SB 968
Modifies provisions relating to business entities
Sponsor:
LR Number:
4530H.09C
Last Action:
5/11/2022 - Requests to Recede or Grant Conference Calendar
Journal Page:
Title:
HCS SS#2 SCS SB 968
Calendar Position:
Effective Date:
August 28, 2022
House Handler:

Current Bill Summary

HCS/SS#2/SCS/SB 968 - This act modifies provisions relating to business entities.

BIDDING ON CERTAIN PUBLIC PROJECTS (Section 8.250)

Under current law, all contracts for projects, the cost of which exceeds $25,000, entered into by any city containing 500,000 inhabitants or more shall be let to the lowest, responsive, responsible bidder or bidders after notice and publication of an advertisement for five days in a daily newspaper in the county where the work is located, or at least twice over a period of ten or more days in a newspaper in the county where the work is located, and in two daily newspapers in the state which do not have less than 50,000 daily circulation, and by such other means as are determined to be most likely to reach potential bidders. This act permits posting invitations to bid on the website of the city or through an electronic procurement system as well.

Current law also provides that all contracts for projects, the cost of which exceeds $100,000, entered into by an officer or agency of this state shall be let to the lowest, responsible bidder or bidders based on pre-established criteria after notice and publication of an advertisement for five days in a daily newspaper in the county where the work is located, or at least over a period of ten or more days in a newspaper in the county where the work is located and in one daily newspaper in the state which does not have less than 50,000 daily circulation and by such other means as determined to be most likely to reach potential bidders. This act permits posting invitations to bid on the website of the officer or agency or through an electronic procurement system as well.

This provision is identical to a provision in HCS/HB 2289 (2022) and is similar to a provision in HCS/SS#3/SCS/SB 758 (2022).

MISSOURI DISASTER FUND (Section 44.032)

This act allows rural electric cooperatives, as defined in the act, to receive funds from the Missouri Disaster Fund.

This provision is identical to a provision in the truly agreed to and finally passed HCS/SS#2/SCS/SB 745, the perfected SS/SCS/SB 756 (2022), SS/SCS/SB 931 (2022), SCS/HCS/HB 1734 (2022), and HCS/HB 2328 (2022).

PERSONAL PRIVACY PROTECTION ACT (Section 105.1500)

This act establishes the Personal Privacy Protection Act prohibiting public agencies, as defined in the act, from disclosing or requiring the disclosure of personal information, as defined in the act. Specifically, public agencies are prohibited from:

• Requiring any individual to provide the public agency with personal information or otherwise compel the release of such personal information;

• Requiring any entity exempt from federal income taxation under Section 501(c) of the Internal Revenue Code to provide the public agency with personal information or otherwise compel the release of personal information;

• Releasing, publicizing, or otherwise publicly disclosing personal information in possession of a public agency; or

• Requesting or requiring a current or prospective contractor or grantee with the public agency to provide the public agency with a list of entities exempt from federal income tax under Section 501(c) of the Internal Revenue Code to which it has provided financial or nonfinancial support.

The act contains various exceptions to these prohibitions.

Any person or entity may bring a civil action for appropriate injunctive relief, damages, or both. Damages may be not less than $2,500 to compensate for injury or loss caused by each violation of this act and, for an intentional violation, a sum of money not to exceed three times the sum of damages assessed. A court may additionally award all or a portion of the costs of litigation, including reasonable attorney fees and witness fees, to the complainant in the action if the court determines that the award is appropriate.

This provision is similar to a provision in the perfected SS/SCS/SB 741 (2022), SCS/HCS/HB 2120 (2022), HCS/HB 1030 (2021), SB 464 (2021) and a provision in HCS/SS/SB 333 (2021).

LLC CAMPAIGN CONTRIBUTIONS (Section 130.029)

The act permits any limited liability company that has not elected to be classified as a corporation under federal law to make campaign contributions to any committee, provided such limited liability company has been in existence for at least one year prior to making such contribution and such entity submits a form to the Missouri Ethics Commission indicating that such LLC is a legitimate business with a legitimate business interest and is not created for the sole purpose of making campaign contributions.

