Administrative Procedures
OKLAHOMA TAX
COMMISSION
Kathryn Bass
Chief Deputy General Counsel
Oklahoma Tax Commission
Three
Commissioners
Kemp, Johnson, Irby
Counsel
to Commission
Administrative
Law Judges
Administrator
Internal Audit Group
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OTC Divisions
ADMINISTRATOR
ACCOUNT MAINTENANCE DIVISION
AD VALOREM DIVISION
CENTRAL PROCESSING DIVISION
omitted divisions
HR, IT, MS
COMPLIANCE DIVISION
LEGAL (GENERAL COUNSEL’S OFFICE)
MOTOR VEHICLE DIVISION
TAX POLICY DIVISION
TAXPAYER ASSISTANCE DIVISION
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Legal Division
(General Counsel’s Office)
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Protests (administrative)
Litigation (state and federal court)
Bankruptcy
Foreclosures/Quiet Title
Collections
Personnel Cases
Opinions/Letter Rulings
Partial Lien Releases
Innocent Spouse
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OKLAHOMA TAX LAWS
 Tax Codes: Title 68 of
Oklahoma Statutes
 Uniform Tax Procedure
Code: 68 O.S. §§ 201
– 263 (hearing
procedures in APA, 75
O.S. § 250 et seq. do
not apply to OTC)
 Tax Commission rules
are in Ch. 710 of the
Okla. Administrative
Code (OAC)*
 OTC Rules of Practice
and Procedure
710:1-5-1 through
710:1-5-200
*OTC website
www.tax.ok.gov
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ASSESSMENTS
§ 221(A) authorizes OTC to audit and issue
proposed tax assessments in cases of:
(1) failure to file report and
(2) where tax disclosed by report is less
than tax disclosed by OTC examination
§ 224 authorizes jeopardy assessments under
certain circumstances; they are issued by
OTC order, rather than as a proposed
assessment; order is appealable
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Oklahoma Taxes
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Sales
Income
Withholding
Mixed Beverage
Franchise
Estate
Gross Production
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Cigarette
Tobacco
Motor Fuel
Vehicle Excise
Aircraft Excise
Documentary Stamp
Ad Valorem
Other Miscellaneous
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Administrative Hearings (most common)
1. protest to estate tax assessment §815
2. protest to denial of tax refund claim §227
(except income tax)
3. protest to denial of income tax refund claim
§207
4. protest to tax assessment §221 (except
estate tax)
5. hearing on interception of income tax
refund to satisfy outstanding tax liability
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Administrative Hearings
(miscellaneous)
1. protest to denial of manufacturer’s
exemption certificate § 207
2. protest to denial of ad valorem exemption
3. title revocation hearing
4. boat dealer license hearing
5. cancellation of tax permit or license § 212
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Protest Steps I (prior to pre-hearing)
 Taxpayer is audited and issued an assessment
 Taxpayer files protest to assessment
 Auditors review and make any adjustments that
may be necessary
 ALJ dockets case, sends taxpayer copy of
procedural rules
 OTC attorney is assigned to represent Division
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Protest Steps II (before ALJ)
 Pre-hearing conference; scheduling order issued
 Discovery
 Hearing
 ALJ issues Findings, Conclusions, and
Recommendations
 Petition for Rehearing or Reconsideration before
ALJ
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Protest Steps III (before OTC)
Petition for En Banc before OTC
Commissioners
Commissioners adopt Findings
Right to appeal OTC Order to Oklahoma
Supreme Court
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Protest letter components
amount of deficiency
each error alleged to have been committed
by OTC
argument and legal authority
statement of relief sought
verification that statements are true
signed by taxpayer or taxpayer’s agent
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Time limits for protests
within 60 days after mailing of the proposed
assessment
OTC may extend the time for filing not to
exceed an additional 90 days
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Time limits for claims for refund
(68 O.S. §227)
claims must be filed within 3 years from date
of payment
if claim is denied, taxpayer may file a
demand for hearing within 30 days of the
mailing date of the notice of denial
OTC must set date of hearing which is not
later than 60 days from the date the demand
for hearing was mailed
§227 does not apply to income tax or to
estate tax (income tax claim for refund
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hearings are held under § 207)
§ 226 Procedures
 In addition to right to protest under § 221, within
30 days of assessment, taxpayer may pay tax and
give notice of intent to file suit for recovery of such
tax (suit must be filed in district court within 1 year)
 only available in cases where taxes are claimed to
be an unlawful burden on interstate commerce of
violative of any Congressional Act or provisions of
the Federal Constitution
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Representation
Taxpayer may represent himself or herself or
may be represented by:
an attorney
an accountant
an enrolled agent
a representative who has been approved by the
Commission to represent the taxpayer
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Proceedings confidential
