SB 5
Modifies provisions relating to taxation
Sponsor:
LR Number:
1041H.06C
Last Action:
5/10/2021 - H Calendar Senate Bills for Third Reading w/HCS (In Fiscal Review)
Journal Page:
Title:
HCS SB 5
Calendar Position:
Effective Date:
August 28, 2021
House Handler:

Current Bill Summary

HCS/SB 5 - This act modifies several provisions relating to taxation.

COMMUNITY IMPROVEMENT DISTRICTS

Current law requires a petition for the creation of a community improvement district (CID) to include a five year plan describing the improvements to be made in the district. This act requires such plan to include the anticipated sources of funds and the term of such sources used to pay the costs of such improvements. This act also limits the duration of a CID to twenty-seven years for CIDs formed after August 28, 2021.

Upon the creation of a district, this act requires the municipal clerk of the municipality to report in writing to the State Auditor in addition to the Missouri Department of Economic Development. (Section 67.1421)

For CIDs established after August 28, 2021, in which there are no registered voters, this act requires at least one director to be a person who resides within the municipality, is registered to vote, has no financial interest in any real property or business operating within the CID, and to not be a relative within the second degree of consanguinity to an owner of real property or a business operating within the CID. (Section 67.1451)

This act requires all construction contracts entered into after August 28, 2021, and that are in excess of $5,000 shall be competitively bid and shall be awarded to the lowest and best bidder. (Section 67.1461)

In its annual report filed with the Department of Economic Development, this act requires a CID to include the dates the district adopted its annual budget, submitted its proposed annual budget to the municipality, and submitted its annual report to the municipal clerk. (Section 67.1471)

These provisions are substantially similar to HB 213 (2021) and to provisions contained in HS/HCS/HB 441 (2021).

AIM ZONES

Under current law, no advanced industrial manufacturing (AIM) zone may be established after August 28, 2023. This act extends such date to August 28, 2030. (Section 68.075)

This act is identical to SB 636 (2020) and HB 2334 (2020), and to a provision contained in HCS/SS/SCS/SB 570 (2020), HCS/SS/SCS/SB 594 (2020), HCS/SB 686 (2020), HCS/SCS/SB 725 (2020), HCS/SB 782 (2020), and HCS/SCS/SB 867 (2020).

TAX INCREMENT FINANCING

This act modifies several provisions relating to tax increment financing.

This act modifies the definitions of "blighted area" and "conservation area", and creates new definitions for "port infrastructure projects", "retail area", and "retail infrastructure projects". (Section 99.805)

This act modifies local tax increment financing projects by providing that a study shall be conducted by a land use planner, urban planner, licensed architect, licensed commercial real estate appraiser, or licensed attorney, which details how the area meets the definition of an area eligible to receive tax increment financing.

This act also provides that retail areas, as defined in the act, shall not receive tax increment financing unless such financing is exclusively utilized to fund retail infrastructure projects, as defined in the act, or unless such area is a blighted or conservation area. (Section 99.810)

Current law requires cities, towns, and villages located in St. Louis County, St. Charles County, or Jefferson County to establish a twelve member commission that shall include six members appointed by the county executive or presiding commissioner prior to the adoption of any resolution or ordinance approving tax increment financing projects. This act adds Cass County to such list of counties. (Section 99.820)

This act prohibits new projects from being authorized in any Greenfield area. (Section 99.843)

This act also prohibits new projects from being authorized in an area designated as a flood plain by the Federal Emergency Management Agency unless such projects are located in 1) Jackson, Platte, Clay, or Cole counties; 2) the cities of Springfield, St. Joseph, or Hannibal, 3) in a port district, provided such financing is utilized for port infrastructure projects; or 4) in a levee or drainage district created prior to August 28, 2021. Projects in flood plains shall not be authorized in St. Charles County unless the redevelopment area actually abuts a river or major waterway, as described in the act. (Section 99.847)

Current law allows districts and counties imposing a property tax for the purposes of providing emergency services to be entitled to reimbursement from the special allocation fund of a portion of the district's or county's tax increment. For projects approved after August 28, 2021, this act modifies such provision to allow reimbursement to ambulance districts, fire protection districts, and governing bodies operating a 911 center providing dispatch services and which impose economic activity taxes for such purposes. (Section 99.848)

These provisions are identical to SS/SB 22 (2021), are substantially similar to HB 1612 (2020), HCS/SS/SCS/SB 108 (2019), and HB 698 (2019), and to provisions contained in HCS/SS/SCS/SB 570 (2020), HCS/SCS/SB 616 (2020), and HCS/SS#2/SB 704 (2020), and are similar to SB 871 (2020), SB 311 (2019), HB 32 (2019), and SS/SCS/SB 859 (2018).

INCOME TAXES

For all tax years beginning on or after January 1, 2022, this act provides that no income tax shall be imposed on the first $50,000 of income of any person who is under twenty-three years of age on the first day of the tax year. (Section 143.088)

This provision is identical to a provision contained in HCS/SB 365 (2021) and is substantially similar to HB 1292 (2021).

