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91ST CONGRESS 1st Session

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SENATE

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REPORT No. 91-386

GRANTING STATES RECIPROCAL RIGHT TO SUE IN DISTRICT OF COLUMBIA COURTS TO RECOVER DELINQUENT STATE TAXES

AUGUST 13, 1969.-Ordered to be printed

Mr. TYDINGS, from the Committee on the District of Columbia, submitted the following

REPORT

[To accompany S. 2502]

The Committee on the District of Columbia, to which was referred the bill (S. 2502), to authorize suits in the courts of the District of Columbia for collection of taxes owed to States, territories, or possessions, or political subdivisions thereof, when the reciprocal right is accorded to the District of Columbia, and for other purposes, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass.

PURPOSE OF THE BILL

The purpose of S. 2502 is to authorize suits in the courts of the District of Columbia for the collection of taxes owed to States, territories, or possessions, or political subdivisions thereof, when a reciprocal right is accorded to the District.

NEED FOR THE LEGISLATION

According to the Finance Officer of the District of Columbia, many individuals move out of the District each year leaving unpaid District income taxes. In addition, corporations, other organizations, and individuals may, while located at or operated from places outside the District, incur liability for employer withholding, sales and use, franchise, or death taxes. Some evade payment of District taxes and other compliance with District tax laws because they are not within the jurisdiction of the District for normal enforcement proceedings. Under the proposed legislation, the Corporation Counsel or any of his assistants would be authorized to sue for delinquent District taxes

and obtain judgments in the courts of the States. A judgment obtained in a State court would be effective against the taxpayer's assets located within the State. Compliance with District tax laws should be greatly improved in consequence.

Tax collection suits by sister States and the District of Columbia may be brought on a reciprocal basis under the laws of 40 States, including nearby Maryland and Virginia. The bill (S. 2502) is necessary in order that the District may be eligible to proceed in the courts of these States under such reciprocal authority.

The committee is informed that the proposed legislation (S. 2502) is similar to general comity laws for such purposes of the following States:

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The District of Columbia government, by the Commissioner thereof, recommends enactment of the proposed legislation (S. 2502), so that the District may take advantage of the widespread reciprocal authority for tax collection provided by other jurisdictions. The District government does not anticipate that the bill will impose on the courts of the District of Columbia any substantial increased caseload. In addition, the Department of Justice and the Bureau of the Budget have advised that there is no administration objection. to this bill (S. 2502).

PROVISIONS OF THE BILL

Section 1 of the proposed legislation grants to any State, territory, or possession, or any political subdivision thereof, the right to sue in the courts of the District of Columbia when the reciprocal right is accorded to the District either by statute or as a matter of comity. Section 2 provides a means of certifying the officials authorized to institute such an action in the District of Columbia courts.

Section 3 defines the term "taxes" to include all assessments, penalties, and interest.

Section 4 authorizes the Corporation Counsel or any of his assistants to bring actions in the courts of States, territories, and possessions, and subdivisions thereof, to collect taxes legally due the District. Since such suits may occasionally require the assistance of local in

S. Rept. 91-386

vestigators or local counsel, section 4 authorizes the Commissioner of the District of Columbia to retain such services without the limitations on per diem compensation imposed by section 15 of the act of August 2, 1946, 60 Stat. 810 (Public Law 89-600).

HEARING

A public hearing on S. 2502 was held before the Judiciary Subcommittee of this committee on August 8, 1969. There was no opposition to the legislation.

HISTORY OF THE LEGISLATION

S. 2502 is derived verbatim from S. 1628 (90th Cong., 2d sess.) as passed by the Senate on June 26, 1968.

CONCLUSION

In the committee's view, the District of Columbia government should be made eligible to proceed in State courts for the collection of delinquent taxes, and to avail itself of the reciprocal authority granted by State laws for this purpose.

Accordingly, the committee commends S. 2502 to the Senate for favorable action.

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S. Rept. 91-386

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