 Taxpayer records are confidential under §
205 (note exceptions, including amounts
due by any taxpayer where a tax warrant
has been filed; annual list containing names
and address of all income tax payers;
information as to issuance or revocation of
any tax permit or license)
 Taxpayer may waive confidentiality
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Pre-hearing Conference
710:1-5-28. General provisions
attempt to resolve case
discuss facts
identify legal issues
present discovery requests
propose procedural schedule
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After Pre-hearing conference
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ALJ issues pre-hearing order with scheduling dates
If taxpayer fails to appear at pre-hearing, but has
requested a hearing in writing, ALJ schedules a hearing
If taxpayer fails to appear, but has not requested a
hearing, Division will file a Verified Response to Protest;
a. if taxpayer responds to the Verified Response and
requests a hearing, ALJ sets for hearing
b. if taxpayer responds and does not request a
hearing, ALJ issues Findings based on written
submissions
c. if taxpayer does not respond, ALJ issues Findings
based on protest and Verified Response
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PRE-HEARING PROCEDURES
 ALJ issues notice of date and time of
hearing and due date of briefs or positions
letters in support of position
 Discovery (interrogatories, requests for
production of documents, depositions)
 Subpoenas issued by Secretary of Tax
Commission
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Rules of Evidence
710:1-5-34
 OTC follows rules of evidence as applied in nonjury, civil cases in district court, “except when it is
necessary to ascertain facts not reasonably
susceptible of proof under those rules.”
 “In that event, evidence not admissible under the
Rules of Evidence may be admitted, if it is of a
type commonly relied on by reasonably prudent
persons in the conduct of their affairs.”
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Certification of issues
 A party who objects to a ruling of the
Administrative Law Judge may request and
obtain certification of the issue to the
Commission for a decision prior to ALJ’s
issuance of Findings, Conclusions, and
Recommendations
 Certification must contain signatures of
taxpayer’s representative, tax division
attorney, and ALJ
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Administrative Law Judges
Two ALJs; Must be licensed attorney
 conduct hearings
 examine witnesses
 rule on motions
 rule on admissibility of evidence
 continue or recess any hearing
 control the record
 make recommendations to Tax Commission
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Conduct of hearing
 preliminary motions, if any
 opening statements
 call and examine witnesses (ALJ entitled to question any
party or any witness)
 offer documentary evidence
 cross examine opposing witnesses (in discretion of ALJ,
cross may cover matters relevant to issue even though not
covered in direct examination)
 make closing arguments (taxpayer entitled to open and
conclude)
 Parties may submit Proposed Findings, Conclusions, and
Recommendations
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Burden of Proof
 Taxpayer has burden of proof
(preponderance of evidence) to show in
what respect the action of the OTC is
incorrect
 exception – where OTC brings action to
revoke a permit
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Submission of Case On Briefs
 if taxpayer does not request hearing or
parties agree hearing is not necessary, ALJ
may base Findings on briefs submitted by
parties (and stipulations)
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Dismissal
 Voluntary dismissal (taxpayer may dismiss
protest or tax division may withdraw
assessment any time prior to the entry of a
final order by OTC)
 Dismissal for mootness (case presents no
actual controversy or issues have ceased to
exist)
 Dismissal for lack of jurisdiction (not filed
within the time provided by statute)
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Findings, Conclusions, and
Recommendations
 includes statement of facts, issues and
contentions, conclusions based on findings
of fact and applicable law, and
recommendation to the Tax Commission
 Tax Commission issues final order
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Options after ALJ Findings
issued
 motion for rehearing before ALJ
 applications for en banc hearing before
Commissioners; application must specify each
ground upon which the party alleges the Findings
to be erroneous
 if granted, case heard by Commissioners;
Commissioners set date and time of hearing,
briefs submitted at least 14 days prior to hearing,
Commission sets time limits for oral arguments
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OTC issues order
 OTC may vacate, modify, or affirm, in part or
whole, the recommendations of the ALJ
 OTC order appealable to Oklahoma
Supreme Court
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Actions requiring approval of
Commissioners*
 Findings and Recommendations of ALJ
 waivers of penalty and interest §220**
 requests for abatement under §221(e)
 requests for abatement under §219.1
 requests for settlement under §219
 innocent spouse relief under §2361
*meet every Tues. & Thurs.
