taxable year and up to April 15 of the succeeding |
| |
16| year, or the due date of a taxpayer's state income tax |
| |
17| return, excluding extensions, whichever is later. |
| |
18| Provided, a deduction for the same contribution may |
| |
19| not be taken for two (2) different taxable years. |
| |
20| c. In taxable years beginning after December 31, 2006, |
| |
21| deductions for contributions made pursuant to |
| |
22| subparagraph b of this paragraph shall be limited as |
| |
23| follows: |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 57
___________________________________________________________________________
1| (1) for a taxpayer who qualified for the five-year |
| |
2| carryforward election and who takes a rollover or |
| |
3| nonqualified withdrawal during that period, the |
| |
4| tax deduction otherwise available pursuant to |
| |
5| subparagraph b of this paragraph shall be reduced |
| |
6| by the amount which is equal to the rollover or |
| |
7| nonqualified withdrawal, and |
| |
8| (2) for a taxpayer who elects to take a rollover or |
| |
9| nonqualified withdrawal within the same tax year |
| |
10| in which a contribution was made to the |
| |
11| taxpayer's account, the tax deduction otherwise |
| |
12| available pursuant to subparagraph b of this |
| |
13| paragraph shall be reduced by the amount of the |
| |
14| contribution which is equal to the rollover or |
| |
15| nonqualified withdrawal. |
| |
16| d. If a taxpayer elects to take a rollover on a |
| |
17| contribution for which a deduction has been taken |
| |
18| pursuant to subparagraph b of this paragraph within |
| |
19| one (1) year of the date of contribution, the amount |
| |
20| of such rollover shall be included in the adjusted |
| |
21| gross income of the taxpayer in the taxable year of |
| |
22| the rollover. |
| |
23| e. If a taxpayer makes a nonqualified withdrawal of |
| |
24| contributions for which a deduction was taken pursuant |
| |
arsid10121103 SB1477 HFLR Page 58
___________________________________________________________________________
1| to subparagraph b of this paragraph, such nonqualified |
| |
2| withdrawal and any earnings thereon shall be included |
| |
3| in the adjusted gross income of the taxpayer in the |
| |
4| taxable year of the nonqualified withdrawal. |
| |
5| f. As used in this paragraph: |
| |
6| (1) "non-qualified withdrawal" means a withdrawal |
| |
7| from an Oklahoma College Savings Plan account |
| |
8| other than one of the following: |
| |
9| (a) a qualified withdrawal, |
| |
10| (b) a withdrawal made as a result of the death |
| |
11| or disability of the designated beneficiary |
| |
12| of an account, |
| |
13| (c) a withdrawal that is made on the account of |
| |
14| a scholarship or the allowance or payment |
| |
15| described in Section 135(d)(1)(B) or (C) or |
| |
16| by the Internal Revenue Code, received by |
| |
17| the designated beneficiary to the extent the |
| |
18| amount of the refund does not exceed the |
| |
19| amount of the scholarship, allowance, or |
| |
20| payment, or |
| |
21| (d) a rollover or change of designated |
| |
22| beneficiary as permitted by subsection F of |
| |
23| Section 3970.7 of Title 70 of the Oklahoma |
| |
24| Statutes, and |
| |
arsid10121103 SB1477 HFLR Page 59
___________________________________________________________________________
1| (2) "rollover" means the transfer of funds from the |
| |
2| Oklahoma College Savings Plan to any other plan |
| |
3| under Section 529 of the Internal Revenue Code. |
| |
4| 18. For tax years 2006 through 2021, retirement benefits |
| |
5|received by an individual from any component of the Armed Forces of |
| |
6|the United States in an amount not to exceed the greater of |
| |
7|seventy-five percent (75%) of such benefits or Ten Thousand Dollars |
| |
8|($10,000.00) shall be exempt from taxable income but in no case less |
| |
9|than the amount of the exemption provided by paragraph 14 of this |
| |
10|subsection. For tax year 2022 and subsequent tax years, retirement |
| |
11|benefits received by an individual from any component of the Armed |
| |
12|Forces of the United States shall be exempt from taxable income. |
| |
13| 19. For taxable years beginning after December 31, 2006, |
| |
14|retirement benefits received by federal civil service retirees, |
| |
15|including survivor annuities, paid in lieu of Social Security |
| |
16|benefits shall be exempt from taxable income to the extent such |
| |
17|benefits are included in the federal adjusted gross income pursuant |
| |
18|to the provisions of Section 86 of the Internal Revenue Code, 26 |
| |
19|U.S.C., Section 86, according to the following schedule: |
| |
20| a. in the taxable year beginning January 1, 2007, twenty |
| |
21| percent (20%) of such benefits shall be exempt, |
| |
22| b. in the taxable year beginning January 1, 2008, forty |
| |
23| percent (40%) of such benefits shall be exempt, |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 60
___________________________________________________________________________
1| c. in the taxable year beginning January 1, 2009, sixty |
| |
2| percent (60%) of such benefits shall be exempt, |
| |
3| d. in the taxable year beginning January 1, 2010, eighty |
| |
4| percent (80%) of such benefits shall be exempt, and |
| |
5| e. in the taxable year beginning January 1, 2011, and |
| |
6| subsequent taxable years, one hundred percent (100%) |
| |
7| of such benefits shall be exempt. |
| |
8| 20. a. For taxable years beginning after December 31, 2007, a |
| |
9| resident individual may deduct up to Ten Thousand |
| |
10| Dollars ($10,000.00) from Oklahoma adjusted gross |
