House of Representatives

HB 2089

withholding taxes; technical correction

Sponsors: Representative May

X	Committee on Ways and Means
	Caucus and COW
	Third Read
	As Passed the House

HB 2089 makes technical corrections to the classification of failures to remit withholding tax. HB 2089 has a proposed strike-everything amendment to allow a transaction privilege tax credit for the construction of transmission lines on an Indian reservation when the Indian tribe offers a credit against their tribal tax.

History

Currently, non-Indian companies that do business on an Indian reservations are subject to state TPT as well as any tribal excise taxes. This is similar to off-reservation activities where the state TPT is imposed, as well as city and county sales taxes. The proposed strike-everything amendment will allow a credit against the state TPT on prime contracting activities for the installation of transmission lines if a tribal tax is also imposed on these activities and the tribe grants a credit. The state TPT credit is equal to 50% of the tribal tax. However, the tribal tax credit is either 50% of the state TPT OR 50% of the state credit, whichever is less. Fifty per cent of the state credit equals 25% of the tribal tax.

Provisions of the proposed strike-everything amendment

· Provides a transaction privilege tax (TPT) credit for prime contracting activities on a contractor’s creditable tax base. The term creditable tax base is defined as the gross proceeds of sales or gross income relating to the construction of assets to be used in providing electric transmission service within an Indian reservation.

· Stipulates that the TPT credit is equal to 50% of the eligible tribal tax that is imposed on the taxpayer except that the credit may not exceed the amount of the tax on the creditable tax base.

· Provides that an eligible tribal tax must be imposed on these prime contracting activities and satisfy the tribal reciprocity requirement.

· The tribal reciprocity requires that the Indian tribe provide a credit for the tribal tax. The tribal tax credit is the lesser of:

· 50% of the state TPT on the creditable tax base

· 50% of the contracting credit allowed by the state

· The taxpayer will claim the state credit on forms prescribed by DOR. No credit is allowed if the taxpayer fails to pay the tax due before the payment becomes delinquent.

· Provides that the definitions for electric transmission service, Indian reservation and Indian tribe have the same meanings as currently defined in Title 42 (taxation).

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· 45th Legislature

· Second Regular Session 2 March 27, 2002

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