**over $10,000 requires D.Ct. approval
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221(e) abatement
 if taxpayer fails to file protest within 60 day period,
assessment becomes final
 however, within one year of the date the
assessment becomes final, taxpayer may request
the OTC to adjust or abatement the assessment
 taxpayer must demonstrate, by a preponderance
of the evidence that the assessment or some
portion thereof is clearly erroneous
 order denying a request for abatement is not
appealable
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221(e) procedures
Initial Review
Division which issued proposed assessment
determines whether the request was timely
filed and whether the assessment was
clearly erroneous
If Division agrees assessment erroneous,
Division director issues abatement letter
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221(e) Review of Initial
Determination
 If Division does not agree to abatement the assessment,
Division notifies taxpayer of decision
 Taxpayer may make a written request for a review of the
Division’s determination to the OTC General Counsel’s
Office
 Assigned attorney reviews the evidence in support of
taxpayer’s request and prepares a fact sheet for
presentation to the Commission at a regularly scheduled
meeting (recommending either approval or denial of
request)
 Taxpayer may appear and present arguments at meeting,
but no other hearing is provided
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§219.1 Abatement/Settlement
Taxes may be abated if Commission finds by clear
and convincing evidence:
1. collection would result in taxpayer filing
bankruptcy
2. taxpayer is insolvent (beyond control of
taxpayer)
3. tax liability is attributable to actions of a person
other than taxpayer (inequitable to hold liable)
4. nonpayment of trust fund taxes, taxes were not
collected from customer and taxpayer had good
faith belief collection was not required
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§219.1 settlement factors*
 whether taxpayer made good faith effort to
comply with tax laws
 whether taxpayer benefited from
nonpayment of the tax
 involvement of taxpayer in economic
activities from which tax liability originated
*Application for Settlement of Tax Liability is
on OTC website www.tax.ok.gov
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§219.1 abatement agreements
must be approved by unanimous vote of
OTC
decision to deny abatement not appealable
if taxes abated are greater than $10,000,
agreement must be approved by judge of
the district court of Oklahoma County
no appointed or elected official is eligible for
this relief
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§219 settlements (compromises
where amounts in dispute)
Where amount of tax due is in controversy
and liability has not been finally established,
OTC may enter agreement to compound,
settle, or compromise any controversy
relating to amount of taxes due
agreements to settle controversies do not
require district court approval
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Innocent Spouse Relief
68 O.S. § 2361
if joint return has been filed by married
taxpayers
liability is attributable to income of nonrequesting spouse and would be inequitable
to hold the requesting spouse liable
IRS determination binding on OTC
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Innocent spouse relief – IRS
determination (§ 2361)
The determination made by the Tax
Commission shall be the same as the
determination made by the IRS provided tax
years and circumstances are the same
If IRS has not made a determination, the
OTC shall apply the factors that would have
been applied by IRS
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§207 Hearings
 general power of Commission to conduct
hearings, issues subpoenas for witnesses and
production of records
 person desiring hearing files an application
setting forth: tax, amount, error, argument and
legal authority, relief, witnesses, verification
(this section applies to claims for refund of income
tax, Sowders v. OTC, 527 P.2d 852; also applies
to hearings on protest to denial of manufacturer’s
exemption certificate)
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Tax liens
 filed in office of the county clerk; evidence of
state’s lien on any interest in any real or
personal property of the taxpayer
 prior to other claims or encumbrances on
property except those of a mortgagee
whose rights have attached prior to date of
filing of tax lien
 Partial release: OAC 710:1-3-80
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