Andrea Mansfield, on behalf of MACo, testified in support of SB 844, Interest Rate on Tax Deficiencies and Refunds, to the House Ways and Means Committee on April 5, 2016.
As amended by the Senate, this bill would reduce the monthly interest rate set by the Comptroller for tax deficiencies and refunds from 13% to 10% over six years.
Under current law, the Comptroller sets the annual interest rate by October 1 of each year. The rate is equal to the greater of 13% or three percentage points above the average prime interest rate for the previous fiscal year.
From the MACo testimony,
SB 844, as introduced, would have phased-in over three years a change toward a new rate from the current 13% to the average prime rate of interest quoted by commercial banks to large businesses during the State’s previous fiscal year, approximately 3.5%. In addition to fiscal concerns, MACo expressed concerns with the bill as introduced that it would both compromise collections from delinquent taxpayers, and perhaps more importantly, encourage more people to similarly flout timely tax payment laws.
As amended, the local revenue loss has been substantially moderated and the interest rate remains at a level that still encourages prompt compliance. For these reasons, MACo now offers its SUPPORT of SB 844.
This bill passed the Senate (46-0) on March 24, 2016.
An identical cross-filed bill, HB 1251, was heard on February 12 in the House.
For more on 2016 MACo legislation, visit the Legislative Database.