Bill Text For HB2775 - Senate Floor Version

 1|                        SENATE FLOOR VERSION                           |
  |                            April 6, 2021                              |
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 3|ENGROSSED HOUSE                                                        |
  |BILL NO. 2775                        By: Pfeiffer of the House         |
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  |                                         Montgomery of the Senate      |
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 8|       An Act relating to revenue and taxation; amending 68            |
  |       O.S. 2011, Sections 2802, as amended by Section 1,              |
 9|       Chapter 266, O.S.L. 2018 and 2875, as amended by                |
  |       Section 1, Chapter 142, O.S.L. 2015 (68 O.S. Supp.              |
10|       2020, Sections 2802 and 2875), which relate to the Ad           |
  |       Valorem Tax Code; modifying definition; modifying               |
11|       provisions related to valuation of personal property;           |
  |       modifying duties of the Ad Valorem Division of the              |
12|       Oklahoma Tax Commission; and providing an effective             |
  |       date.                                                           |
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15|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:                  |
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16|    SECTION 1.     AMENDATORY     68 O.S. 2011, Section 2802, as       |
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17|amended by Section 1, Chapter 266, O.S.L. 2018 (68 O.S. Supp. 2020,    |
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18|Section 2802), is amended to read as follows:                          |
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19|    Section 2802.  As used in Section 2801 et seq. of this title:      |
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20|    1.  "Accepted standards for mass appraisal practice" means those   |
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21|standards for the collection and analysis of information about         |
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22|taxable properties within a taxing jurisdiction permitting the         |
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23|accurate estimate of fair cash value for similar properties in the     |
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24|jurisdiction either without direct observation of such similar         |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 1
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 1|properties or without direct sales price information for such          |
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 2|similar properties using a reliable statistical or other method to     |
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 3|estimate the values of such properties;                                |
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 4|    2.  "Additional homestead exemption" means the exemption           |
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 5|provided by Section 2890 of this title;                                |
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 6|    3.  "Assessor" means the county assessor and, unless the context   |
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 7|clearly requires otherwise, deputy assessors and persons employed by   |
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 8|the county assessor in performance of duties imposed by law;           |
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 9|    4.  "Assess and value" means to establish the fair cash value      |
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10|and taxable fair cash value of taxable real and personal property      |
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11|pursuant to requirements of law;                                       |
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12|    5.  "Assessed valuation" or "assessed value" means the             |
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13|percentage of the fair cash value of personal property, or the         |
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14|percentage of the taxable fair cash value of real property, pursuant   |
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15|to the provisions of Sections 8 and 8B of Article X of the Oklahoma    |
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16|Constitution, either of individual items of personal property,         |
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17|parcels of real property or the aggregate total of such individual     |
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18|taxable items or parcels within a jurisdiction;                        |
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19|    6.  "Assessment percentage" means the percentage applied to        |
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20|personal property and real property pursuant to Section 8 of Article   |
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21|X of the Oklahoma Constitution;                                        |
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22|    7.  "Assessment ratio" means the relationship between assessed     |
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23|value and taxable fair cash value for a county or for use categories   |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 2
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 1|within a county expressed as a percentage determined in the annual     |
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 2|equalization ratio study;                                              |
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 3|    8.  "Assessment roll" means a computerized or noncomputerized      |
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 4|record required by law to be kept by the county assessor and           |
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 5|containing information about property within a taxing jurisdiction;    |
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 6|    9.  "Assessment year" means the year beginning January 1 of each   |
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 7|calendar year and ending on December 31 preceding the following        |
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 8|January 1 assessment date;                                             |
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 9|    10.  "Circuit breaker" means the form of property tax relief       |
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10|provided by Sections 2904 through 2911 of this title;                  |
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11|    11.  "Class of subjects" means a category of property              |
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12|specifically designated pursuant to provisions of the Oklahoma         |
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13|Constitution for purposes of ad valorem taxation;                      |
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14|    12.  "Code" means the Ad Valorem Tax Code, Section 2801 et seq.    |
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15|of this title;                                                         |
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16|    13.  "Coefficient of dispersion" means a statistical measure of    |
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17|assessment uniformity for a category of property or for all property   |
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18|within a taxing jurisdiction;                                          |
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19|    14.  "Confidence level" means a statistical procedure for          |
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20|determining the degree of reliability for use in reporting the         |
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21|assessment ratio for a taxing jurisdiction;                            |
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22|    15.  "Cost approach" means a method used to establish the fair     |
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23|cash value of property involving an estimate of current construction   |
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24|cost of improvements, subtracting accrued depreciation and adding      |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 3
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 1|the value of land including any loss in value that may be caused by    |
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 2|physical deterioration, functional obsolescence or economic            |
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 3|obsolescence and adding the value of the land.                         |
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 4|         a.    Physical deterioration is a cause of depreciation       |
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 5|              that is a loss in value due to ordinary wear and tear    |
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 6|              and the forces of nature.                                |
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 7|         b.    Functional or internal obsolescence is the loss in      |
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 8|              value of a property resulting from changes in tastes,    |
