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Greater Tulsa Reporter


Studies Are Underway to Examine OTC’s Efficiency

From Tulsa County by RON PETERS
Tulsa County Commissioner

During the last legislative session, you may recall there was a lot of discussion about ways to increase revenues. Equally important, there needs to be a discussion about how to improve the efficiency of the services provided by the state of Oklahoma to our cities and counties. One area of state government that directly impacts Oklahoma’s cities and counties is the Oklahoma Tax Commission’s (OTC) responsibility for the collection of sales taxes. Cities and counties rely on sales taxes to support important projects. In Tulsa County, the sales tax is the main funder of the jail, the new mental health pods at the jail, the new Family Justice Center, and of course the Vision projects.

Anytime a purchase is made in Tulsa County, a sales tax is paid by the customer. It’s then the obligation of the business to remit all of the taxes they collected to the OTC. Then, the OTC has the responsibility to distribute the tax proportionately to cities and counties. For providing this service, the OTC takes ½ percent of the total taxes raised. Recently, questions have been raised at the capitol regarding how effective the OTC is in discovering and recovering sales tax from businesses. In other words, are the cities and counties getting all of the taxes they are entitled to?

To answer this question, and to see if there are opportunities for improvement, two studies to examine OTC’s efficiency are underway this fall. These assessments come at a time when the Supreme Court has recently decided that online purchases must include state and local sales taxes and the passage of SQ 788 which will result in additional tax collection obligations from medical marijuana businesses.

The first study, requested by Senator Dave Rader, on Tulsa County’s behalf, will be heard this month by the Senate Appropriations and Budget Committee. They will hear from leaders in the private sector who believe there are new and better ways to make the OTC more efficient with its auditing and tax collection responsibilities.

The second assessment, which will occur simultaneously with the Interim Study mentioned above, comes under the auspices of the Agency Performance and Accountability Commission (APAC), which the Legislature created in 2017. This nine member private sector panel is legislatively charged with conducting performance audits of the state’s top 20 agencies over the next four years.

APAC choose the OTC to be in the first group of agencies to be audited and in June, after a competitive bid process, APAC hired the international auditing and accounting firm KPMG to conduct a performance audit of OTC operations. In September, a team of six KPMG team members arrived at the OTC to begin the audit.

Importantly, when the legislature created the APAC, the law specifically stated that the recommendations from the performance audits shall be implemented unless the legislature finds reasons that it should not be. The report by KPMG is to be completed by the end of 2018.

The OTC, like all state agencies, has seen its budget reduced over the past three years. There is little doubt that this has impacted OTC’s capacity to efficiently serve Oklahoma’s cities and counties. Perhaps these two assessments will find opportunities such as privatizing some of the tax administrative work or permitting cities and counties to do it themselves which could have benefits across all levels of government.
While the discussion on raising new revenues may have died down for now, we still need to answer the question: “Is the OTC collecting all of the sales tax cities and counties are entitled to?”

Updated 10-16-2018

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