| |
11| income if the individual, or the dependent of the |
| |
12| individual, while living, donates one or more human |
| |
13| organs of the individual to another human being for |
| |
14| human organ transplantation. As used in this |
| |
15| paragraph, "human organ" means all or part of a liver, |
| |
16| pancreas, kidney, intestine, lung, or bone marrow. A |
| |
17| deduction that is claimed under this paragraph may be |
| |
18| claimed in the taxable year in which the human organ |
| |
19| transplantation occurs. |
| |
20| b. An individual may claim this deduction only once, and |
| |
21| the deduction may be claimed only for unreimbursed |
| |
22| expenses that are incurred by the individual and |
| |
23| related to the organ donation of the individual. |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 61
___________________________________________________________________________
1| c. The Oklahoma Tax Commission shall promulgate rules to |
| |
2| implement the provisions of this paragraph which shall |
| |
3| contain a specific list of expenses which may be |
| |
4| presumed to qualify for the deduction. The Tax |
| |
5| Commission shall prescribe necessary requirements for |
| |
6| verification. |
| |
7| 21. For taxable years beginning after December 31, 2009, there |
| |
8|shall be exempt from taxable income any amount received by the |
| |
9|beneficiary of the death benefit for an emergency medical technician |
| |
10|or a registered emergency medical responder provided by Section |
| |
11|1-2505.1 of Title 63 of the Oklahoma Statutes. |
| |
12| 22. For taxable years beginning after December 31, 2008, |
| |
13|taxable income shall be increased by any unemployment compensation |
| |
14|exempted under Section 85(c) of the Internal Revenue Code, 26 |
| |
15|U.S.C., Section 85(c)(2009). |
| |
16| 23. For taxable years beginning after December 31, 2008, there |
| |
17|shall be exempt from taxable income any payment in an amount less |
| |
18|than Six Hundred Dollars ($600.00) received by a person as an award |
| |
19|for participation in a competitive livestock show event. For |
| |
20|purposes of this paragraph, the payment shall be treated as a |
| |
21|scholarship amount paid by the entity sponsoring the event and the |
| |
22|sponsoring entity shall cause the payment to be categorized as a |
| |
23|scholarship in its books and records. |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 62
___________________________________________________________________________
1| 24. For taxable years beginning on or after January 1, 2016, |
| |
2|taxable income shall be increased by any amount of state and local |
| |
3|sales or income taxes deducted under 26 U.S.C., Section 164 of the |
| |
4|Internal Revenue Code. If the amount of state and local taxes |
| |
5|deducted on the federal return is limited, taxable income on the |
| |
6|state return shall be increased only by the amount actually deducted |
| |
7|after any such limitations are applied. |
| |
8| 25. For taxable years beginning after December 31, 2020, each |
| |
9|taxpayer shall be allowed a deduction for contributions to accounts |
| |
10|established pursuant to the Achieving a Better Life Experience |
| |
11|(ABLE) Program as established in Section 4001.1 et seq. of Title 56 |
| |
12|of the Oklahoma Statutes. For any tax year, the deduction provided |
| |
13|for in this paragraph shall not exceed Ten Thousand Dollars |
| |
14|($10,000.00) for an individual taxpayer or Twenty Thousand Dollars |
| |
15|($20,000.00) for taxpayers filing a joint return. Any amount of |
| |
16|contribution not deducted by the taxpayer in the tax year for which |
| |
17|the contribution is made may be carried forward as a deduction from |
| |
18|income for up to five (5) tax years. Deductions may be taken for |
| |
19|contributions made during the tax year and through April 15 of the |
| |
20|succeeding tax year, or through the due date of a taxpayer's state |
| |
21|income tax return excluding extensions, whichever is later. |
| |
22|Provided, a deduction for the same contribution may not be taken in |
| |
23|more than one (1) tax year. |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 63
___________________________________________________________________________
1| 26. For tax year 2024 and subsequent tax years, tax credits |
| |
2|received pursuant to the Oklahoma Parental Choice Tax Credit Act in |
| |
3|Section 28-101 of Title 70 of the Oklahoma Statutes shall be exempt |
| |
4|from taxable income. |
| |
5| F. 1. For taxable years beginning after December 31, 2004, a |
| |
6|deduction from the Oklahoma adjusted gross income of any individual |
| |
7|taxpayer shall be allowed for qualifying gains receiving capital |
| |
8|treatment that are included in the federal adjusted gross income of |
| |
9|such individual taxpayer during the taxable year. |
| |
10| 2. As used in this subsection: |
| |
11| a. "qualifying gains receiving capital treatment" means |
| |
12| the amount of net capital gains, as defined in Section |
| |
13| 1222(11) of the Internal Revenue Code, included in an |
| |
14| individual taxpayer's federal income tax return that |
| |
15| result from: |
| |
16| (1) the sale of real property or tangible personal |
| |
17| property located within Oklahoma this state that |
| |
18| has been directly or indirectly owned by the |
| |
19| individual taxpayer for a holding period of at |
| |
20| least five (5) years prior to the date of the |
| |
21| transaction from which such net capital gains |
| |
22| arise, |
| |
23| (2) the sale of stock or the sale of a direct or |
| |
