Wyoming Legislature

Committee Meeting Summary of Proceedings

Task Force Subcommittee Meeting Information

September 26, 2005

State Capitol, LSO Library

Cheyenne, Wyoming

Task Force Subcommittee Members Present

Senator Jayne Mockler

Representative Lockhart

Other Task Force Members Present

Representative Morgan

Legislative Service Office Staff

Mark Quiner, Assistant Director

Don Richards, Senior Research Analyst

Others Present at Meeting

Please refer to Appendix 1 to review the Task Force Sign-in Sheet
for a list of other individuals who attended the meeting.

Call To Order

Representative Lockhart called the meeting to order at 11:00 a.m.  The following sections summarize the Task Force proceedings by topic.  Please refer to Appendix 2 to review the Task Force Meeting Agenda.

Comments of Interested Parties – Definitions of “Intangible”

Wade Hall, Department of Revenue, provided the Subcommittee with a brief history of Wyoming’s approach to taxing intangible property for purposes of ad valorem taxation.  He recounted two Supreme Court cases (Airtouch Cellular and RT Communications), which raised an issue of what assets are included within the definition of intangible personal property, since statute exempts intangible personal property from taxation.  Beyond determining what intangible property, if any, will be exempt is the question of determining value of the intangible property and how to remove the identified value from taxation.

Brenda Arnold, Laramie County Assessor, suggested that Subcommittee start by focusing on the term “intangible property.”  Ms. Arnold stated that the proposed definitions from the 2004 Revenue Subcommittee on Intangible Property Taxation could be selected.  (See Appendix 3 for a copy of the proposed definitions from 2004.)  After the definitions are established, Ms. Arnold suggested the question of what should be exempt could be addressed. 

Members of the Subcommittee then discussed whether it would be useful to have Wyoming statute refer to a list of established intangible property developed by the IRS (section 197).

Liz Zerga, representing Alltel, formerly Western Wireless, commented favorably on the proposed definitions of “tangible” and “intangible property.”  However, given the testimony of experts at the previous Task Force meeting, Ms. Zerga recommended to the Subcommittee that it refer to the IRS list.  This strategy would be preferred since it removes broad definitions that could be interpreted differently, and a definitive list from the IRS is a much better way to proceed in order to reduce ambiguity and potential lawsuits.

Ken Uhrich, Appraisal Supervisor, Department of Revenue, indicated that reference to the IRS list has some problems.  He indicated that the International Association of Assessing Officers (IAAO) no longer refer to the IRS list since the list changes and is simply a list.  He raised questions of how the Legislature would deal with a list that itself is subject to change.  Mr. Uhrich indicated that a subgroup of the IAAO is in the process of writing its own definitions; however, the proposed definitions would not be finalized until the December meeting of IAAO.  Mr. Uhrich indicated that even the IAAO standards could change about every five years.

Robert Barton, Qwest Communications, commented that the IRS code has withstood the test of litigation and has been changed as a result of those challenges.  He recounted testimony from the previous Task Force meeting that intangible property must be separable and identifiable, not just a characteristic that contributes to value.  Paula Rhodes, Qwest Communications, added that the IRS definition had not been amended substantially for some time. 

Brenda Arnold suggested that the Subcommittee and Task Force deal separately with the issue of inserting definitions and identify exemptions in the appropriate section of statute dealing with property tax exemptions, rather than mixing the two.  Wade Hall raised a concern with including the exemption list of intangible within the introductory statutes, which could impact sales taxation.  Mr. Hall also discussed pending changes to possible real property definition language for purposes of Department of Revenue rules on local assessments.  (Appendix 4)

Randy Bolles, Wyoming Taxpayers Association, indicated that if the definition is placed in Chapter 13 (Property Tax), they would not impact the sales tax statutes, and he noted that the sales tax statutes have their own definition of intangible personal property.

Stacey Sprinkle, Verizon Wireless, echoed the fact that IRS section 197 has not changed often.  She also supported the idea of statutory definitions and further definitions in Department rule.

The Subcommittee adjourned for lunch 11:50 p.m. and reconvened at 12:50 p.m. 

Finalization of Definitions - Motions For Draft Legislation

Members discussed the appropriate placement of definitions of intangible and tangible within the administration section.  Senator Mockler moved to remove definitions currently in W.S. 39-11-101 (a)(viii) and (xvi) and replace them with the proposed definitions of “tangible property” and “intangible property.”  (Appendix 3)  The motion carried by consensus.

Next, Senator Mockler moved to insert IRS code Section 197 (c) within the exemption statutes for Title 39, Article 13 to be consistent with the other drafts within W.S. 39-13-105.

Representative Lockhart requested that the minutes cross reference the date of the IRS Section 9 and suggested a request to Lexis Nexis to include an Editor’s note within this text.  The motion passed.  (The pertinent sections of IRS code referenced, 26 U.S.C. Section 197 (c) from January 2004, are included as Appendix 5.)

The Subcommittee requested that one bill be drafted incorporating both motions.  Further, the Subcommittee asked that the Attorney General’s Office and any interested parties have an opportunity to review the draft legislation prior to the next meeting of the Task Force and bring any concerns to the members of the Subcommittee in advance.  The Subcommittee also requested a preliminary fiscal impact be prepared, if possible.

Meeting Adjournment

There being no further business, Representative Lockhart adjourned the meeting at 1:15 p.m.

Respectfully submitted,

Senator Mockler                                                          Representative Lockhart