PHOSITA

     On Tuesday, November 6, Election Day, Oklahoma ballots will include State Question 766, which proposes an amendment to the Oklahoma Constitution to exempt all intangible personal property from taxation, including intellectual property such as patents and trademarks.  

     In the past in Oklahoma, intangible property taxes were levied just on businesses that were “centrally assessed,” including airlines, telecommunications companies, and utilities.  A centrally assessed telecommunications company sued the State, however, arguing that the company should be exempt from certain intangible property taxes.  In 2009, the Oklahoma Supreme Court decided an appeal of the case, holding that intangible property not specifically exempted by the Constitution is taxable.

     The Court holding generated questions for county assessors as to whether and how to levy intangible property taxes at the local level (on non-centrally assessed entities). Non-centrally assessed entities had concerns as to the effect of the holding on taxation of non-tangible personal property such as patents, licenses, trademarks, copyrights, and even goodwill.  As a stop-gap measure for 2010-2012, the Oklahoma legislature created a $25 business activity fee for non-centrally assessed companies to pay instead of intangible property taxes. 

     Passing State Question 766 would create a constitutional exception such that intangible property taxes would no longer be levied against those currently paying them (centrally assessed businesses) and could not be levied in the future at the local level (for non-centrally assessed entities).  If State Question 766 fails, then the business activity fee may continue, but county assessors would still have the power to levy taxes on intangible property on non-centrally assessed entities, and intangible property taxes would continue to be collected from centrally assessed businesses. 

     Which way to vote?  Does a tax exemption encourage intellectual property growth in Oklahoma?  Would the gap in funding caused by the cessation of taxes from centrally assessed companies create a burden on other tax payers and state programs?  Interests on both sides have strong arguments as to why they are right on State Question 766.  What’s your opinion?  

     For additional information and opinions, see these source websites:

http://stateimpact.npr.org/oklahoma/tag/sq-766/

http://newsok.com/oklahoma-voters-to-decide-multimillion-dollar-tax-issue/article/3702304

http://newsok.com/oklahomas-vote-on-intangible-property-tax-exemption-to-have-uncertain-financial-impact-on-homeowners/article/3723041

http://www.ok.gov/elections/documents/Oklahoma%20State%20Questions%202012.pdf

http://okpolicy.org/resources/2012-state-questions

http://okpolicy.org/property-tax-cuts-create-winners-and-losers

http://www.oscn.net/applications/oscn/deliverdocument.asp?id=457650&hits=  (Southwestern Bell Telephone Co. v. Okla. State Bd. Of Equalization, 2009 OK 72)