24| indirect ownership interest in an Oklahoma |
| |
arsid10121103 SB1477 HFLR Page 64
___________________________________________________________________________
1| company, limited liability company, or |
| |
2| partnership where such stock or ownership |
| |
3| interest has been directly or indirectly owned by |
| |
4| the individual taxpayer for a holding period of |
| |
5| at least two (2) years prior to the date of the |
| |
6| transaction from which the net capital gains |
| |
7| arise, or |
| |
8| (3) the sale of real property, tangible personal |
| |
9| property or intangible personal property located |
| |
10| within Oklahoma this state as part of the sale of |
| |
11| all or substantially all of the assets of an |
| |
12| Oklahoma company, limited liability company, or |
| |
13| partnership or an Oklahoma proprietorship |
| |
14| business enterprise where such property has been |
| |
15| directly or indirectly owned by such entity or |
| |
16| business enterprise or owned by the owners of |
| |
17| such entity or business enterprise for a period |
| |
18| of at least two (2) years prior to the date of |
| |
19| the transaction from which the net capital gains |
| |
20| arise, |
| |
21| b. "holding period" means an uninterrupted period of |
| |
22| time. The holding period shall include any additional |
| |
23| period when the property was held by another |
| |
24| individual or entity, if such additional period is |
| |
arsid10121103 SB1477 HFLR Page 65
___________________________________________________________________________
1| included in the taxpayer's holding period for the |
| |
2| asset pursuant to the Internal Revenue Code, |
| |
3| c. "Oklahoma company," "limited liability company," or |
| |
4| "partnership" means an entity whose primary |
| |
5| headquarters have been located in Oklahoma this state |
| |
6| for at least three (3) uninterrupted years prior to |
| |
7| the date of the transaction from which the net capital |
| |
8| gains arise, |
| |
9| d. "direct" means the individual taxpayer directly owns |
| |
10| the asset, |
| |
11| e. "indirect" means the individual taxpayer owns an |
| |
12| interest in a pass-through entity (or chain of |
| |
13| pass-through entities) that sells the asset that gives |
| |
14| rise to the qualifying gains receiving capital |
| |
15| treatment. |
| |
16| (1) With respect to sales of real property or |
| |
17| tangible personal property located within |
| |
18| Oklahoma this state, the deduction described in |
| |
19| this subsection shall not apply unless the |
| |
20| pass-through entity that makes the sale has held |
| |
21| the property for not less than five (5) |
| |
22| uninterrupted years prior to the date of the |
| |
23| transaction that created the capital gain, and |
| |
24| each pass-through entity included in the chain of |
| |
arsid10121103 SB1477 HFLR Page 66
___________________________________________________________________________
1| ownership has been a member, partner, or |
| |
2| shareholder of the pass-through entity in the |
| |
3| tier immediately below it for an uninterrupted |
| |
4| period of not less than five (5) years. |
| |
5| (2) With respect to sales of stock or ownership |
| |
6| interest in or sales of all or substantially all |
| |
7| of the assets of an Oklahoma company, limited |
| |
8| liability company, partnership or Oklahoma |
| |
9| proprietorship business enterprise, the deduction |
| |
10| described in this subsection shall not apply |
| |
11| unless the pass-through entity that makes the |
| |
12| sale has held the stock or ownership interest for |
| |
13| not less than two (2) uninterrupted years prior |
| |
14| to the date of the transaction that created the |
| |
15| capital gain, and each pass-through entity |
| |
16| included in the chain of ownership has been a |
| |
17| member, partner or shareholder of the |
| |
18| pass-through entity in the tier immediately below |
| |
19| it for an uninterrupted period of not less than |
| |
20| two (2) years. For purposes of this division, |
| |
21| uninterrupted ownership prior to July 1, 2007, |
| |
22| shall be included in the determination of the |
| |
23| required holding period prescribed by this |
| |
24| division, and |
| |
arsid10121103 SB1477 HFLR Page 67
___________________________________________________________________________
1| f. "Oklahoma proprietorship business enterprise" means a |
| |
2| business enterprise whose income and expenses have |
| |
3| been reported on Schedule C or F of an individual |
| |
4| taxpayer's federal income tax return, or any similar |
| |
5| successor schedule published by the Internal Revenue |
| |
6| Service and whose primary headquarters have been |
| |
7| located in Oklahoma this state for at least three (3) |
| |
8| uninterrupted years prior to the date of the |
| |
9| transaction from which the net capital gains arise. |
| |
10| G. 1. For purposes of computing its Oklahoma taxable income |
| |
11|under this section, the dividends-paid deduction otherwise allowed |
| |
12|by federal law in computing net income of a real estate investment |
| |
13|trust that is subject to federal income tax shall be added back in |
| |
14|computing the tax imposed by this state under this title if the real |
| |
15|estate investment trust is a captive real estate investment trust. |
| |
16| 2. For purposes of computing its Oklahoma taxable income under |
| |
17|this section, a taxpayer shall add back otherwise deductible rents |
| |
18|and interest expenses paid to a captive real estate investment trust |
| |
19|that is not subject to the provisions of paragraph 1 of this |
| |
20|subsection. As used in this subsection: |
