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DEDB771B434A6247872584410053AD2E Hearing Summary


Date Jul 24, 2019      
Location HCR 0112

Policy Considerations I: Repeal - Committee Discussion Only

09:14:19 AM  
Mr. Standley began with discussion of the Crop Hail Insurance Premium Tax Exemption. He explained that insurance policies qualifying under this expenditure must be underwritten by firms that underwrite only crop hail insurance, and not other insurance types. He said that OSA has found that there are no insurers in the state that meet these criteria. Further, OSA has found that 67 percent of cropland is covered under the federal crop insurance program. Therefore, OSA has found that no taxpayers are currently taking the exemption or benefitting from it.
09:24:18 AM  
Mr. Standley proceeded to discuss the Occasional Sale of Liquor by Public Action Exemption. This expenditure exempts liquor sales from the liquor excise tax if the sale occurs at a public auction under limited circumstances, such as if part of an estate auction or as seized collateral on a loan in default. OSA believes that the exemption was most likely enacted to eliminate compliance requirements for the excise tax for one-time taxpayers who would otherwise be unfamiliar with the tax.
09:34:28 AM  
Mr. Standley continued with the sales and use tax exemption for sales of residents to bordering states. This exemption, from 1963, is written to apply to non-tourist residents of bordering states that do not impose a sales tax. However, since all bordering states now impose a sales tax, the exemption now appears to be obsolete.
09:45:41 AM  
Mr. Standley proceeded to discuss the pre-1987 net operating loss deduction for individuals, estates, and trusts. Net operating losses occur when deductible business expenses exceed their revenue, and businesses are permitted to carry forward these losses against revenues in future years.

Individuals, estates, and trusts were allowed this deduction before 1987 and could have carried the deduction forward for 15 years, through 2002. Therefore, this tax expenditure cannot be claimed by any taxpayers.

09:50:58 AM  
Mr. Standley proceeded to discuss the Previously Taxed Income or Gain Deduction for C-Corporations. This expenditure allows an income tax deduction for income that had been taxed before 1965, when the state began to apply its income tax based on federal taxable income. Since this deduction no longer applies for any taxpayers, OSA considers it to most likely be obsolete.
09:56:21 AM  
The committee took a brief recess.