NORMAN — The impetus for State Question 766 is a lawsuit by public service company, Southwestern Bell Telephone. Southwestern Bell filed complaints with the Court of Tax Review, protesting the ad valorem tax assessments of its property by the State Board of Equalization for 2005, 2006, and 2007.
A settlement was reached between the two entities, except for Southwestern Bell’s claim that all of its intangible property is exempt from ad valorem taxation. The parties agreed this issue was a question of law and asked the Court of Tax Review to decide.
The Court ruled that only the intangible property set forth in Okla. Const. art. 10, § 6A is exempt. An appeal by Southwestern Bell failed.
This left members of the business community fearful that all businesses could be taxed on intangibles. A coalition of Chamber of Commerce and other business stakeholders pressed for the issue to be brought for a vote of the people.
Those items already exempted by the Oklahoma constitution will remain exempt regardless of the outcome of the vote on this state question.
If the measure passes with a yes vote, all intangible property will become exempt.
Items currently exempted by the state constitution will still be exempt regardless of the outcome of the vote.
A lawsuit by Southwestern Bell challenging the state’s assessment of intangible assets led to the Oklahoma legislature adopting a business activity tax in lieu of ad valorem taxes for 2010 through 2012. According to the Oklahoma Tax Commission, “BAT applies to all entities regardless of form e.g., sole proprietorships, partnerships, limited liability companies, trusts and all types of corporations, doing business in Oklahoma.
“Corporations, associations, joint-stock companies and business trusts doing business in Oklahoma are required to pay BAT in an amount equal to their franchise tax paid for tax year 2010 or $25 whichever is greater. All others doing business in Oklahoma must pay $25.”
Some believe an extension of the BAT is a fair way to handle the tax concern.
The full impact is uncertain, in part, because of the current and future impact of technology and its value.
Joy Hampton 366-3539 jhampton@ normantranscript.com