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 9|              preferences, technical innovations or market             |
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10|              standards.                                               |
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11|         c.    Economic or external obsolescence is a cause of         |
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12|              depreciation that is a loss in value as a result of      |
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13|              impairment in utility and desirability caused by         |
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14|              factors outside the boundaries of the property or loss   |
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15|              of value in a property (relative to the cost of          |
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16|              replacing it with a property of equal utility) that      |
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17|              stems from factors external to the property;             |
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18|    16.  "County board of equalization" means the board which, upon    |
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19|hearing competent evidence, has the authority to correct and adjust    |
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20|the assessment rolls in its respective county to conform to fair       |
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21|cash value and such other responsibilities as prescribed in Section    |
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22|2801 et seq. of this title;                                            |
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23|    17.  "Equalization" means the process for making adjustments to    |
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24|taxable property values within a county by analyzing the               |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 4
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 1|relationships between assessed values and fair cash values in one or   |
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 2|more use categories within the county or between counties by           |
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 3|analyzing the relationship between assessed value and fair cash        |
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 4|value in each county;                                                  |
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 5|    18.  "Equalization ratio study" means the analysis of the          |
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 6|relationships between assessed values and fair cash values in the      |
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 7|manner provided by law;                                                |
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 8|    19.  "Fair cash value" or "market value" means the value or        |
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 9|price at which a willing buyer would purchase property and a willing   |
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10|seller would sell property if both parties are knowledgeable about     |
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11|the property and its uses and if neither party is under any undue      |
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12|pressure to buy or sell and for real property shall mean the value     |
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13|for the highest and best use for which such property was actually      |
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14|used, or was previously classified for use, during the calendar year   |
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15|next preceding the applicable January 1 assessment date;               |
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16|    20.  "Homestead exemption" means the reduction in the taxable      |
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17|value of a homestead as authorized by law;                             |
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18|    21.  "Income and expense approach" means a method to estimate      |
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19|fair cash value of a property by determining the present value of      |
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20|the projected income stream;                                           |
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21|    22.  "List and assess" means the process by which taxable          |
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22|property is discovered, its description recorded for purposes of ad    |
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23|valorem taxation and its fair cash value and taxable fair cash value   |
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24|are established;                                                       |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 5
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 1|    23.  "Mill" or "millage" means the rate of tax imposed upon        |
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 2|taxable value.  One (1) mill equals One Dollar ($1.00) of tax for      |
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 3|each One Thousand Dollars ($1,000.00) of taxable value;                |
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 4|    24.  "Multiple regression analysis" means a statistical            |
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 5|technique for estimating unknown data on the basis of known and        |
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 6|available data;                                                        |
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 7|    25.  "Parcel" means a contiguous area of land described in a       |
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 8|single description by a deed or other instrument or as one of a        |
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 9|number of lots on a plat or plan, separately owned and capable of      |
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10|being separately conveyed;                                             |
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11|    26.  "Sales comparison approach" means the collection,             |
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12|verification, and screening of sales data, stratification of sales     |
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13|information for purposes of comparison and use of such information     |
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14|to establish the fair cash value of taxable property;                  |
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15|    27.  "State Board of Equalization" means the Board responsible     |
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16|for valuation of railroad, airline and public service corporation      |
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17|property and the adjustment and equalization of all property values    |
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18|both centrally and locally assessed;                                   |
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19|    28.  "Taxable value" means the percentage of the fair cash value   |
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20|of personal property or the taxable fair cash value of real            |
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21|property, less applicable exemptions, upon which an ad valorem tax     |
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22|rate is levied pursuant to the provisions of Section 8 and Section     |
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23|8B of Article X of the Oklahoma Constitution;                          |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 6
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 1|    29.  "Taxable fair cash value" means the fair cash value of        |
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 2|locally assessed real property as capped pursuant to Section 8B of     |
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 3|Article X of the Oklahoma Constitution;                                |
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 4|    30.  "Use category" means a subcategory of real property, that     |
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 5|is either agricultural use, residential use or commercial/industrial   |
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 6|use but does not and shall not constitute a class of subjects within   |
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 7|the meaning of the Oklahoma Constitution for purposes of ad valorem    |
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 8|taxation;                                                              |
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 9|    31.  "Use value" means the basis for establishing fair cash        |
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10|value of real property pursuant to the requirement of Section 8 of     |
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11|Article X of the Oklahoma Constitution; and                            |
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12|    32.  "Visual inspection program" means the program required in     |
