Tulsa suing state over new law that strips its power to privatize tax collection

Tulsa sues state over new sales tax collection law

TULSA, Okla. — The city of Tulsa sued the state of Oklahoma on Thursday, targeting a law passed earlier this year requiring cities to use the Oklahoma Tax Commission to collect sales taxes.

The four-count civil suit, filed in Oklahoma County District Court, asks a judge to rule that the city has the right to use a private firm to collect its sales taxes. It says the law is unconstitutional.

Lawmakers passed House Bill 2359 on the final day of this year’s session, but before the governor signed it into law, Tulsa had signed a contract with an Alabama firm to handle the collections. Because of the new law, “Tulsa no longer has a choice regarding how its taxes are collected and enforced,” the suit claims.

“Tulsa no longer has the ability to select its method of tax collection from among the choices available on the free market, or to bargain for the best rate in doing so, or to make the decision to staff its tax collection and enforcement in-house,” the complaint states.

Tulsa Mayor Dewey Bartlett told The Associated Press that it’s a simple issue.

“We have the right to control our own destiny,” Bartlett said. “We have a city charter that gives us the right to take care of our affairs, financial and otherwise.”

The city’s decision to drop the Tax Commission in favor of a private company could save the cash-strapped city millions of dollars, Tulsa officials said.

“We found out that (the Tax Commission) was very underfunded, they had already let loose a lot of people, and the number of auditors they had in the state had been sharply reduced,” said Bartlett. “It was very obvious that their ability to collect and audit and do a good job for the $2 million we were paying them every year … we were not getting a good deal.”

Bartlett predicted that other cities might join Tulsa’s legal fight.

Paula Ross, a spokeswoman for the Tax Commission, acknowledged the department’s past budget shortfalls but said the Legislature recently appropriated extra funding for dozens of field agents, attorneys, accountants and auditors, among other positions.

“I most definitely realize there is a concern, but we feel like we would have liked the opportunity to discuss the many additional benefits of increased appropriations and of House Bill 2359,” Ross said.

The four counts say the law is unconstitutional because it impairs contract obligations, limits Tulsa’s ability to collect its own taxes, limits the city’s ability to maximize revenue and removes or limits several powers reserved to the city in its charter.

Tulsa’s sales tax is 8.517 percent, which is collected by the Tax Commission.