9F3ACF02348C1E9E8725845B005566C8 Hearing Summary

Michelle Colin, senior legislative audit manager, and Trey Standley, legislative audit manager, from the Office of the State Auditor began their presentation concerning tax expenditures for which they had identified policy considerations related to administration of the expenditure.

Ms. Colin addressed the committee concerning the sales and use tax exemption for sales to charitable organizations. The expenditure allows charitable organizations to make tax-free purchases of goods and services related to their charitable work. Ms. Colin explained that OSA had found that the expenditure is occasionally difficult to access, since charitable organizations must provide documentation to retailers in order to access the exemption. The committee discussed this policy consideration.

The committee asked whether this policy consideration might best be handled by the Sales and Use Tax Simplification Task Force. Esther van Mourik, Office of Legislative Legal Services, explained that the task force is not currently authorized to continue beyond the 2019 interim, and that the task force is discussing its own extension and policy issues similar to this one.

Ms. Colin addressed the committee concerning the Rural Healthcare Preceptor Credit, which is available to healthcare preceptors working in rural and frontier counties. Ms. Colin explained that OSA had identified two policy considerations: the credit being allowed to ineligible taxpayers and the statutory definition of the preceptorship duration. She explained that the second policy consideration has already been resolved under House Bill 19-1088. The committee proceeded to discuss the policy consideration regarding ineligible taxpayers.

Ms. Colin proceeded to discuss the tax-exempt organization insurance premium tax deduction, which allows insurers to deduct from their premium tax any premiums for policies purchased by tax-exempt organizations for their employees. She explained that OSA had found the forms used to claim the deduction to be confusing, such that they had stopped some eligible taxpayers from using the deduction. The committee proceeded to discuss the deduction.

Ms. Colin addressed the committee concerning the sales and use tax exemption for energy used for industrial and manufacturing purposes. The expenditure allows manufacturers and other producers of industrial goods to make tax-free purchases of electricity and other fuel sources used in the manufacturing process. She explained that OSA had found that there may not be adequate guidance concerning when and how this exemption applies. Committee discussion continued regarding the exemption, including the overall purpose and value of the exemption.