This provision is identical to a provision in the perfected SS/SCS/SB 931 (2022).

TAX CREDIT ACCOUNTABILITY ACT (Sections 135.800-135.825)

This act modifies the definition of "domestic and social tax credits" by removing the health care access fund tax credit, which has expired, and by adding the previously authorized health, hunger, and hygiene tax credit.

This act also modifies the definition of "recipient" to provide that such term does not include the transferee of a tax credit. (Section 135.800)

This act requires an applicant for a tax credit, as a part of the application process, to sign a statement affirming that the applicant is aware of the reporting requirements and penalty provisions of the Tax Credit Accountability Act. (Section 135.802)

Current law requires the recipients of tax credits to file annual reports that includes either the estimated or actual project costs. This act requires such reports to include both the estimated and actual project costs.

Additionally, current law requires the administering agency of a tax credit to make available the names of each tax credit recipient. This act allows such information to be made available either on the Department of Economic Development's website or through the Missouri Accountability Portal.

This act modifies a provision providing that a person or entity shall not be required to submit an annual report until at least one year after the credit issuance date by making such time period one month. (Section 135.805)

Current law provides for penalties for a failure to submit required annual reports, with a penalty of 2% of the value of the tax credits for each month of delinquency of more than six months but less than one year, and a penalty of 10% of the value of the credits for each month of delinquency of more than one year. This act modifies such penalties. Failure to file the first annual report for more than three months shall result in a penalty of 1% of the value of the credits, not to exceed 10%. Failure to file the second or third annual report for more than three months shall result in a penalty of 1.5% of the value of the credits, not to exceed 20% per report.

Current law provides for a penalty equal to 100% of the value of the credits for fraud in the tax credit application process. This act increases such penalty to 200% for fraud in the application or reporting process. This act also provides that the Administrative Hearing Commission shall determine whether fraud has occurred. The Department of Revenue, the Department of Economic Development, or the administering agency may file a fraud complaint to the Administrative Hearing Commission, as described in the act.

Current law requires an administering agency to send a notice of delinquency ninety days after the annual report is due. This act changes such requirement to thirty days. This act also allows the Department of Revenue to enter into agreements to compromise or abate some or all of any penalties administered under the act. (Section 135.810)

Current law requires tax credit applicants to forfeit and repay tax credits if such applicant purposely and directly employs unauthorized aliens. This act changes such standard to an applicant knowingly employing unauthorized aliens. (Section 135.815)

These provisions are identical to provisions in SCS/SB 868 (2022).

S CORP TAX CREDIT (Section 143.081)

Current law authorizes a tax credit for the amount of income tax paid to another state for income that is also taxed in this state. This act allows such tax credit to be claimed by resident shareholders of an S corporation for the amount of tax imposed by this state on income earned in another state but not taxed by such state.

This provision is identical to a provision in the perfected SS/SCS/SB 931 (2022).

HEALTH INSURANCE DEDUCTION TAX CREDIT (Section 143.119)

Current law authorizes a refundable tax credit for self-employed taxpayers who are ineligible for the federal health insurance deduction. This act modifies such tax credit by making it nonrefundable, nontransferable, and not eligible to be carried forward or backward to any other tax year. This act also requires a taxpayer to have a Missouri income tax liability of less than $3,000. A taxpayer shall not be able to claim such tax credit and the state health insurance deduction in current law for the same tax year.

This tax credit shall sunset on December 31, 2028, unless reauthorized by the General Assembly.

This provision is identical to a provision in SCS/SB 868 (2022).

SALT PARITY ACT (Section 143.436)

This act establishes the "SALT Parity Act".

Current law provides that, in lieu of a corporate income tax on a pass-through entity, shareholders of such pass-through entity shall pay income tax on the shareholder's pro rata share of the entity's income attributable to Missouri. For tax years ending on or after December 31, 2022, this act allows the pass-through entity to elect to pay the tax, as described in the act. The tax shall be equal to the sum of each member's income and loss items, as described in federal law, reduced by a deduction allowed for qualified business income, as described in federal law, and modified by current provisions of state law relating to the taxation of pass-through entities, with such sum multiplied by the highest rate of tax in effect for the state personal income tax.

