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Legislative Year: 2021 Change
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Bill Detail: HB21-1312

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Title Insurance Premium Property Sales Severance Tax
Status Sent to the Governor (06/17/2021)
Bill Subjects
  • Fiscal Policy & Taxes
House Sponsors M. Weissman (D)
E. Sirota (D)
Senate Sponsors D. Moreno (D)
C. Hansen (D)
House Committee Finance
Senate Committee Finance
Date Introduced 05/10/2021
Summary

The bill makes changes to several state and local government
taxes.
Insurance premium tax. Currently, the insurance premium tax is
equal to 2% of premiums collected or contracted for covering property or
risks in this state; except that a company that is deemed to maintain a
home office or regional home office in this state pays tax of 1%. Section
2
of the bill requires a company to have at least 2.5% of its total domestic
workforce in the state in order for the company to be deemed to maintain
a home office or regional home office. This section also narrows the tax
exemption for annuities considerations to those that are purchased in
connection with a qualified retirement plan, a Roth 401(k), or an
individual retirement account. For the purpose of auditing a company's
tax statement, section 2 also authorizes the commissioner of insurance to
appoint an independent examiner to conduct an examination on behalf of
the commissioner.
Property tax. For purposes of imposing the property tax, section
4 requires the actual value of real property to reflect the value of the fee
simple estate. Section 5 requires that the actual value of personal property
be determined based on the property's value in use, which will be defined
by the property tax administrator.
There is an exemption from property tax for business personal
property that would otherwise be listed on a single personal property if
the property is less than a certain amount, which increases with inflation
each property tax cycle. For the next property tax cycle, section 6
increases the exemption from $7,900 to $50,000. Similar to the
reimbursement for the homestead exemption, the state is required to
reimburse local governments for lost property tax revenue caused by the
increase. The first reimbursement will be based on actual property tax
schedules filed, and future reimbursements will be adjusted estimates
based on the initial amount.
Sales and use tax. The state sales and use tax is imposed on the
sale and use of tangible personal property. Section 7 codifies the
department of revenue rule that the definition of tangible personal
property includes digital goods. Section 8 specifies that the state sales
tax applies to amounts charged for mainframe computer access,
photocopying, and packing and crating.
A retailer who collects state sales tax is currently allowed to retain
4% of the state sales taxes collected, with a monthly cap of $1,000, as
compensation for the retailer's expenses incurred in collecting and
remitting the tax (vendor fee). Beginning January 1, 2022, section 9
eliminates the vendor fee for any filing period that the retailer's total
taxable sales were greater than $1 million.
Severance taxes. The severance tax on oil and gas is currently
imposed on gross income, which is equal to the net amount realized for
the sale of the oil and gas. The net amount realized is equal to the gross
lease revenues, less deductions for any transportation, manufacturing, or
processing costs by the taxpayer borne by the taxpayer (netback
deductions). Section 10 limits the netback deductions to direct costs
actually paid by the taxpayer for those purposes, which disallows costs of
capital and other indirect expenses.
Currently, the first 300,000 tons of coal produced in each quarter
is exempt from the property tax. There is also a tax credit equal to 50%
for coal produced from underground mines and another credit in the same
amount for lignitic coal. Beginning with the 2022 taxable year, section 11
phases out the quarterly exemption and both tax credits. The additional
severance tax that results from these changes is credited to the just
transition cash fund under section 12.

Committee Reports
with Amendments
Full Text
Full Text of Bill (pdf) (most recent)
Fiscal Notes Fiscal Notes (05/25/2021) (most recent)  
Additional Bill Documents Bill Documents
Including:
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  • Past fiscal notes
  • Committee activity and documents
  • Bill History
 
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