Missouri Senate

Introduced

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 in the 2019 calendar year, this act provides for an additional 1.2% reduction in the top rate of tax. A reduction of 1% will be made on January 1, 2019, and a reduction of 0.2% will be made on January 1, 2020. Such reductions combined with the reduction in current law shall not result in a top rate of tax lower than 4.3%.

This act also provides for an additional 0.2% reduction in the top rate of tax if the U.S. Supreme Court renders a decision, the U.S. Congress passes a law, or the U.S. Constitution is amended, which allows the state to require out-of-state sellers with no physical presence in the state to collect and remit state and local sales taxes.

The Director of Revenue shall adjust the tax tables as provided in the act. (Section 143.011)

This act repeals a provision of law that allows an employer to retain a percentage of withholding taxes due if such employer remits the withholding taxes on or before the date the taxes are due. (Section 143.261)

For all tax years beginning on or after January 1, 2019, this act eliminates the state income tax deduction for an individual's federal income tax liability. (Section 143.171)

CORPORATE INCOME TAX

For all tax years beginning on or after January 1, 2019, this act reduces the corporate income tax rate from 6.25% to 4.25%. (Section 143.071)

For all tax years beginning on or after January 1, 2019, this act eliminates the state income tax deduction for an corporation's federal income tax liability. (Section 143.171)

EARNED INCOME TAX CREDIT

This act establishes the Missouri Earned Income Tax Credit Act.

For all tax years beginning on or after January 1, 2019, this act creates a tax credit in the amount of twenty percent of the amount of a taxpayer's federal earned income tax credit. The tax credit shall 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 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 act is substantially similar to SB 197 (2017), SB 342 (2017), HCS/HB 109 (2017), and to a provision contained in 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).

MOTOR FUEL TAX

Beginning on January 1, 2019, this act increases the rate of motor fuel tax from $0.17/gallon to $0.18/gallon. For all calendar years beginning on or after January 1, 2020, the rate of motor fuel tax shall be increased to $0.21/gallon. (Section 142.803)

This provision is substantially similar to HB 995 (2015), HB 1168 (2015), and to a provision contained in HCS/SS/SB 623 (2016), and is similar to HB 1581 (2016) and to a provision contained in HB 992 (2017), HB 993 (2017), SS/SB 540 (2015), HB 738 (2015), HB 1360 (2015).

SENIOR SERVICES PROTECTION FUND

This act requires the Director of the Department of Revenue to calculate the amount of corporate income tax deductions for federal income tax liability claimed during fiscal year 2018. Such calculated amount, not to exceed forty million dollars, shall annually be deposited in the Missouri Senior Services Protection Fund. Moneys in the fund shall be allocated for services for low-income seniors and people with disabilities. (Section 208.1050)

LOCAL SALES TAX RATES

For all tax years beginning on or after January 1, 2019, this act places a cap of 7.275% on the combined rates of local sales taxes for any given taxing jurisdiction. (Section 32.087)

STREAMLINES 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, by repealing the ability for political subdivisions to opt out of the sales tax holidays, 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 substantially similar to SCS/SB 105 (2017), SCS/SB 795 (2016), HB 726 (2015), HB 727 (2015), and HCS/HB 1356 (2013), and is similar to provisions contained in HB 500 (2013), HB 422 (2013), HB 521 (2013), and HB 579 (2013).

TAX CREDITS

This act requires that, prior to the sale, assignment, or any other transfer of ownership of a tax credit, the owner of a tax credit shall remit a transfer fee in the amount of five percent of the value of the tax credit to the Department of Revenue. Such fee shall be a liability of the seller.

The Department of Revenue shall provide confirmation to the purchaser that the transfer fee has been paid, and such purchaser shall present the confirmation when redeeming the tax credit.

All fees collected under this provision shall be credited to the General Revenue Fund. (Section 135.805)

This act requires the Department of Revenue to prepare and submit an annual report to the General Assembly that includes information on each tax credit program, including the administering agency and the number and amount of tax credits authorized, issued, and redeemed for each program. The report shall also include a list of taxpayers and other entities that have received certain tax credits in the previous calendar year, as described in the act. (Section 135.825)

This provision is identical to a provision contained in HB 982 (2017) and SCS/SBs 285 & 17 (2017).