A nonresident who is a member, as defined in the act, shall not be required to file a tax return for a tax year if, for such tax year, the only income derived from this state for such member is from one or more affected business entities, as defined in the act, that has elected to pay the tax imposed under this act.

Each partnership and S corporation shall report to each of its members, for each tax year, the member's pro rata share of the tax imposed by this act.

Each taxpayer, including part-year residents, that is subject to the state personal income tax shall be allowed a tax credit if such taxpayer is a member of an affected business entity that elects to pay the tax imposed by this act. The tax credit shall be equal to the taxpayer's pro rata share of the tax paid under this act. Such tax credit shall be nonrefundable, but may be carried forward to subsequent tax years, except that a tax credit authorized for taxes paid to other states shall not be carried forward.

Each corporation that is subject to the state corporate income tax shall be allowed a tax credit if such corporation is a member of an affected business entity that elects to pay the tax imposed by this act. The tax credit shall be equal to the corporation's pro rata share of the tax paid under this act. Such tax credit shall be nonrefundable, but may be carried forward to subsequent tax years.

Partnerships and S corporations may elect to pay the tax imposed under this act by submitting a form to be provided by the Department of Revenue. A separate election shall be made for each tax year. Such election shall be signed either by each member of the electing entity, or by any officer, manager, or member of the electing entity who is authorized to make such election and who attests to having such authorization under penalty of perjury.

An affected business entity shall designate an affected business entity representative for the tax year to act on behalf of the affected business entity in any action required or permitted to be taken by an affected business entity pursuant to this act, a proceeding to protest taxes, an appeal to the Administrative Hearing Commission, or review by the judiciary with respect to such action, and the affected business entity's members shall be bound by those actions.

This provision is identical to SB 1154 (2022) and to a provision in the perfected SS/SCS/SB 931 (2022).

UNEMPLOYMENT COMPENSATION (Sections 288.132, 288.133, & Section B)

The act provides that any employer required to make contributions under the unemployment compensation laws shall pay an annual unemployment automation adjustment equal to .02% of its total taxable wages for the twelve-month period ending the preceding June 30th. The Division of Employment Security is permitted to lower this rate under certain circumstances.

This provision has a delayed effective date of January 1, 2023.

This provision is substantially similar to SB 876 (2022).

ALCOHOLIC BEVERAGE LICENSES (Section 311.060)

The act amends the requirement of 3 years of continuous residency in the state of officers, directors, and stockholders owning or controlling 60% or more of a corporation for qualification for a license for the sale of liquor and now requires such residency on the filing date of application for such license.

This provision is identical to HB 1855 (2022).

ENTERTAINMENT DISTRICTS (Section 311.094)

provides that the city of Branson may establish Branson Landing as an entertainment district in which establishments may sell intoxicating liquor by the drink for consumption within the common areas of the entertainment district from certain hours as provided in the act. The holder of the license is solely responsible for alcohol violations occurring at its establishment and in any common areas.

INVOLUNTARY DISSOLUTION OF LLCS (Section 347.143)

The act modifies the procedure by which a court may decree dissolution of an LLC. Specifically, the court may issue such a decree if it determines:

It is not reasonably practicable to carry on the business in conformity with the operating agreement;

Dissolution is reasonably necessary for the protection of the rights or interests of the complaining members;

The business of the limited liability company has been abandoned;

The management of the limited liability company is deadlocked or subject to internal dissension; or

Those in control of the limited liability company have been found guilty of, or have knowingly countenanced, persistent and pervasive fraud, mismanagement, or abuse of authority. (Section 347.143)

This provision is identical to a provision in the perfected SS/SCS/SB 931 (2022) and to a provision in SCS/SB 877 (2022).

CHARITABLE ORGANIZATIONS (Section 407.475)

Under this act, the state shall not impose any additional annual filing or reporting requirements on a charitable organization that are more stringent, restrictive, or expansive than the report already required to be submitted to the Attorney General's office unless such filing or report is specifically required by federal law. This provision shall not apply to labor organizations, state grants or contracts, or investigations by the Attorney General of charitable organizations as set forth in state statute.