| |
21| a. the term "real estate investment trust" or "REIT" |
| |
22| means the meaning ascribed to such term in Section 856 |
| |
23| of the Internal Revenue Code, |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 68
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1| b. the term "captive real estate investment trust" means |
| |
2| a real estate investment trust, the shares or |
| |
3| beneficial interests of which are not regularly traded |
| |
4| on an established securities market and more than |
| |
5| fifty percent (50%) of the voting power or value of |
| |
6| the beneficial interests or shares of which are owned |
| |
7| or controlled, directly or indirectly, or |
| |
8| constructively, by a single entity that is: |
| |
9| (1) treated as an association taxable as a |
| |
10| corporation under the Internal Revenue Code, and |
| |
11| (2) not exempt from federal income tax pursuant to |
| |
12| the provisions of Section 501(a) of the Internal |
| |
13| Revenue Code. |
| |
14| The term shall not include a real estate investment |
| |
15| trust that is intended to be regularly traded on an |
| |
16| established securities market, and that satisfies the |
| |
17| requirements of Section 856(a)(5) and (6) of the U.S. |
| |
18| Internal Revenue Code by reason of Section 856(h)(2) |
| |
19| of the Internal Revenue Code, |
| |
20| c. the term "association taxable as a corporation" shall |
| |
21| not include the following entities: |
| |
22| (1) any real estate investment trust as defined in |
| |
23| paragraph a of this subsection other than a |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 69
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1| "captive real estate investment trust" captive |
| |
2| real estate investment trust, or |
| |
3| (2) any qualified real estate investment trust |
| |
4| subsidiary under Section 856(i) of the Internal |
| |
5| Revenue Code, other than a qualified REIT |
| |
6| subsidiary of a "captive real estate investment |
| |
7| trust" captive real estate investment trust, or |
| |
8| (3) any Listed Australian Property Trust listed |
| |
9| Australian property trust (meaning an Australian |
| |
10| unit trust registered as a "Managed Investment |
| |
11| Scheme" "managed investment scheme" under the |
| |
12| Australian Corporations Act 2001 in which the |
| |
13| principal class of units is listed on a |
| |
14| recognized stock exchange in Australia and is |
| |
15| regularly traded on an established securities |
| |
16| market), or an entity organized as a trust, |
| |
17| provided that a Listed Australian Property Trust |
| |
18| listed Australian property trust owns or |
| |
19| controls, directly or indirectly, seventy-five |
| |
20| percent (75%) or more of the voting power or |
| |
21| value of the beneficial interests or shares of |
| |
22| such trust, or |
| |
23| (4) any Qualified Foreign Entity qualified foreign |
| |
24| entity, meaning a corporation, trust, association |
| |
arsid10121103 SB1477 HFLR Page 70
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1| or partnership organized outside the laws of the |
| |
2| United States and which satisfies the following |
| |
3| criteria: |
| |
4| (a) at least seventy-five percent (75%) of the |
| |
5| entity's total asset value at the close of |
| |
6| its taxable year is represented by real |
| |
7| estate assets, as defined in Section |
| |
8| 856(c)(5)(B) of the Internal Revenue Code, |
| |
9| thereby including shares or certificates of |
| |
10| beneficial interest in any real estate |
| |
11| investment trust, cash and cash equivalents, |
| |
12| and U.S. Government securities, |
| |
13| (b) the entity receives a dividend-paid |
| |
14| deduction comparable to Section 561 of the |
| |
15| Internal Revenue Code, or is exempt from |
| |
16| entity level tax, |
| |
17| (c) the entity is required to distribute at |
| |
18| least eighty-five percent (85%) of its |
| |
19| taxable income, as computed in the |
| |
20| jurisdiction in which it is organized, to |
| |
21| the holders of its shares or certificates of |
| |
22| beneficial interest on an annual basis, |
| |
23| (d) not more than ten percent (10%) of the |
| |
24| voting power or value in such entity is held |
| |
arsid10121103 SB1477 HFLR Page 71
___________________________________________________________________________
1| directly or indirectly or constructively by |
| |
2| a single entity or individual, or the shares |
| |
3| or beneficial interests of such entity are |
| |
4| regularly traded on an established |
| |
5| securities market, and |
| |
6| (e) the entity is organized in a country which |
| |
7| has a tax treaty with the United States. |
| |
8| 3. For purposes of this subsection, the constructive ownership |
| |
9|rules of Section 318(a) of the Internal Revenue Code, as modified by |
| |
10|Section 856(d)(5) of the Internal Revenue Code, shall apply in |
| |
11|determining the ownership of stock, assets, or net profits of any |
| |
12|person. |
| |
13| 4. A real estate investment trust that does not become |
| |
14|regularly traded on an established securities market within one (1) |
| |
15|year of the date on which it first becomes a real estate investment |
| |
16|trust shall be deemed not to have been regularly traded on an |
| |
17|established securities market, retroactive to the date it first |
| |
18|became a real estate investment trust, and shall file an amended |
| |
19|return reflecting such retroactive designation for any tax year or |
| |
20|part year occurring during its initial year of status as a real |
| |
21|estate investment trust. For purposes of this subsection, a real |
