Missouri Senate

Perfected

INDIVIDUAL INCOME TAX

Current law provides for a reduction in the top rate of income tax over a period of years from 6% to 5.5%, with each cut becoming effective if net general revenue collections meet a certain trigger. Beginning January 1, 2019, this act provides that the top rate of tax shall be reduced to 5.0% for all taxable income over $7,000. (Section 143.011)

This act repeals provisions requiring the Missouri income tax brackets to be adjusted for inflation beginning in the 2017 calendar year, and instead requires such brackets to be adjusted for inflation beginning in the 2021 calendar year. (Section 143.021)

Current law provides for an increase over a period of years in the amount business income a taxpayer may deduct from his or her taxes at a rate of an additional 5% per year until such deduction is 25%, with each increase becoming effective if net general revenue collections meet a certain trigger. For all tax years beginning on or after January 1, 2018, this act limits such deduction to 5%. (Section 143.022)

This act provides that Missouri personal and dependency exemptions shall not be allowed for tax years beginning on or after January 1, 2018. (Sections 143.151 and 143.161)

Beginning January 1, 2020, this act modifies the income tax deduction for federal tax liability paid by indexing the amount that may be deducted to the taxpayer's Missouri adjusted gross income, as described in the act. The deduction is allowed at 100% for adjusted gross income of $25,000 or less, and is phased out to 0% for adjusted gross income of $150,001 or more. Additionally, current law caps such deduction at $5,000 for taxpayers filing single and $10,000 for taxpayers filing jointly. This act removes such caps. (Section 143.171)

This provision is substantially similar to a provision contained in SS#2/SCS/SBs 617, 611, & 667 (2018).

This act creates an income tax deduction in an amount equal to the amount of income from a loan forgiveness program included in a taxpayer's federal adjusted gross income, provided that the taxpayer is a veteran with a total service-connected disability. (Section 143.116)

For all tax years beginning on or after January 1, 2019, this act eliminates the ability for employers to deduct and retain a portion of withholding taxes due when the employer remits such taxes on or before the due date. (Sections 143.225, 143.261)

MISSOURI EARNED INCOME TAX CREDIT

This act establishes the Missouri Earned Income Tax Credit Act.

For all tax years beginning on or after January 1, 2020, this act creates a tax credit to be applied to a taxpayer's Missouri income tax liability after all reductions for other credits for which the taxpayer is eligible have been applied. The tax credit shall not exceed the amount of the taxpayer's tax liability, and shall not be refundable. The amount of such tax credit shall be twenty percent of the amount of a taxpayer's federal earned income tax credit.

The Department of Revenue shall determine whether a taxpayer who did not apply for the tax credit established by this act is eligible and shall notify such taxpayer of his or her potential eligibility.

The Department shall prepare an annual report regarding the tax credit established by this act containing certain information as described in the act.(Section 135.760)

This provision shall sunset after six years unless reauthorized by the General Assembly.

This provision is substantially similar to SB 615 (2018), SB 197 (2017), SB 342 (2017), HCS/HB 109 (2017), and to a provision contained in SS#2/SCS/SBs 617, 611, & 667 (2018) and HCS/HB 1605 (2016), and is similar to HB 2154 (2016), SB 1018 (2016), SB 40 (2015), SB 687 (2014), HB 1120 (2014), HB 895 (2013), HB 1606 (2012), HB 581 (2011), and HB 1915 (2010).

CORPORATE INCOME TAX

For all tax years beginning on or after January 1, 2020, this act reduces the corporate income tax rate from 6.25% to 5.0%. (Section 143.071)

Beginning January 1, 2020, this act modifies the income tax deduction for federal tax liability paid by indexing the amount that may be deducted to the taxpayer's Missouri adjusted gross income, as described in the act. The deduction is allowed at 100% for adjusted gross income of $25,000 or less, and is phased out to 0% for adjusted gross income of $150,001 or more. Additionally, current law caps such deduction at 50% of the corporation's federal tax liability. This act changes the cap to $5,000 for tax years between September 1, 1993, and January 1, 2020, and removes such caps for all tax years beginning or after January 1, 2020. (Section 143.171)

For all tax years beginning on or after January 1, 2019, this act modifies the Multistate Tax Compact by requiring corporations subject to income tax in this state to apportion and allocate income according to the income tax provisions provided in Chapter 143, and disallows the three-factor apportionment option available in the Multistate Tax Compact. (Section 32.200)

For all tax years beginning on or after January 1, 2020, this act modifies the law relating to the allocation and apportionment of corporate income by requiring corporations to determine their income derived from sources within this state according to the provisions of this act.

