Parental Choice Tax Credit used to pay off debts before tuition
OKLAHOMA CITY (KFOR) – News 4 has taken a closer look at how some of the money from the Parental Choice Tax Credit has been spent after receiving emails from Oklahomans who said some of the money from their tax credit went to pay unpaid taxes, student loans, and other debts before going to their child’s tuition.
The Oklahoma Tax Commission confirmed rules to the tax credit, referring to the FAQs section on the Parental Choice Tax Credit website.
The Tax Commission said if someone has been approved for a tax credit but owed delinquent taxes to the Oklahoma Tax Commission or a debt for which a claim has been filed with the Oklahoma Tax Commission by another qualified entity, then the credit payment would be reduced as a result of the outstanding obligations.
Below is from the FAQs section on the Parental Choice Tax Credit Website:
If I owe delinquent taxes to the Oklahoma Tax Commission or a debt for which a claim has been filed with the Oklahoma Tax Commission by another qualified entity, will my credit payment be reduced as a result of my outstanding obligations?
Yes, the amount of your credit payment will be reduced if you have outstanding delinquent tax balances or other qualified debts. The Oklahoma Tax Commission is required by statute (68 O.S. § 205.2) to deduct from any state tax refund payment the amount of any delinquent state tax, penalty, and interest thereon, which the Taxpayer owes pursuant to any state tax law. Additionally, if the Oklahoma Tax Commission has received a claim from a qualified entity for an outstanding debt, the Oklahoma Tax Commission is required to deduct from the payment the amount owed to that entity, including any collection expenses and costs.
“This is taxpayer money. And we didn’t take this seriously. We tried to implement it too fast and then here we have problems right away,” said Senator Julia Kirt, D-Oklahoma City. “There is no transparency built into this.”
Here’s an example of how the rules work. If a person was approved for the tax credit in the $7,000 value but owed $4,000 in back taxes or another agency reported a debt to the Tax Commission, then the Commission would use the money from the tax credit to pay off the fines and send the rest to be used for tuition.
The formula would mean taxpayers who have footed the bill for the school tax credits were also paying off someone else’s debt.
Senate President Pro Tem Greg Treat, R-Oklahoma City, recognized potential problems with the tax credit late last year.
“We’ll have to clean some things up,” said Treat.
He has authored a bill this session to do just that by cleaning up the original legislation. The 70-page bill has focused on back taxes, but was not specific about other potential debts owed to the Tax Commission from other agencies.
“Of course we have clean up,” said Kirt. “We pointed out that there were going to be problems with the administration of this and we kept getting dismissed when we raised all the concerns about logistics, because it matters when it’s people’s money.”
Treat’s bill has not been heard on the Senate floor yet but, if passed, would go into effect immediately. News 4 reached out to the Governor’s office for comment on the way the credits have been used but never heard back.
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