| |
22|estate investment trust becomes a real estate investment trust on |
| |
23|the first day it has both met the requirements of Section 856 of the |
| |
24|Internal Revenue Code and has elected to be treated as a real estate |
| |
arsid10121103 SB1477 HFLR Page 72
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1|investment trust pursuant to Section 856(c)(1) of the Internal |
| |
2|Revenue Code. |
| |
3| SECTION 3. AMENDATORY Section 2, Chapter 278, O.S.L. |
| |
4|2023 (70 O.S. Supp. 2023, Section 28-101), is amended to read as |
| |
5|follows: |
| |
6| Section 28-101. A. As used in the Oklahoma Parental Choice Tax |
| |
7|Credit Act: |
| |
8| 1. "Commission" means the Oklahoma Tax Commission; |
| |
9| 2. "Curriculum" means a complete course of study for a |
| |
10|particular content area or grade level; |
| |
11| 3. "Department" means the State Department of Education; |
| |
12| 4. "Education service provider" means a person, business, |
| |
13|public school district, public charter school, magnet school, or |
| |
14|organization that provides educational goods and/or services to |
| |
15|eligible students; |
| |
16| 5. "Eligible student" means a resident of this state who is |
| |
17|eligible to enroll in a public school in this state. Eligible |
| |
18|student shall include a student who is enrolled in and attends or is |
| |
19|expected to enroll in a private school accredited by the State Board |
| |
20|of Education or another accrediting association or a student who is |
| |
21|educated pursuant to the other means of education exception provided |
| |
22|for in subsection A of Section 10-105 of Title 70 of the Oklahoma |
| |
23|Statutes this title; |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 73
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1| 6. "Qualified expense" for the purpose of claiming the credit |
| |
2|authorized by subparagraph a of paragraph 1 of subsection C of this |
| |
3|section means tuition and fees at a private school accredited by the |
| |
4|State Board of Education or another accrediting association; |
| |
5| 7. "Qualified expense" for the purpose of claiming the credit |
| |
6|authorized by subparagraph b of paragraph 1 of subsection C of this |
| |
7|section means the following expenditures: |
| |
8| a. tuition and fees for nonpublic online or in-person |
| |
9| learning programs, |
| |
10| b. academic tutoring services provided by an individual |
| |
11| or a private academic tutoring facility, |
| |
12| c. textbooks, curriculum, or other instructional |
| |
13| materials including, but not limited to, supplemental |
| |
14| materials or associated online instruction required by |
| |
15| an education service provider, and |
| |
16| d. fees for nationally standardized assessments |
| |
17| including, but not limited to, assessments used to |
| |
18| determine college admission and advanced placement |
| |
19| examinations as well as tuition and fees for tutoring |
| |
20| or preparatory courses for the assessments; and |
| |
21| 8. "Taxpayer" means a biological or adoptive parent, |
| |
22|grandparent, aunt, uncle, legal guardian, custodian, or other person |
| |
23|with legal authority to act on behalf of an eligible student. |
| |
24| |
| |
arsid10121103 SB1477 HFLR Page 74
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1| B. There is hereby created the Oklahoma Parental Choice Tax |
| |
2|Credit Program to provide an income tax credit to a taxpayer for |
| |
3|qualified expenses to support the education of eligible students in |
| |
4|this state. |
| |
5| C. For the tax year 2024 and subsequent tax years, there shall |
| |
6|be allowed against the tax imposed by Section 2355 of Title 68 of |
| |
7|the Oklahoma Statutes a credit for any Oklahoma taxpayer who incurs |
| |
8|a qualified expense on behalf of an eligible student, to be |
| |
9|administered subject to the following amounts for each tax year: |
| |
10| 1. If the eligible student attends a private school in |
| |
11|Oklahoma, accredited by the State Board of Education or another |
| |
12|accrediting association, the maximum credit amount shall be: |
| |
13| a. (1) Seven Thousand Five Hundred Dollars ($7,500.00) |
| |
14| or the amount of tuition and fees for the private |
| |
15| school, whichever is less, if the combined |
| |
16| adjusted gross income of the parents or legal |
| |
17| guardians of the eligible student is a member of |
| |
18| a household in which the total adjusted gross |
| |
19| income during the second preceding tax year does |
| |
20| not exceed Seventy-five Thousand Dollars |
| |
21| ($75,000.00), |
| |
22| (2) Seven Thousand Dollars ($7,000.00) or the amount |
| |
23| of tuition and fees for the private school, |
| |
24| whichever is less, if the combined adjusted gross |
| |
arsid10121103 SB1477 HFLR Page 75
___________________________________________________________________________
1| income of the parents or legal guardians of the |
| |
2| eligible student is a member of a household in |
| |
3| which the total adjusted gross income during the |
| |
4| second preceding tax year is more than |
| |
5| Seventy-five Thousand Dollars ($75,000.00) but |
| |
6| does not exceed One Hundred Fifty Thousand |
| |
7| Dollars ($150,000.00), |
| |
8| (3) Six Thousand Five Hundred Dollars ($6,500.00) or |
| |
9| the amount of tuition and fees for the private |
| |
10| school, whichever is less, if the combined |
| |
11| adjusted gross income of the parents or legal |
| |
12| guardians of the eligible student is a member of |
| |
13| a household in which the total adjusted gross |
| |
14| income during the second preceding tax year is |