ALLOCABLE INCOME

Net rents and royalties from real property located in the state, and capital gains from the sale of such property, is allocable to the state. Net rents and royalties from tangible personal property are allocable to the state to the extent that the property is used in this state, or in their entirety if the corporation's commercial domicile is in this state and is not organized or taxable by the state in which the property is utilized, as described in the act. Capital gains from the sale of tangible personal property is allocable to this state if the property had a situs in the state at the time of sale, or if the corporation's commercial domicile is in this state and is not organized or taxable by the state in which the property had a situs, as described in the act. Interest and dividends are allocable to this state if the corporation's commercial domicile is in this state. Patent and copyright royalties are allocable to this state to the extent that the patent or copyright is utilized in this state, or to the extent that the patent or copyright is utilized in a state in which the corporation is not taxable and the corporation's commercial domicile is in this state.

APPORTIONABLE INCOME

All apportionable income shall be apportioned to this state by dividing the total receipts of the corporation in this state during the tax period by the total receipts of the corporation everywhere during the tax period, and multiplying such result by the net income.

Receipts from the sale of tangible personal property shall be considered in this state if 1) the property is delivered or shipped to a purchaser in this state other than the U.S. Government, or 2) the property is shipped from this state and the purchaser is the U.S. Government or the corporation is not taxable in the state of the purchaser, as described in the act. Receipts from all other sales shall be considered in this state if the corporation's market for such sales is in this state, as described in the act.

In the case of certain industries where unusual factual situations produce inequitable results under the apportionment and allocation provisions of this act, the Director of Revenue shall promulgate rules for determining the apportionment and allocation factors for each such industry. In such a case, a corporation may petition the Director of Revenue, as described in the act. (Sections 143.451, 143.456, 143.471, 620.1350)

This act provides that the method of allocation and apportionment elected by a corporation shall expire after five years, or whenever the director of revenue finds and notifies such corporation that such method does not show the income applicable to this state, whichever occurs first. After such expiration or revocation, the corporation may elect to use the same or a different method. Failure to make such an election shall constitute an election to comply with the allocation and apportionment provisions provided by the act. (Section 143.461)

These provisions are substantially similar to provisions contained in SS#2/SCS/SBs 617, 611, & 667 (2018).

FINANCIAL INSTITUTIONS TAX

Current law allows certain financial institutions to receive a credit against the financial institutions tax for any corporate income tax paid. This act provides that, if the corporate income tax rate is reduced, the financial institutions tax rate shall be reduced proportionally. (Sections 148.030, 148.140, 148.620)

This provision is substantially similar to a provision contained in SS#2/SCS/SBs 617, 611, & 667 (2018).

SALES TAX ALLOWANCE

Current law allows vendors to deduct and remit 2% of the amount of sales tax due if such vendor remits such sales tax on or before the due date. This act provides that such allowance shall not exceed $1,500 per month, per location. (Sections 144.140, 144.710)

SALES AND USE TAX EXEMPTIONS

This act exempts usual and customary delivery charges from sales and use taxes. (Section 144.030)

This provision is substantially similar to SB 16 (2017, HCS/HB 129 (2017), HB 671 (2017), and HB 704 (2017).

STREAMLINED SALES AND USE TAX AGREEMENT

Under this act, the Department of Revenue shall enter into the Streamlined Sales and Use Tax Agreement (SSUTA). The state shall be represented by four delegates in meetings with other states regarding the Agreement. One delegate shall be appointed by the Governor, one shall be a member of the General Assembly appointed by the President Pro Tem of the Senate, one shall be a member of the General Assembly appointed by the Speaker of the House of Representatives, and one shall be the Director of the Department of Revenue or his or her designee. These delegates shall report annually to the General Assembly regarding the agreement. (Section 32.070)

Any local sales tax changes due to a boundary change shall take effect on the first day of the calendar quarter 120 days after the sellers receive notice of the change.

The effective date for the imposition, repeal, or rate change of each local sales and use tax shall be the first day of the calendar quarter at least 120 days after the sellers receive notice of the change. (Section 32.087)

This act makes changes to several sections of law relating to local sales taxes in order to make language consistent across sections and to make such sections compliant with the SSUTA. (Sections 66.601 to 94.705, 184.845, 221.407, 238.235, 238.410, 644.032)

The act adds several definitions relating to the application of the sales tax law in order to make interpretation of said sales tax law compliant with the SSUTA. (Section 144.010)

Certain exemptions from state sales tax are modified to be in compliance with the SSUTA. (Section 144.030)

The school and Show Me Green sales tax holidays are modified by removing the fifty-dollar per purchase limit on school supplies, and by defining how the sales tax exemption applies to the purchase or return of certain items. (Sections 144.049 and 144.526)

This act relieves a purchaser from any penalties for failure to pay the proper amount of sales tax if the error was a result of erroneous information provided by the Director of Revenue. (Section 144.060)