This act places a requirement on certain economic development tax credit programs that an administering agency not award tax credits to an applicant unless the proposed project provides a net fiscal benefit to the state of at least $2.50 for each $1.00 in state benefits awarded. This provision shall apply to the Business Use Incentives for Large-Scale Development (BUILD) Program, the Business Facilities Tax Credit, the Low Income Housing Tax Credit, the Historic Preservation Tax Credit, and the Missouri Works Program. (Sections 100.730, 135.110, 135.352, 253.559, and 620.2010)

LOW INCOME HOUSING TAX CREDIT

This act implements a cap of $60 million on the aggregate amount of tax credits that may be authorized in a given fiscal year under the Missouri Low-Income Housing Tax Credit program.

This provision is similar to a provision contained in SCS/SBs 285 & 17 (2017).

This act also implements cap of $2 million on the amount of tax credits that may be awarded to a single project in a given fiscal year.

Tax credits shall not be awarded under this program if the Missouri Housing Development Commission determines that the project would result in a net fiscal benefit to the state less than $2.50 for each $1.00 in state benefits awarded, or if the Commission determines that an applicant is not likely to complete the project as proposed. (Section 135.352)

HISTORIC PRESERVATION TAX CREDIT

Currently, the Department of Economic Development shall not approve tax credits for the rehabilitation of historic structures which, in the aggregate, exceed $140 million, increased by any amount of tax credits for which approval shall be rescinded for any reason. For each fiscal year beginning on or after July 1, 2018, this act reduces the aggregate cap to $30 million.

This provision is similar to a provision contained in SCS/SB 6 (2017) and SB 1112 (2016).

This act also implements cap of $2 million on the amount of tax credits that may be awarded to a single project in a given fiscal year.

For all fiscal years beginning on or after July 1, 2018, no tax credits shall be authorized under this program for residential projects. (Section 253.550)

Tax credits shall not be awarded under this program if the Department of Economic Development determines that the project would result in a net fiscal benefit to the state less than $2.50 for each $1.00 in state benefits awarded. Applicants shall also provide evidence of financial stability, creditworthiness, and the ability to complete the project as proposed. (Section 253.559)

CAPITOL COMPLEX TAX CREDIT ACT

This act creates the Capitol Complex Tax Credit Act.

The Capitol Complex Fund, which is created by this act, shall be authorized to receive any eligible monetary donation, as defined in the act, and shall be segregated into two accounts: a rehabilitation and renovation account, and a maintenance account. Ninety percent of the revenues deposited into the fund shall be placed in the rehabilitation and renovation account and seven and one-half percent of revenues deposited in the fund shall be placed in the maintenance account. The remaining two and one-half percent of the funds may be used for the purposes of fundraising, advertising, and administrative costs.

The choice of projects for which money is to be used, as well as the determination of the methods of carrying out the project and the procurement of goods and services, shall be made by the Commissioner of Administration. No moneys shall be released from the fund for any expense without the approval of the Commissioner of Administration.

For all taxable years beginning on or after January 1, 2018, any qualified donor, as defined in the act, shall be allowed a tax credit equal to fifty percent of the monetary donation amount. Any amount of tax credit that exceeds the qualified donor's state income tax liability may be refunded or carried forward for the following four years.

For all taxable years beginning on or after January 1, 2018, a qualified donor shall be allowed a tax credit equal to thirty percent of the value of an eligible artifact donation, as defined in the act. Any amount of tax credit that exceeds the donor's tax liability shall not be refunded for artifacts, but the credit may be carried forward for four subsequent years.

The DED shall not issue tax credits under this act or the Public Buildings Preservation Tax Credit, which is created by this act, in excess of $10 million per year in the aggregate. Donations received in excess of the cap shall be placed in line for tax credits the following year. Alternatively a donor may donate without receiving the credit or may request that their donation is returned.

Tax credits issued for donations under this act are not subject to any fee. Tax credits may be assigned, transferred, sold, or otherwise conveyed.

This act shall sunset six years after August 28, 2018, unless reauthorized by the General Assembly. (Section 620.3210)

This provision is substantially similar to a provision contained in SCS/SB 6 (2017) and SB 1112 (2016).

This act also allows the DED to charge a fee in an amount not to exceed one percent of any tax credit issued to a recipient for the rehabilitation of historic structures. Any revenues generated by such a fee shall be deposited in the Capitol Complex Fund. (Section 620.3200)

This provision is identical to a provision contained in SCS/SB 6 (2017).

JOSHUA NORBERG