| |
15| more than One Hundred Fifty Thousand Dollars |
| |
16| ($150,000.00) but does not exceed Two Hundred |
| |
17| Twenty-five Thousand Dollars ($225,000.00), |
| |
18| (4) Six Thousand Dollars ($6,000.00) or the amount |
| |
19| of tuition and fees for the private school, |
| |
20| whichever is less, if the combined adjusted gross |
| |
21| income of the parents or legal guardians of the |
| |
22| eligible student is a member of a household in |
| |
23| which the total adjusted gross income during the |
| |
24| second preceding tax year is more than Two |
| |
arsid10121103 SB1477 HFLR Page 76
___________________________________________________________________________
1| Hundred Twenty-five Thousand Dollars |
| |
2| ($225,000.00) but does not exceed Two Hundred |
| |
3| Fifty Thousand Dollars ($250,000.00), or |
| |
4| (5) Five Thousand Dollars ($5,000.00) or the amount |
| |
5| of tuition and fees for the private school, |
| |
6| whichever is less, if the combined adjusted gross |
| |
7| income of the parents or legal guardians of the |
| |
8| eligible student is a member of a household in |
| |
9| which the total adjusted gross income during the |
| |
10| second preceding tax year is more than Two |
| |
11| Hundred Fifty Thousand Dollars ($250,000.00), and |
| |
12| b. One Thousand Dollars ($1,000.00) in qualified |
| |
13| expenses per eligible student in each tax year if the |
| |
14| eligible student is educated pursuant to the other |
| |
15| means of education exception provided for in |
| |
16| subsection A of Section 10-105 of Title 70 of the |
| |
17| Oklahoma Statutes this title. To claim the credit, |
| |
18| the taxpayer shall submit to the Commission receipts |
| |
19| for qualified expenses as defined by paragraph 7 of |
| |
20| subsection A of this section; |
| |
21| 2. If the eligible student attends a private school in |
| |
22|Oklahoma, accredited by the State Board of Education or another |
| |
23|accrediting association, that exclusively serves students |
| |
24|experiencing homelessness, the credit amount shall be Seven Thousand |
| |
arsid10121103 SB1477 HFLR Page 77
___________________________________________________________________________
1|Five Hundred Dollars ($7,500.00) or the amount of the cost to |
| |
2|educate the eligible student at the private school, whichever is |
| |
3|less; |
| |
4| 3. If the eligible student attends a private school in |
| |
5|Oklahoma, accredited by the State Board of Education or another |
| |
6|accrediting association, that primarily serves financially |
| |
7|disadvantaged students, the credit amount shall be the maximum |
| |
8|credit amount authorized by subparagraph a of paragraph 1 of this |
| |
9|subsection or the amount of the cost to educate the eligible student |
| |
10|at the private school, whichever is less. The cost to educate the |
| |
11|eligible student shall be equal to the average cost to educate all |
| |
12|students attending the private school, which shall be calculated by |
| |
13|dividing the private school's total expenditures in the previous |
| |
14|year by the total enrollment in the previous school year. A private |
| |
15|school shall be deemed to be primarily serving financially |
| |
16|disadvantaged students if the private school's admissions are based |
| |
17|on enrolling students whose gross family income is two hundred fifty |
| |
18|percent (250%) of the federal poverty threshold or below; |
| |
19| 4. The taxpayer shall retain all receipts of qualified expenses |
| |
20|as proof of the amounts paid each tax year the credit is claimed and |
| |
21|shall submit them to the Commission upon request; and |
| |
22| 3. 5. If the credit exceeds the tax imposed by Section 2355 of |
| |
23|Title 68 of the Oklahoma Statutes, the excess amount shall be |
| |
24|refunded to the taxpayer; and |
| |
arsid10121103 SB1477 HFLR Page 78
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1| 6. Credits claimed by a taxpayer pursuant to the provisions of |
| |
2|this section shall not be used to offset or pay the following: |
| |
3| a. delinquent tax liability, |
| |
4| b. accrued penalty or interest from the failure to file |
| |
5| a report or return, |
| |
6| c. accrued penalty or interest from the failure to pay a |
| |
7| state tax within the statutory period allowed for its |
| |
8| payment, |
| |
9| d. liability of the taxpayer from any prior tax year, or |
| |
10| |
| |
11| e. any debt, unpaid fine, final judgement, or claim |
| |
12| filed with the Commission by a qualified entity as |
| |
13| defined in Section 205.2 of Title 68 of the Oklahoma |
| |
14| Statutes. |
| |
15| D. 1. a. For tax fiscal year 2024, the total amount of credits |
| |
16| authorized by subparagraph a of paragraph 1 of |
| |
17| subsection C of this section shall not exceed One |
| |
18| Hundred Fifty Million Dollars ($150,000,000.00). Any |
| |
19| unused credits from fiscal year 2024 shall be carried |
| |
20| over to fiscal year 2025. |
| |
21| b. For tax fiscal year 2025, the total amount of credits |
| |
22| authorized by subparagraph a of paragraph 1 of |
| |
23| subsection C of this section shall not exceed Two |
| |
24| Hundred Million Dollars ($200,000,000.00), except for |
| |
arsid10121103 SB1477 HFLR Page 79
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1| unused credits carried over from fiscal year 2024 |
| |
2| pursuant to subparagraph a of this paragraph. |
| |
3| c. For tax fiscal year 2026, and subsequent tax fiscal |
| |
4| years, the total amount of credits authorized by |
| |
5| subparagraph a of paragraph 1 of subsection C of this |
| |
