After several months of working together, the OTC and OML's Liaison Board are pleased to present the new agreement for the administration of sales and use tax ordinances. The OTC will be sending out letters to each city and the agreement will be available on their website as well. OML and the Liaison Board also wanted to ensure that you received this information. Find a copy of the agreement here. As discussed at the OML annual conference, we have also included Attorney and OML Liaison Board member John Vincent's summary of the agreement. If you have any questions, please feel free to contact us.
Following a two year cooperative effort between the Oklahoma Municipal League, the Oklahoma Tax Commission and the OML Liaison Board to the OTC, HB 1875 by Rep. Charles McCall (R-Atoka) and Sen. Clark Jolley (R-Edmond) was signed into law during the 2014 legislative session. This bill corrects an imbalance of fees charged by the state for services that has accrued over many years.
HB 1875 represents an agreement between the Oklahoma Municipal League (OML) and the Oklahoma Tax Commission (OTC) that corrects the issue of Oklahoma municipalities and counties overpaying the Oklahoma Tax Commission for the collection of their sales and use taxes. Under current law, municipalities and counties are required to enter into a contract with the Oklahoma Tax Commission to collect their local sales and use taxes. OTC charges a retention fee from those collected taxes ranging from 1% to 1¾%. HB 1875 reduces the retention fee charged to cities, towns and counties to .5% of a municipality’s and county’s collections. HB 1875 corrects the imbalance that has occurred and allows for review of cost every five years ensuring that this imbalance does not occur again.
The bill goes into effect July 1, 2015. The OML and the OML Liaison Board to the Oklahoma Tax Commission have worked tirelessly to get this bill pushed through for Oklahoma cities and towns.
Bob Ponkilla, OML Liaison Board member and Oklahoma City’s City Treasurer explains how the bill will affect municipalities in the next couple of months, “The retention fee is, of course, based on services rendered by the OTC in collecting our taxes. As we see each month, they receive remittances from taxpayers in one month, process the returns, and then remit our taxes to us early the following month, less a retention fee based on the tax amount. This would appear to mean the first opportunity for them to apply the reduced retention fee would be on the first batch of taxes they process after July 1. This would translate to our seeing our first reduced retention fee with our August tax payment.”
Local sales tax is critical to all Oklahoma cities and towns. Although the State has diverse sources of revenue, only in Oklahoma do cities and towns not receive ad valorem for general operations, thus making our municipalities overly dependent on local sales tax. Every municipality in the state that collects sales and taxes benefits from this bill, allowing money that is rightfully due to the city or town to remain in their community to provide local services.
5/16/14 - We are pleased to announce that Governor Mary Fallin has signed HB 1875 by Rep. Charles McCall (R-Atoka) and Sen. Clark Jolley (R-Edmond) this morning.
HB 1875 reduces the Oklahoma Tax Commission retention fee for municipalities and counties. It is a result of a two year joint effort between the Oklahoma Municipal League (OML) and the Oklahoma Tax Commission (OTC). Municipalities in Oklahoma contract with OTC to collect and remit their sales and use tax. For this service, the municipalities pay OTC a retainage fee ranging from 1% to 1 ¾% (most contracts are at 1%).
To offset any loss of funding to OTC, the bill allows OTC to capture any loss through the OMES/OTC Computer Enhancement Fund.
Every municipality in the state that collects sales tax benefits from this bill, allowing money that is rightfully due to the city or town to remain in their community to provide local services.
Special thanks to the Municipal Liaison Board and the Accountability team for all the work in finding this solution.