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13|order to gather data about real property from physical examination     |
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14|of the property and improvements in order to establish the fair cash   |
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15|values of properties so inspected at least once each four (4) years    |
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16|and the fair cash values of similar properties on an annual basis.     |
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17|    SECTION 2.     AMENDATORY     68 O.S. 2011, Section 2875, as       |
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18|amended by Section 1, Chapter 142, O.S.L. 2015 (68 O.S. Supp. 2020,    |
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19|Section 2875), is amended to read as follows:                          |
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20|    Section 2875.  A.  There is hereby created within the Oklahoma     |
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21|Tax Commission the Ad Valorem Division.  The Ad Valorem Division       |
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22|shall have the authority and it shall be its duty to:                  |
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23|    1.  Confer with and assist county assessors and county boards of   |
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24|equalization in the performance of their duties, to the end that all   |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 7
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 1|assessments of property be made relative, just and uniform and that    |
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 2|real property and tangible personal property may be assessed at its    |
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 3|fair cash value estimated at the price it would bring at a fair        |
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 4|voluntary sale;                                                        |
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 5|    2.  Prescribe forms with numbers ascribed thereto for the county   |
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 6|assessors' use in assessment procedure, including property             |
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 7|classification and appraisal forms;                                    |
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 8|    3.  Provide technical assistance to county assessors and county    |
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 9|boards of equalization in the services of appraisal engineers;         |
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10|    4.  Provide from year to year schedules of values of personal      |
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11|property in accordance with Uniform Standards of Professional          |
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12|Appraisal Practice (USPAP) and International Association of            |
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13|Assessing Officers (IAAO) requirements to aid county assessors in      |
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14|the assessment of personal property;                                   |
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15|    5.  Conduct training schools, institutes, conferences and          |
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16|meetings for the purpose of improving the qualifications of county     |
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17|assessors and their deputies as required by law;                       |
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18|    6.  Prepare and furnish from time to time to county assessors an   |
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19|assessors' manual.  Such manual shall include, but not be limited      |
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20|to, valuation methodologies for property in a county for which no      |
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21|comparable property exists in order for a county assessor to           |
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22|establish a value for ad valorem tax purposes.  The manual shall       |
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23|include information concerning valuation of hazardous waste disposal   |
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24|facilities and such other types of facilities as may be requested by   |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 8
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 1|the county assessor for which the assessor does not have adequate      |
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 2|data to value such property;                                           |
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 3|    7.  Render such other assistance as may be conducive to the        |
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 4|proper assessment of property for ad valorem taxation;                 |
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 5|    8.  Recommend rules to the Tax Commission establishing uniform     |
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 6|procedures and standards for the appraisal of real property by         |
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 7|county assessors;                                                      |
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 8|    9.  Develop assessment manuals for the valuation of manufactured   |
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 9|homes and periodic updates for such manuals for use by county          |
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10|assessors; and                                                         |
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11|    10.  Promptly notify county assessors, county treasurers and       |
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12|members of county excise and equalization boards of any changes to     |
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13|the laws relating to ad valorem taxation.                              |
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14|    B.  The county assessors shall not use any form not prescribed     |
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15|or approved by the Ad Valorem Division.                                |
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16|    C.  Each county assessor shall comply with the rules and guides    |
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17|adopted by the Oklahoma Tax Commission.                                |
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18|    D.  The Ad Valorem Division, upon request of any county            |
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19|assessor, shall furnish to the county assessor any information shown   |
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20|by its files and records as to any real and personal property,         |
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21|subject to taxation, including income and expense data as shown by     |
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22|income tax returns, to the end that no property shall escape           |
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23|taxation, and this information is to be furnished notwithstanding      |
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arsid9921176 SENATE FLOOR VERSION - HB2775 SFLR                    Page 9
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 1|any statute that such files and records shall be confidential and      |
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 2|privileged.                                                            |
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 3|    E.  The Ad Valorem Division shall be authorized to obtain          |
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 4|information relating to the ownership, location, taxable status or     |
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 5|valuation for purposes of ad valorem taxation of real or personal      |
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 6|property from any state agency, board, commission, department,         |
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 7|authority or other division of state government if necessary to        |
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 8|respond to a request by a county assessor as provided by subsection    |
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 9|D of this section.  Such information shall be confidential and         |
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10|privileged and shall only be released to a county assessor in order    |
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11|to locate, discover and correctly value taxable property as required   |
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12|by law.                                                                |
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13|    SECTION 3.  This act shall become effective November 1, 2021.      |
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14|COMMITTEE REPORT BY: COMMITTEE ON FINANCE                              |
  |April 6, 2021 - DO PASS                                                |
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