The Director of Revenue shall promulgate a rule allowing for the issuance of a direct pay permit to purchasers, which would allow the purchaser to purchase goods and services without remitting payment of the tax to the seller at the time of purchase. Such purchaser shall determine the amount owed and remit such amount directly to the taxing jurisdiction. (Section 144.079)

The Director of Revenue shall participate in an on-line registration system that will allow sellers to register in this state and other member states. Registering in the system obligates the seller to collect and remit sales and use taxes for all taxable sales into this state as well as the other member states. Registration in the system shall not be used as a factor for determining nexus with this state. (Section 144.082)

The Director shall promulgate rules for the remittance of returns, which shall include an allowance for electronic payments and simplified electronic returns, as described in the act. (Section 144.084)

A certified service provider, as defined in the act, shall not be certified unless it meets certain requirements relating to the security and privacy of purchasers' information, as described in the act. (Section 144.109)

This act provides uniform sourcing rules for all purchases made in this state. For purchases for which the location where the order is received by the seller and the purchaser receives the product are both in Missouri, the sale shall be sourced to the location where the order is received by the seller, as described in the act. For purchases for which the location where the order is received by the seller and the purchaser receives the product are in different states, the sale shall be sourced to the location where receipt by the purchaser occurs, as described in the act. All sales of motor vehicles, trailers, semi-trailers, watercraft, outboard motors, and aircraft shall be sourced to the address of the owner. For the lease or rental of tangible personal property that requires recurring periodic payments, the first periodic payment shall be sourced to where the order is received by the seller. All subsequent payments shall be sourced to the primary property location for the property, as described in the act. For the lease or rental of tangible personal property that does not require recurring periodic payments, the payment shall be sourced to the location where receipt by the purchaser occurs. (Section 144.111)

The sale of certain telecommunications service, including internet, mobile telecommunications service, and ancillary service, shall be sourced to the customer's place of primary use. (Section 144.114)

The Director shall provide and maintain downloadable electronic databases at no cost to the user of the databases for taxing jurisdiction boundary changes, tax rates, and a taxability matrix detailing taxable property and services. Sellers will be relieved from liability if they fail to properly collect tax based upon certain information provided by the department. (Sections 144.123 and 144.124)

Amnesty for uncollected or unpaid sales or use tax shall be granted for sellers under certain circumstances following registration with the state, as described in the act. (Section 144.125)

This act provides that a cause of action against a seller by a purchaser for a tax erroneously or illegally collected shall not accrue until the purchaser has provided written notice to a seller and the seller has had sixty days to respond. A seller shall be presumed to have a reasonable business practice if in the collection of such tax the seller uses a provider or a system certified by the Director of Revenue and has remitted all tax collected. (Section 144.190)

Monetary allowances from taxes collected shall be provided to certain sellers and certified service providers for collecting and remitting state and local taxes, as described in the act. (Section 144.140)

When an exemption is claimed by a purchaser, a seller shall be required to collect certain information, as described in the act. A seller shall be relieved from collecting and remitting tax if it is determined that the purchaser improperly claimed an exemption. Relief from liability shall not apply to a seller who fraudulently fails to collect tax, or sellers who otherwise improperly accept an exemption certificate, as described in the act. (Section 144.212)

This act repeals a provision which requires the Director to establish brackets showing the amounts of tax to be collected on sales of specified amounts. Instead, the tax computation shall be carried to the third decimal place, and the tax shall be rounded to a whole cent using a method that rounds up to the next cent whenever the third decimal place is greater than four. (Section 144.285).

This act provides that all provisions of law with respect to sales into the state by out-of-state sellers apply to the Compensating Use Tax Law. (Section 144.600)

These provisions are identical to provisions contained in SS#2/SCS/SBs 617, 611, & 667 (2018), are substantially similar to SCS/SB 105 (2017), SCS/SB 795 (2016), HB 726 (2015), HB 727 (2015), and HCS/HB 1356 (2013), and aresimilar to provisions contained in HB 500 (2013), HB 422 (2013), HB 521 (2013), and HB 579 (2013).

DEPARTMENT OF REVENUE RENAMING

This act changes the name of the Department of Revenue to the Department of Taxation and Revenue. (Sections 32.005, 32.006)

This provision is identical to HB 2620 (2018).

STATE BIDS AND CONTRACTS

Current law provides that all purchases in excess of $3,000 shall be based on competitive bids. This act increases such threshold to $10,000. Current law also requires purchases over $25,000 to comply with certain notice provisions. This act increases such threshold to $100,000. This act also provides that the term "lowest and best" shall not consider only the lowest bid price, but also the quality promised under such bid.

This act also authorizes the Commissioner of Administration to hold a reverse auction to procure merchandise, supplies, raw materials, or finished goods if the price is the primary factor in evaluation bids. (Sections 34.040 to 34.047)

These provisions are substantially similar to HB 1701 (2018), HB 2263 (2018), and to provisions contained in HCS/HB 2140 (2018).