The restriction on additional annual filing or reporting requirements on a charitable organization shall not apply when such organization is providing any report or disclosure required by state law to be filed with the Secretary of State.

These provisions are similar to HB 1490 (2022), provisions in CCS/HCS/SS/SB 333 (2021), and to HB 245 (2021).

SELF-STORAGE (Section 415.415)

Under current law, if the owner of personal property in a self-storage facility defaults on rent or other charges as set forth in statute and the operator of the facility chooses to sell such personal property to satisfy the lien on the property, notice of sale of the defaulted property shall be made in the classified section of a newspaper in the jurisdiction where the sale is to be held. This act allows the seller to also advertise in any commercially reasonable manner. The manner of advertisement shall be deemed commercially reasonable if at least 3 independent bidders attend or view the sale at the time and place advertised.

This provision is identical to SB 885 (2022).

BUSINESS COVENANTS (Section 431.204)

This act provides that a reasonable covenant in writing promising not to solicit, induce, persuade, encourage, accept business from, or otherwise interfere with, directly or indirectly, a business entity's customers shall be enforceable if certain requirements are met.

If a covenant is overbroad, overlong, or otherwise not reasonably necessary to protect the protectable interests of the business entity seeking enforcement of the covenant, a court shall modify the covenant, enforce the covenant as modified, and grant only the relief reasonably necessary to protect such interests.

This provision shall not be construed to limit an owner's ability to seek or accept employment with another business entity as stated in the act.

REQUIREMENTS FOR PUBLIC NOTICES (Sections 493.050 & 493.070)

The act modifies the requirements for a newspaper to be able to publish public advertisements, orders of publication required by law, and legal publications affecting the title to real estate. Specifically, such publications shall be published in some daily, triweekly, semiweekly, or weekly newspaper of general circulation in the county where located, and such newspaper shall have:

· Been admitted to the post office as periodicals class matter in the city of publication;

· Been either published regularly and consecutively for a period of one year, rather than 3 years, with a certain exception, or a purchased or newly established newspaper that meets the requirements of the act; and

· A list of bona fide subscribers who have paid or agreed to pay a stated price for a subscription for a definite period of time.

These provisions are identical to provisions in the perfected HCS/HB 2289 (2022).

CIVIL ACTIONS BASED ON PUBLIC EXPRESSION (Section 537.529)

This act establishes the "Uniform Public Expression Protection Act". Currently, any action against a person for conduct or speech undertaken or made in connection with a public hearing or meeting in a quasi-judicial proceeding before a tribunal or decision-making body of the state or a political subdivision thereof is subject to a special motion to dismiss, a motion for judgment on the pleadings, or motion for summary judgment and any such motion shall be considered by the court on a priority or expedited basis. This act repeals such provision and provides procedures for dismissal of causes of action asserted in a civil action based on a person's:

(1) Communication in a legislative, executive, judicial, administrative, or other governmental proceeding;

(2) Communication on an issue under consideration or review in a legislative, executive, judicial, administrative, or other governmental proceeding; or

(3) Exercise of the right of freedom of speech or of the press, the right to assemble or petition, or the right of association, guaranteed by the United States Constitution or the Missouri Constitution, on a matter of public concern.

However, this act shall not apply to a cause of action asserted:

(1) Against a governmental unit, as described in the act, or an employee or agent of a governmental unit acting in an official capacity;

(2) By a governmental unit or an employee or agent of a governmental unit acting in an official capacity to enforce a law to protect against an imminent threat to public health or safety; or

(3) Against a person primarily engaged in the business of selling or leasing goods or services if the cause of action arises out of a communication related to the sale or lease of such goods or services.

No later than 60 days after a party is served with a complaint, cross-claim, counterclaim, third-party claim, or other pleading that asserts a cause of action covered by this act, or at a later time upon a showing of good cause, a party may file a special motion to dismiss. The court shall hear and rule on such motion no later than 60 days after the filing of the motion, unless the court orders a later hearing to allow for limited discovery or upon good cause. However, this act provides that the court shall hear and rule on the motion for dismissal no later than 60 days after the order allowing for discovery.

