Home
Blogs
Recent Updates
Known abuses
Claimed investments
Tax credits used
The financial shell games
Extent of false reporting
About this fraud flawed law
Guide to flaws in the law
Colorado land scam
Oklahoma legislator Mike Reynolds says tax credit plan is abuse target
NewsOK.com, October 17, 2009
Michael McNutt
A state lawmaker Friday called for an immediate investigation into tax credits administered by the state Tax Commission to investors in qualifying projects.
The practice is abused and costs taxpayers hundreds of millions of dollars, Rep. Mike Reynolds said at a news conference.
"There are far too many programs that have no objective legislative oversight, said Reynolds, R-Oklahoma City. "While it is difficult to know specifically how much money each of the programs cost, I have become aware in the last few months of two programs that have apparently cost about half a billion dollars during a three-year period.
Reynolds said about $467 million in tax credits have been issued from 2006-08 through the rural small business and small business tax credit programs. The programs offer investors 20 percent or 30 percent tax credits on investments in qualifying projects.
"From the records Ive looked at, I expect 2009 is going to be worse, he said. "It has accelerated, and in doing research, I have found many new companies starting up their numbers wont show up until some time in 2010.
Reynolds said about $764 million has been invested in 112 companies during the past three years.
"I consider most of the so-called investments to be an outright fraud perpetuated on the taxpayers of Oklahoma, he said. "As far as Im concerned, it is criminal activity, it is outright fraud against the state of Oklahoma and its taxpayers.
Reynolds said the Tax Commission has refused to give him information he requested on the 112 companies that received the investments through the rural small business and small business programs. He said his research shows most of them do not even exist in Oklahoma and "the few that do have created few if any jobs.
The Tax Commission contends confidentiality laws prohibit it from releasing the information.
"We understand the frustration when there is taxpayer information that cannot be released due to confidentiality statutes, said Paula Ross, a Tax Commission spokeswoman. "The Oklahoma Tax Commission works hard to administer the tax laws passed by the Legislature.
Reynolds said he has asked House Speaker Chris Benge to form a committee to begin an investigation into the tax credit program. The committee would be able to conduct interviews and have the power to issue subpoenas, Reynolds said.
Benge, R-Tulsa, "is aware of Representative Reynolds concerns and is looking into it, said his spokeswoman, Jennifer Monies.
Reynolds criticized legislation passed in 2006 that was designed to plug a tax credit loophole that threatened to cost the state hundreds of millions of dollars.
"Far from it, Reynolds said. "It did nothing to clean up the loopholes. ... It probably did make things worse because they (investors) just found a better way to get around it.
Reynolds said he will seek to get legislation passed next session that would open up records about the tax credits. He also said he would offer legislation to end the small business and rural small business tax credit programs.
Reynolds said he came forward because he had a chance to review records after First State Bank of Altus failed in August. He said he discovered the bank made six loan commitments totaling $642.5 million in December 2005; the commitment was eight times higher than the banks assets of $75 million, he said.
He said he has contacted federal authorities to look into how the tax credits are being administered by the Tax Commission. Reynolds said he hadnt considered seeking a grand jury investigation.
"I suppose thats an avenue, he said.
"In short, I do not trust the Tax Commission and their workings, Reynolds said.