Current law allows a taxpayer to deduct from his or her Missouri adjusted gross income a portion of his or her federal income taxes paid, exempting federal income tax credits received for the 2020 tax year under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act when determining the amount of federal income tax liability allowable as a deduction. This act also exempts federal income tax credits received for the 2020 tax year under the supplemental CARES Act, as well as any other federal COVID-19-related income tax credits. (Section 143.171)

Current law also requires taxpayers who itemize deductions to include any federal income tax refund amounts in his or her Missouri adjusted gross income if such taxpayer previously claimed a deduction for federal income tax liability on his or her Missouri income tax return. This act provides that any amount of any federal income tax refund attributable to COVID-19-related tax credits in the supplemental CARES ACT, as well as any other federal COVID-19-related income tax credits, shall not be included in the taxpayer's Missouri adjusted gross income. (Section 143.121)

These provisions contain an emergency clause.

These provisions are identical to provisions contained in HCS/SB 365 (2021) and SCS/HB 991 (2021), and are substantially similar to SCS/SBs 405, 522, & 428 (2021), and to a provision contained in HCS/SB 676 (2020), HCS/SS#2/SB 704 (2020), and HCS/SS/SCS/SB 570 (2020).

QUALIFIED RESEARCH EXPENSES TAX CREDIT

A tax credit for a portion of qualified research expenses, as defined in federal law, expired on December 31, 2004. This act reauthorizes such tax credit, which shall be equal to 15% of qualified research expenses, or 20% of qualified research expenses if done in conjunction with a public or private college or university located in this state, as described in the act. Tax credits shall not be issued for any qualified research expenses that exceed 200% of the taxpayer's average qualified research expenses incurred during the three immediately preceding tax years. Tax credits issued under the act shall not be refundable, but may be carried forward for the twelve succeeding tax years, and may be transferred, sold, or assigned. A taxpayer shall not receive tax credits in excess of $300,000 in a calendar year.

This act also authorizes a sales tax exemption for the purchase of qualified research and development equipment and property, as defined in the act.

Tax credits issued under the act shall not exceed ten million dollars in any year, provided that five million dollars of such tax credits shall be reserved for minority business enterprises, women's business enterprises, and small businesses, as defined in the act.

The provisions of this act shall sunset on December 31, 2027, unless reauthorized by the General Assembly. (Section 620.1039)

This provision is substantially similar to SCS/SB 545 (2021) and HB 690 (2021).

MISSOURI WORKS PROGRAM

Current law requires the Department of Economic Development to recapture Missouri Works benefits for a qualifying company that fails to timely file the annual report required by law. This act requires the Department to use multiple means of communication to contact a qualifying company that has failed to file a timely report, and to grant a thirty day extension to such company if requested. A failure to submit the report by the end of the extension shall result in the recapture of Missouri Works benefits for such qualifying company as provided under current law. A qualified company with an annual report due between January 1, 2020, and September 1, 2021, shall not be subject to the recapture of benefits for a failure to timely submit such annual report as long as such report is submitted by November 1, 2021. (Section 620.2020)

This provision contains an emergency clause.

This provision is identical to HCS/HBs 1339 & 1324 (2021) and to a provision contained in HCS/SB 365 (2021), and is similar to SB 227 (2021).

TARGETED INDUSTRIAL MANUFACTURING ENHANCEMENT ZONES

This act establishes the "Targeted Industrial Manufacturing Enhancement Zones Act".

This act allows any two or more contiguous or overlapping political subdivisions, as defined in the act, to create targeted industrial manufacturing enhancement (TIME) zones for the purpose of completing infrastructure projects to promote economic development. Prior to the creation of a TIME zone, each political subdivision shall propose an ordinance or resolution that sets forth the names of the political subdivisions which will form the zone, the general nature of the proposed improvements, the estimated cost of such improvements, the boundaries of the proposed TIME zone, and the estimated number of new jobs to be created in the TIME zone. The political subdivisions shall hold a public hearing prior to approving the ordinance or resolution creating the TIME zone.

This act allows the zone board governing the TIME zone to retain twenty-five percent of withholding taxes on new jobs created within the TIME zone to fund improvements made in the TIME zone. Prior to retaining such withholding taxes, the zone board shall enter into an agreement with the Department of Economic Development. Such agreement shall specify the estimated number of new jobs to be created, the estimated average wage of new jobs to be created, the estimated net fiscal impact of the new jobs, the estimated costs of improvements, and the estimated amount of withholding tax to be retained over the period of the agreement. The Department shall not approve an agreement unless the zone board commits to the creation of a certain number of new jobs, as described in the act.

The term of such agreement shall not exceed ten years. A zone board may apply to the Department for approval to renew any agreement. In determining whether to approve the renewal of an agreement, the Department shall consider the number of new jobs created and the average wage and net fiscal impact of such new jobs, and the outstanding improvements to be made within the TIME zone, the funding necessary to complete such improvements, and any other factor the Department requires. The Department may approve the renewal of an agreement for a period not to exceed ten years. If a zone board has not met the new job creation requirement s by the end of the agreement, the Department shall recapture the withholding taxes retained by the zone board.

The zone board shall submit an annual report to the Department and to the General Assembly, as described in the act.

No political subdivision shall establish a TIME zone with boundaries that overlap the boundaries of an advanced industrial manufacturing (AIM) zone.

The total amount of withholding taxes retained by TIME zones under this act shall not exceed $5 million per year.

No new TIME zone shall be created after August 28, 2024. (Section 620.2250)

This provision is identical to HCS/HB 379 (2021) and to a provision contained in SCS/SB 174 (2021), HCS/SS/SCS/SB 594 (2020), HCS/SS/SCS/SB 570 (2020), HCS/SCS/SB 725 (2020), and SS#2/SCS/HCS/HB 1854 (2020), and is substantially similar to HCS/HB 1695 (2020).

JOSH NORBERG