This act provides that all other proceedings between the moving party and the responding party in the action, including discovery and any pending hearings or motions, shall be stayed upon the filing of the special motion to dismiss. Additionally, this act provides that the court may stay, upon motion by the moving party, a hearing or motion involving another party or discovery by another party if a ruling on such hearing or motion or discovery relates to a legal or factual issue material to the special motion to dismiss.

Any stay pursuant to this act shall remain in effect until the entry of an order ruling on the special motion to dismiss and the expiration of the time to appeal the order. A moving party may appeal an order denying the special motion to dismiss in whole or in part within 21 days of such order. If a party appeals an order ruling on a special motion to dismiss, this act provides that all proceedings between all parties be stayed until the conclusion of the appeal.

The court may allow discovery if a party shows that specific information is necessary to establish whether a party has satisfied or failed to satisfy the requirements of this act and such information is not reasonably available without discovery. Additionally, a motion for costs and expenses, voluntarily dismissal, or a motion to sever shall not be stayed. During a stay, the court upon good cause may hear and rule on any motions unrelated to the special motion to dismiss and any motions seeking a special or preliminary injunction to protect against an imminent threat to public health or safety.

In ruling on a special motion to dismiss, this act provides that the court shall consider the parties' pleadings, the motion, any replies and responses to the motion, and any evidence that could be considered in a ruling on a motion for summary judgment. The court shall dismiss the cause of action with prejudice if:

(1) The moving party has established that the cause of action is covered by this act;

(2) The responding party has failed to establish that this act does not apply to the cause of action; and

(3) Either the responding party failed to establish a prima facie case as to each essential element of the cause of action, or the moving party has established that the responding party failed to state a cause of action upon which relief can be granted or that there is no genuine issue as to any material fact and that the party is entitled to judgment as a matter of law.

A voluntary dismissal without prejudice of a cause of action that is subject to a special motion to dismiss pursuant to this act shall not affect the moving party's right to obtain a ruling on the motion and seek costs, reasonable attorneys' fees, and reasonable litigation expenses. Additionally, if the moving party prevails on the motion, this act provides that such costs, fees, and expenses shall be awarded to the moving party. A voluntary dismissal with prejudice of a cause of action that is subject to a special motion to dismiss establishes that the moving party prevailed on the motion. The responding party shall be entitled to such costs, fees, and expenses if the responding party prevails on the motion and the court finds that the motion was frivolous or filed solely with the intent to delay the proceeding.

Finally, this provision applies to causes of action filed or asserted on or after August 28, 2022.

This provision is identical to HB 2624 (2022) and substantially similar to SB 1219 (2022).

RESEARCH EXPENSES TAX CREDIT (Section 620.1039)

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.

This provision shall sunset on December 31, 2028, unless reauthorized by the General Assembly.

This provision is identical to SB 688 (2022) and to a provision in the perfected SS/SCS/SB 931 (2022).

REGULATORY SANDBOX ACT (Sections 620.3900-620.3930)

This act establishes the "Regulatory Sandbox Act", which creates the Regulatory Relief Office within the Department of Economic Development. The Regulatory Relief Office shall administer the provisions of the act with the purpose of identifying state laws or regulations that could potentially be waived or suspended for participating businesses during a 2-year period in which the participating business demonstrates an innovative product offering to consumers.

The Regulatory Relief Office shall maintain a web page on the Department's website that invites residents and businesses to make suggestions regarding laws and regulations that could be modified or eliminated to reduce the regulatory burden of residents and businesses in the state. (Section 620.3905)

Upon the receipt of a report from all applicable agencies, the Regulatory Relief Office shall provide the application and associated reports to the General Regulatory Sandbox Program Advisory Committee, which is created by the act. The Advisory Committee shall be composed of eight members, as described in the act. The Advisory Committee shall advise and make recommendations to the Regulatory Relief Office on whether to approve applications to the Sandbox Program, and may meet at its own discretion to override a decision of the Regulatory Relief Office on the admission or denial of an applicant to the Sandbox Program, provided such override is decided with a majority vote of the members of the Advisory Committee, and further provided that such vote shall be taken within 10 business days of the Regulatory Relief Office's decision. Meetings of the Advisory Committee shall not be considered public meetings for the purposes of the Sunshine Law except in certain situations (Section 620.3910)