6| section shall not exceed Two Hundred Fifty Million |
| |
7| Dollars ($250,000,000.00). |
| |
8| d. Credits authorized by subparagraph a of paragraph 1 |
| |
9| of subsection C of this section shall be applied to |
| |
10| the fiscal year in which the installment payment |
| |
11| provided in subsection E of this section is made. |
| |
12| 2. For tax fiscal year 2025, and subsequent tax fiscal years, |
| |
13|the total amount of credits authorized by subparagraph b of |
| |
14|paragraph 1 of subsection C of this section shall not exceed Five |
| |
15|Million Dollars ($5,000,000.00). |
| |
16| E. 1. The Commission shall prescribe applications for the |
| |
17|purposes of claiming the credits authorized by the Oklahoma Parental |
| |
18|Choice Tax Credit Act and a deadline by which applications shall be |
| |
19|submitted. A taxpayer claiming the credit authorized by |
| |
20|subparagraph a of paragraph 1 of subsection C of this section shall |
| |
21|submit an application prescribed by the Commission to receive the |
| |
22|credit. If an eligible taxpayer provides documentation on the |
| |
23|application that he or she is a recipient of income-based government |
| |
24|benefits including the Supplemental Nutrition Assistance Program |
| |
arsid10121103 SB1477 HFLR Page 80
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1|(SNAP), Temporary Assistance for Needy Families (TANF), or |
| |
2|SoonerCare, the eligible taxpayer shall not be required to provide |
| |
3|additional income verification. |
| |
4| 2. To ensure educational continuity for students, the |
| |
5|application process shall be administered based on the school year. |
| |
6|The first application aligned to the school year shall open on May |
| |
7|1, 2024, for the 2024-2025 school year. Prior to authorizing any |
| |
8|credits for the 2024-2025 school year to taxpayers who did not |
| |
9|receive an allocation of credits for the fall semester of 2024, the |
| |
10|Commission shall first automatically authorize the same amount of |
| |
11|credits to taxpayers who were authorized credits prior to May 1, |
| |
12|2024, for the fall semester of 2024. Beginning in the 2025-2026 |
| |
13|school year and subsequent years, the application period shall open |
| |
14|on January 15 prior to the beginning of each school year. For any |
| |
15|eligible student who is a member of a household in which the total |
| |
16|federal adjusted gross income does not exceed One Hundred Fifty |
| |
17|Thousand Dollars ($150,000.00), applications shall be submitted to |
| |
18|the Commission within the first sixty (60) days of the opening of |
| |
19|the application period to receive priority consideration. Any |
| |
20|taxpayer who receives an allocation of tax credits shall also have |
| |
21|priority consideration in any subsequent period; provided, that an |
| |
22|application is submitted within the first sixty (60) days of the |
| |
23|application period. For students enrolled in the full school year, |
| |
24|the credit shall be paid in two installments, one per school |
| |
arsid10121103 SB1477 HFLR Page 81
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1|semester, to be paid no later than August 30 and January 15, each of |
| |
2|which shall be half of the total expected amount of tuition and fees |
| |
3|for the private school based on the affidavit enrollment |
| |
4|verification form submitted pursuant to this subsection, but in no |
| |
5|event shall an installment payment exceed half the amount of the |
| |
6|credit authorized by subparagraph a of paragraph 1 of subsection C |
| |
7|of this section. |
| |
8| 3. Beginning in the 2023-2024 school year and subsequent years, |
| |
9|for students enrolled in less than the full school year, the credit |
| |
10|shall be prorated by semester and issued no later than thirty (30) |
| |
11|days after the application is approved or during the first thirty |
| |
12|(30) days of the semester in which the student is enrolled, |
| |
13|whichever is later. The prorated installment payment shall not be |
| |
14|less than the total expected amount of the prorated tuition and fees |
| |
15|for the private school based on the enrollment verification form |
| |
16|submitted pursuant to this subsection, but in no event shall an |
| |
17|installment payment exceed the amount of the credit authorized by |
| |
18|subparagraph a of paragraph 1 of subsection C of this section. |
| |
19| 4. A taxpayer claiming the credit authorized by subparagraph a |
| |
20|of paragraph 1 of subsection C of this section shall submit to the |
| |
21|Commission an affidavit enrollment verification form from the |
| |
22|private school in which the eligible student is enrolled or is |
| |
23|expected to enroll with the tuition and fees to be charged the |
| |
24|taxpayer for the applicable school year. The Commission shall make |
| |
arsid10121103 SB1477 HFLR Page 82
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1|installment payments based on the expected tuition and fee amounts |
| |
2|provided on the enrollment verification form and submitted pursuant |
| |
3|to this subsection. |
| |
4| F. In reviewing the event there are more applications submitted |
| |
5|by eligible taxpayers to determine whether they qualify for a credit |
| |
6|authorized by subparagraph a of paragraph 1 of subsection C of this |
| |
7|section, than available credits pursuant to subsection D of this |
| |
8|section, then the Commission shall give first preference in making |
| |
9|installments authorizing credits to eligible students of taxpayers |
| |
10|who qualify pursuant to divisions (1) and (2) of subparagraph a of |
| |