RETIREMENT WITHHOLDINGS

This act modifies several tax credits to exclude voluntary retirement withholdings from the tax liability that is eligible for such tax credit. The tax credits modified by this provision include the Infrastructure Tax Credit, Business Facility Tax Credit, Wood Energy Tax Credit, Charcoal Producers Tax Credit, and Dry Fire Hydrant Tax Credit. (Sections 100.286, 100.297, 135.110, 135.305, 135.313, 320.093)

This act also adds voluntary retirement withholdings to the amounts that shall be withheld from gaming winnings. (Section 313.826)

These provisions are identical to provisions contained in HB 2502 (2018).

SENIOR CITIZENS PROPERTY TAX CREDIT

This act prohibits renters from receiving the Senior Citizens Property Tax Credit. (Sections 135.025, 135.030)

PROPERTY TAX DEFINITIONS

This act adds a definition of "solar energy systems" for the purposes of property taxes. (Section 137.010)

MANAGED CARE ORGANIZATIONS

This act modifies the Medicaid managed care reimbursement allowance by applying it, beginning July 1, 2019, to all managed care organizations in Missouri, including those providing benefits to MO HealthNet managed care participants. The reimbursement allowance may be imposed on the basis of revenue or enrollment and may impose differential rates on Medicaid and commercial business. The Department of Social Services shall recognize the cost of the reimbursement allowance as a cost in calculating actuarially sound reimbursement rates. (Sections 208.431 to 208.437)

These provisions are identical to provisions contained in HCS/SS/SCS/SB 775 (2018).

SENIOR SERVICES PROTECTION FUND

This act requires the Director of Revenue to calculate the amount of deductions claimed by corporations for federal tax liability paid during fiscal year 2019, and to annually transfer such amount, not to exceed $40 million, from the General Revenue Fund to the Senior Services Protection Fund. (Section 208.1050)

LONG-ACTING REVERSIBLE CONTRACEPTIVES

This act allows a long-acting reversible contraceptive (LARC) prescribed to a MO HealthNet participant to be transferred to another Mo HealthNet participant if the LARC was not delivered to, implanted in, or used on the original participant. (Section 208.1070)

This provision is identical to HB 1499 (2018), HB 1955 (2018), HB 774 (2017), and HB 1188 (2017).

EMERGENCY BRIDGE REPAIR AND REPLACEMENT FUND

This act creates the Emergency Bridge Repair and Replacement Fund, which shall consist of appropriated money for accelerated replacements and repairs to bridges located on state or interstate highways that are in critical disrepair. (Section 226.228)

This provision is identical to HCS/HB 2153 (2018).

YIELD TAX ON FOREST CROPLANDS

Current law provides for a yield tax on certain cuttings made on forest croplands. This act repeals such yield tax. (Sections 254.075, 254.180, 254.210)

This provision is identical to HB 2480 (2018), and is substantially similar to SB 1006 (2018) and to provisions contained in SS/SCS/SBs 627 & 925 (2018).

MOTOR VEHICLE LICENSE FEES

This act increases several fees relating to motor vehicles. (Sections 301.025 to 306.550)

FANTASY SPORTS OPERATOR FEES

This act modifies several provisions relating to fantasy sports.

Several definitions related to fantasy sports are modified. (Section 313.905)

This act limits a license applicant's liability for the cost of the Gaming Commission's investigation into the applicant's employees, officers, directors, trustees, and principal salaried executive staff officers to $10,000 rather than $50,000. The Commission may grant a waiver of all or a portion of the cost of an investigation.

This act also establishes a graduated annual license renewal fee structure. An operator that made $2 million or more in the previous calendar year shall pay a fee of $5,000. An operator that made less than $2 million but more than $1 million shall pay a fee of $2,500. An operator that made less than $1 million but more than $250,000 shall pay a fee of $1,000. An operator that made $250,000 or less shall not be required to pay an annual license renewal fee.

This act also reduces the annual operation fee from 11.5% of the operator's net revenue from the previous calendar year to 6%. The Commission may suspend an operator's license if such operator fails to apply for an annual license renewal or remit the operation fee. (Section 313.935)

This provision is similar to SCS/SB 886 (2018), HB 1390 (2018), SB 445 (2017), and to provisions contained in HCS/HB 502 (2017).

EFFECTIVE DATES

Certain sections of this act shall become effective on January 1, 2020. Sections relating to managed care organizations shall become effective on July 1, 2019. Sections relating to the Streamlined Sales and Use Tax Agreement shall become effective on January 1 of the first year following a determination by the Director of the Department of Revenue determines that the state of Missouri is not able to require out-of-state sellers with no physical presence in the state to collect and remit state and local sales taxes.

JOSHUA NORBERG