SB 1099 Implements the Tax Credit Accountability Act
Sponsor:Gibbons Co-Sponsor(s)
LR Number:3665S.12T Fiscal Note:3665-12
Committee:Ways and Means
Last Action:05/27/04 - Signed by Governor Journal page:S1660
Effective Date:August 28, 2004
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Current Bill Summary

CCS/HS/HCS/SS/SCS/SB 1099 - This act makes various changes to the various Missouri tax credits and enacts the Tax Credit Accountability Act of 2004. The act:

(1) Charges the Joint Committee on Tax Policy with an automatic review by the committee after each of the Auditor's tax credit program audits. After this period of review, the committee is given the option to make an official recommendation to the General Assembly as to the merit and suggested future treatment of each credit. (Section 21.810)

(2) Includes the state Attorney General in the list of people to whom the Director of Revenue may disclose information regarding a taxpayer, if the information is pertinent to Attorney General's investigation. (Section 32.057)

(3) Requires that any abatement or exemption in an enterprise zone stop 30 days after the business closes or there is a significant change in the type of business conducted. A new owner can reapply to receive the abatement or exemption, but cannot receive the benefit for any period of time beyond the life of the zone.(Section 135.215)

(4) Establishes a system of classifications for tax credits and minimum requirements for each classification. The requirements are designed to verify compliance and instill confidence in the tax credit system, but avoid undue burdens on the individuals and businesses who apply for the credits.

The act follows established classifications and application requirements where possible. The administering state agencies are enabled to implement rules to include additional requirements or explain the listed requirements. Any such rules are subject to the standard rules promulgation and approval requirements. (Sections 135.800 and 135.802)

(5) Implements reporting requirements focused on gathering meaningful information in order to assist future legislatures in assessing the value of tax credit programs. The reporting requirements are varied to reflect the diverse landscape of the currently enacted tax credits.

The requirements reflect differences between economic development credits and social benefit credits that have benefits that are not revealed in the same empirical fashion. Reporting occurs over a period of three years for most credits. Annual reporting is fixed to a date certain (June 30) for all reports.

Reporting is the duty of the recipient of the credit, and not any subsequent purchaser, in the case of a transferred credit. An exception to this is made in the case of contribution based credits. These credits are obtained differently from other credits. Contribution based credits are given to the a contributor who donates money to a specific program. The state policy is the promotion of the program, and thus reporting is the duty of the recipient of the contribution and not the recipient of the credit. Additionally, the act requires that a taxpayer receiving a credit be made aware of the future reporting requirements prior to issuance.

(6) Implements a compliance system for reporting. Failure to meet the annual reporting requirements will result in graduated penalties. A six month grace period and at least one notice by certified mail to the last known address of the taxpayer is included. Penalties also accompany fraud in the application process. If fraud is found by a court of competent jurisdiction, a one hundred percent penalty will be incurred.

Penalties are assessed against a noncompliant taxpayer as of the end of the taxpayer's taxable year and due and owing as of the last date of filing of the taxpayer's return. Further collection procedures follow the existing collection procedures for income taxes. (Section 135.810)

(7) Requires that prior to approval of any tax credit application, an administering agency shall verify through the Department of Revenue that the tax credit applicant does not owe any delinquent taxes, including penalties and interest. Such delinquency will not affect the approval of the application for such tax credits, except that the amount of credits issued are reduced by the applicant's tax delinquency. (Section 135.815)

(8) Requires that all administering agencies implement a system of tracking issuance and redemption of credits. This system should be developed with the cooperation of the Department of Revenue who has already begun implementing a similar system in certain cases. (Section 135.825)

(9) Specifies that the additional requirements of the accountability act are in addition to all existing requirements for such credits. (Section 135.830)

(10) Prohibits tax credits for donations to the Missouri Higher Education Scholarship Fund and the Advantage Missouri Program from being approved, awarded, or issued after January 1, 2005. (Sections 173.196 & 173.796)

(11) Provides that application information submitted by a taxpayer seeking a tax credit be made subject to the Sunshine Law once the credits have been approved. In the case where state approval of a credit application comes prior to actual issuance, the application data become open records at the time such application is approved. (Sections 610.255 and 620.014)

(12) Expands the options of the Department of Economic Development when the department engages in an agreement regarding discretionary tax credits. Current law enables such agreements. This act will allow the department to require that specific purposes and goals for the incentive be set forth in each such agreement. Current law also allows for recapture of such discretionary credits where a taxpayer breaches the agreement. This act will expand the recapture to include the additional purposes and goals mentioned above. (Section 620.017).

(13) Expands the existing audit statutes for state sponsored cost benefit analysis to require periodic examination of all credits. Current law only subjects credits administered by the Department of Economic Development to be analyzed. All audits are required to be provided to the Governor, the Legislature and, specifically, the Joint Committee on Tax Policy. (Section 620.1300)