TEI supports creation of independent Kansas Tax Appeals Commission.

On April 8, 1998, TEI submitted the following comments supporting H.B. 2602, which calls for the creation of an independent Kansas tax appeals commission, to Rep. Phill Kline, Chairman of the House Committee on Taxation, and Sen. Audrey Langworthy, Chairman of the Senate Committee on Assessment and Taxation. The comments were prepared under the aegis of TEI's State and Local Tax Committee, whose chair is Lisa Norton of Ingersoll-Rand Company, and signed by TEI President Paul Cherecwich, Jr. of Thiokol Corporation. Members of the Institute's Kansas City Chapter also contributed materially to the development of TEI's comments.

Background

Tax Executives Institute is the professional association of corporate tax executives. Our 5,000 members are accountants, attorneys, and other business professionals who work for the largest 2,800 companies in North America; they are responsible for conducting the tax affairs of their companies and of ensuring their compliance with the tax laws. Hence, TEI members deal with the tax laws and with taxing agencies in the States on almost a daily basis. One of TEI's 50 local chapters, with more than 50 members, is located in the Kansas City area. In addition, members from across the country work for companies with substantial activities (and frequently employees) in Kansas.

TEI is dedicated to promoting the uniform, equitable, and nondiscriminatory enforcement of' the tax laws throughout the Nation, to reducing the costs and burdens of administration and compliance to the benefit of both the government and taxpayers, and to vindicating the Commerce Clause and other constitutional rights of business taxpayers. TEI believes that the professional training and experience of our members enables the Institute to bring an important, and balanced, perspective to issues such as the establishment of an independent tax tribunal.

Discussion

House Bill 2602 would abolish the State Board of Tax Appeals and transfer the Board's powers and responsibilities to the Kansas Tax Appeals Commission. The new commission would be an independent agency within the executive branch of the State government and would be composed of five commissioners appointed by the Governor and subject to confirmation by the Senate. The commission would be empowered to hear appeals from the Director of Taxation and the Director of Property Valuation and to act as the State Board of Equalization. Decisions of the Commission would generally be subject to judicial review. The bill also sets forth residency and professional requirements for the commissioners.

TEI wholeheartedly endorses the proposed legislation to establish an independent forum for hearing tax appeals. The Institute believes that House Bill 2602 would accomplish two important goals in tax administration. First, it would ensure that the decisions of the State taxing authorities are reviewed by an administrative board well-versed in tax matters and unrelated to the department determining the tax. As an association of tax professionals, TEI has long sought to level the playing field between taxpayers and taxing authorities. The establishment of an independent appeals function, staffed by qualified professionals, is a positive step toward reaching that goal.

Second -- and perhaps more important -- enactment of House Bill 2602 would convey to taxpayers that the process is fair. Taxpayers' perception that taxing and valuation disputes will be handled in an evenhanded manner -- that the deck is not stacked against them -- is crucial to our voluntary compliance system. Without an independent appellate board, taxpayers may well conclude that the process is flawed, i.e., that they cannot obtain an objective review of their cases. The enactment of House Bill 2602 will help remedy this misperception.

For the foregoing reasons, Tax Executives Institute respectfully recommends that the Committee on Taxation recommend adoption of House Bill 2602 to the Kansas legislature.

If you should have any questions about the Institute's position, or if we can be of any further assistance, please do not hesitate to call Timothy J. McCormally, TEI's General Counsel and Director of Tax Affairs, at [phone].