| Introduced By: Senators Irons, Oster, Tavares and Connors |
| Date Introduced: February 12, 1997 |
| Referred To: Senate Committee on Corporations |
It is enacted by the General Assembly as follows
SECTION 1. Chapter 44-5 of the General Laws entitled "Levy and Assessment of Local Taxes" is hereby amended by adding thereto the following section:
{ADD 44-5-12.1. Tax assessor asset verification. -- ADD} {ADD (a) To carry out the purposes of the laws that he or she is required to administer and for the purpose of determining whether in connection with such laws, any taxable personal property, as defined in chapter 3 of title 44, has been undervalued or omitted from the taxpayer's annual return filed with the cities or towns, the tax assessor of each city or town may conduct an asset verification. For the purpose of this section, "asset verification" means the examination of a taxpayer through the inspection of documents or questioning of witnesses as herein provided. In addition to the powers enumerated in this section, the tax assessor of any city or town shall have the same authority as is provided in chapter 44-5 to require any taxpayer to produce information with respect to its assets, to the extent such information is contained on the fixed asset detail schedule as filed for federal and state income tax purposes by the taxpayer during the year preceding each assessment date as to which the asset verification is being conducted. If any company, firm, corporation, association, partnership, sole proprietorship, or public utility reports over twenty-five thousand dollars ($25,000) in depreciable assets subject to personal property tax in this state on the fixed asset detail schedule as filed for federal and state income tax purposes, the company, firm, corporation, association, partnership, sole proprietorship, or public utility may be subject to assist verification as provided herein. If the company, firm, corporation, association, partnership, sole proprietorship, or public utility reports on the fixed asset detail schedule as filed for federal and state income tax purposes less than twenty-five thousand dollars ($25,000) in depreciable assets subject to personal property tax in this state, the company, firm, corporation, association, partnership, sole proprietorship, or public utility shall not be subject to asset verification. In making an asset verification, the tax assessor or governing authority may enter into contracts with individuals or business organizations or entities to asset the tax assessor in the conduct of such asset verification and the tax assessor shall be authorized to pay any reasonable salary and expenses or a percentage of the tax collected, or a combination thereof, as payment for such services. An asset verification may be conducted within three (3) years from the later of the date due or date filed of an annual return, whichever is greater.
(b) All property which has not been reported or is undervalued in any annual return but which the tax assessor determines, after completion of an asset verification, should have been so reported or valued accurately, shall be added to the tax roll and annual return at a value in accordance with section 44-5-12 and if such addition results in an increase of ten thousand dollars ($10,000) or more in the assessed value of assets of a taxpayer, twenty-five percent (25%) of such additional value shall be added to such assessment. The tax assessor may increase or decrease valuation of personal property in accordance with applicable law based on the asset verification result. Any personal property located in this state during a taxable year that is not located in this state at the time of assessment, reassessment, or asset verification, shall be pro rated as to the time such personal property was located in this state during the taxable year. The assessment shall be in addition to any assessment of taxes for the then current year and shall be placed on a special tax roll and annexed to the general tax roll for the current year. The assessors of taxes shall give notice of the proposed assessment or reassessment of any personal property for any previous year or years to all persons liable to the tax in the manner provided in this chapter for the levy and assessment of taxes. The notice shall contain a general description of the personal property, state the year or years for which the personal property is liable to assessment or reassessment, the name or names of the person or persons liable to assessment or reassessment, and a time period in which such additional tax and penalty must be paid. Like proceedings for the collection of any and all taxes shall be taken as is provided in chapters 7 through 9 of title 44 for the collection of taxes, and all the provisions of chapter 2 through 9 of title 44, so far as applicable and consistent herewith, shall apply to every assessment of taxes for the previous year and to the collection thereof, except that no lien for the collection of any tax for a previous year shall attach to any personal property which has been alienated by the person liable to the tax prior to the giving of the notice, and no lien thereon which lawfully attached prior to the giving of the notice shall be prejudiced thereby.
(c) If any company, firm, corporation, person, association, partnership, sole proprietorship, or public utility receives at least thirty (30) days' written notice of an assessor's valuation or request for information made under this section and refuses or fails to comply with the assessor's valuation or request for information, a penalty of two hundred dollars ($200) shall be imposed upon the person or business for each day of noncompliance; provided, however, that no such penalties shall accrue so long as proceedings of the type contemplated by subsection (d) below have been instituted and remain unresolved. Penalties imposed under this section may be assessed and collected in the same manner as assessments made under chapter 5 of title 44 of the general laws.
(d) Any company, firm, corporation, person, association, partnership, sole proprietorship, or public utility shall have the right to contest the result of any asset verification and subsequent assessment in accordance with sections 44-5-15 through 44-5-17 and sections 44-5-26 through 44-5-31.
(e) Any information acquired as the result of such asset verification shall not be divulged by the tax assessor or any employee section unless the tax assessor or any employee or agent is required to testify in a court or other proceeding under compulsion of legal process.
(f) The tax assessor may require, by order or subpoena served on any company, firm, corporation, person, association, partnership, sole proprietorship or public utility in the same manner that a subpoena is served in a civil action in the superior court, the production within this state, at such time and place as the tax assessor designates, of any books, accounts, papers, records, documents, personal property, state or federal income or franchise tax returns and supporting documents, financial statements, receipts, or records kept by such company, firm, corporation, person, association, partnership, sole proprietorship, or public utility in any office or place within or without the state, or verified copies in lieu thereof if the tax assessor so orders, or compel the attendance of witnesses to testify under oath, so that the tax assessor can verify the personal property tax returns as submitted.
(g) The additional taxes collected under the provisions of this section by the individual city or town, if any, shall be credited against those taxes the individual city or town imposes and collects on the stock in trade or inventory of both wholesalers and retailers as defined in section 44-3-29 and 44-3-37 of the general laws and the individual city or town shall reduce and offset said stock in trade or inventory taxes to be imposed and collected by the amounts collected herein. The stock in trade and inventory taxes imposed and collected by the cities and towns shall not be deemed a limit on the amounts that may be collected through the provisions of this section and nothing provided in this section shall be construed to limit the amounts that may be collected through asset verifications. ADD}
SECTION 2. This act shall take effect upon passage.
This act would allow tax assessors of the cities and towns to conduct asset verifications of personal property of businesses with depreciable assets of a certain threshold to ensure that proper reporting and valuation is taking place. The act provides for appeal rights from such asset verifications and prevents the disclosure of financial information gained as a result of these asset verifications.
This act would take effect upon passage.
