Federal taxation; creating the Taxpayer Protection Act. Effective date.
The proposed act states that any federal fines or penalties levied against individuals or employers due to compliance with the provisions of this act shall be null and void. This declaration raises significant questions about the enforceability of federal taxation laws within the state. The act also stipulates that any federal sanctions resulting from its implementation may be deemed unconstitutional by a simple majority vote of the Legislature, thereby centralizing power regarding the state's response to federal taxation and sanctions.
Senate Bill 306, known as the Taxpayer Protection Act, is a legislative initiative aimed at affirming state sovereignty over federal taxation practices. The bill outlines the intent to protect Oklahoma taxpayers by creating the Federal Tax Fund, where all federal income tax withholdings and payments are deposited. Furthermore, it establishes state mechanisms to review and potentially contest federal sanctions imposed on the state or its citizens under the premise of maintaining constitutional integrity as outlined by the Tenth Amendment of the United States Constitution.
Notably, the legislation has sparked contention around the constitutionality and practicality of rejecting federal mandates, especially in light of the complexity of the existing federal tax code, which is deemed burdensome and unjust by its proponents. Critics argue that such a sweeping rejection of federal authority could lead to legal conflicts and undermine the basic principles of the relationship between state and federal governments, specifically those articulated in the Constitution. The potential for this law to challenge the Internal Revenue Service's (IRS) authority further amplifies these concerns, considering the IRS's role in federal tax enforcement.
If passed, SB306 will necessitate significant changes in how Oklahoma handles federal tax compliance, including the requirement for state taxpayers to electronically remit federal tax forms to the Oklahoma Tax Commission. The Tax Commission would be tasked with ensuring compliance and would have the authority to cease federal tax disbursements based on internal reviews or legislative votes, thereby creating a unique fiscal dynamic within Oklahoma's state government and its interface with federal tax statutes.