11|paragraph 1 of subsection C of this section. The Commission shall |
| |
12|make the installments based on the expected amount of tuition and |
| |
13|fee amounts on the affidavit submitted pursuant to this subsection: |
| |
14| 1. First, received the credit the prior year; |
| |
15| 2. Second, qualify pursuant to divisions (1) and (2) of |
| |
16|subparagraph a of paragraph 1 of subsection C of this section; and |
| |
17| 3. Third, are siblings of eligible students of taxpayers who |
| |
18|received the credit in the prior year. |
| |
19| F. G. Taxpayers claiming the credit shall: |
| |
20| 1. Only claim the credit for qualified expenses as defined in |
| |
21|paragraphs 6 and 7 of subsection A of this section to provide an |
| |
22|education for an eligible student; |
| |
23| 2. Ensure no other person is claiming a credit for the eligible |
| |
24|student; |
| |
arsid10121103 SB1477 HFLR Page 83
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1| 3. Not claim the credit for an eligible student who enrolls as |
| |
2|a full-time student in a public school district, public charter |
| |
3|school, public virtual charter school, or magnet school; and |
| |
4| 4. Comply with rules and requirements established by the |
| |
5|Commission for administration of the Oklahoma Parental Choice Tax |
| |
6|Credit Program; and |
| |
7| 5. Notify the Commission no later than the thirtieth day after |
| |
8|the date on which the eligible student: |
| |
9| a. enrolls in a public school, including an |
| |
10| open-enrollment charter school, |
| |
11| b. enrolls in a nonaccredited private school, |
| |
12| c. graduates from high school, or |
| |
13| d. is no longer utilizing credits authorized by |
| |
14| subparagraph a of paragraph 1 of subsection C of this |
| |
15| section for any reason. |
| |
16| G. H. Eligible students may accept a scholarship from the |
| |
17|Lindsey Nicole Henry Scholarships for Students with Disabilities |
| |
18|Program created by Section 13-101.2 of Title 70 of the Oklahoma |
| |
19|Statutes this title while participating in the Oklahoma Parental |
| |
20|Choice Tax Credit Program. |
| |
21| H. 1. I. The Commission shall have: |
| |
22| 1. Have the authority to conduct an audit or contract for the |
| |
23|auditing of receipts for qualified expenses submitted pursuant to |
| |
24|subparagraph b of paragraph 1 of subsection C of this section.; |
| |
arsid10121103 SB1477 HFLR Page 84
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1| 2. The Commission shall be Be authorized to recapture the |
| |
2|credits otherwise authorized by the provisions of this act on a |
| |
3|prorated by semester basis if an audit conducted pursuant to this |
| |
4|subsection shows that the credit was claimed for expenditures that |
| |
5|were not qualified expenses or it finds that the taxpayer has |
| |
6|claimed an eligible student who no longer attends a private school |
| |
7|or has enrolled in a public school in the state; and |
| |
8| 3. Reallocate credits within thirty (30) days of receipt of |
| |
9|notice from a taxpayer pursuant to paragraph 5 of subsection G of |
| |
10|this section to the next eligible taxpayer in line when a taxpayer, |
| |
11|on behalf of an eligible student in the program, chooses not to |
| |
12|participate, is no longer eligible to participate, or chooses to |
| |
13|forgo participation in the program for any reason. |
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14| I. J. In the event of a failure of revenue pursuant to the |
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15|Oklahoma State Finance Act, the tax credits otherwise authorized in |
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16|subsection C of this section shall be reduced proportionately to the |
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17|reduction in the amount of money appropriated to the State Board of |
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18|Education for the financial support of public schools for the fiscal |
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19|year in which the failure of revenue occurs. |
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20| J. K. The Commission shall make available on its website the |
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21|amount of credits claimed each tax year pursuant to subparagraphs a |
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22|and b of paragraph 1 paragraphs 1, 2, and 3 of subsection C of this |
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23|section. |
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1| L. Credits received pursuant to this act shall not constitute |
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2|taxable income to a taxpayer who received the credit on behalf of an |
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3|eligible student. The Commission shall not issue any Form 1099s to |
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4|taxpayers. |
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5| SECTION 4. It being immediately necessary for the preservation |
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6|of the public peace, health or safety, an emergency is hereby |
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7|declared to exist, by reason whereof this act shall take effect and |
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8|be in full force from and after its passage and approval. |
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10|COMMITTEE REPORT BY: COMMITTEE ON RULES, dated 04/15/2024 - DO PASS, |
|As Amended. |
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