The Regulatory Relief Office shall be responsible for evaluating and approving or denying applications to participate in the Sandbox Program. An applicant shall submit an application along with a $300 application fee to the Regulatory Relief Office, which shall include contact information and a description of the innovative offering to be demonstrated, including statements regarding how the innovative offering is subject to licensing, legal prohibition, or other authorization requirements outside of the Sandbox Program; each law or regulation that the applicant seeks to have waived or suspended while participating in the Sandbox Program; how the innovative offering would benefit consumers; and what risks might exist for consumers who use or purchase the innovative offering, as described in the act.

No later than 5 business days after the day on which a completed application is received by the Regulatory Relief Office, the Office shall review the application and refer the application to each applicable agency, as defined in the act, that regulates the applicant's business. No later than 30 days after the day on which an applicable agency receives a completed application for review, the applicable agency shall provide a written report to the Sandbox Program director with the applicable agency's findings, including any identifiable, likely, and significant harm to the health, safety, or financial well-being of consumers that the relevant law or regulation protects against, and a recommendation to the Regulatory Relief Office that the applicant either be admitted or denied entrance into the Sandbox Program. An applicable agency may deny an application for reasons described in the act. The Regulatory Relief Office shall not approve any application denied by an applicable agency. (Section 620.3915)

Upon approval of an application, a sandbox participant shall have 24 months after the day on which its application was approved to demonstrate the innovative offering described in the sandbox participant's application. During such period, the sandbox participant shall be exempt from the laws and regulations outlined in an agreement entered into with the Regulatory Relief Office. Innovative offerings shall only be available to consumers who are residents of this state, and no law or regulation shall be waived or suspended if such waiver or suspension would prevent a consumer from seeking restitution in the event that the consumer is harmed. A sandbox participant shall not be subject to prosecution or administrative penalty for a violation of any law or regulation that is waived or suspended during the duration of the participant's demonstration period. (Section 620.3920)

Prior to demonstrating an innovative offering, a sandbox participant shall disclose certain information to consumers, as described in the act. (Section 620.3925)

At least 30 days prior to the end of a participant's demonstration period, the participant shall notify the Regulatory Relief Office that it either intends to exit the Sandbox Program or that it seeks an extension. The Regulatory Relief Office may grant an extension not to exceed 12 months, and a participant may seek multiple extensions. If a demonstration includes an innovative offering that requires ongoing services or duties beyond the 2-year demonstration period, the participant may continue to demonstrate the offering, but shall be subject to all laws and regulations that were waived or suspended as part of the Sandbox Program.

A sandbox participant shall retain certain records for a period of 2 years after exiting the Sandbox Program.

The Regulatory Relief Office shall establish quarterly reporting requirements for each participant, and each participant shall notify the Regulatory Relief Office and each applicable agency of any incidents that result in harm to the health, safety, or financial well-being of a consumer.

No later than 30 days after a sandbox participant exits the Sandbox Program, such participant shall submit a written report describing an overview of the demonstration. No later than 30 days after receiving such report, an applicable agency shall provide a written report to the Regulatory Relief Office that describes any statutory or regulatory reform the applicable agency recommends. (Section 620.3930)

These provisions are identical to the perfected HCS/HB 2587 (2022), to provisions in HCS/SS/SB 807 (2022), and similar to SB 1068 (2022).

MISSOURI WORKS PROGRAM (Section 1)

In recognition of the negative effects of COVID-19 and global supply chain disruptions, all qualified companies and military projects under the Missouri Works Program shall have an additional 12 months to reach any requirement or commitment regarding the number of new jobs or new payroll and provide evidence and documentation to the Department of Economic Development as stated in the act.

This provision shall apply only to benefits requested by qualified companies and qualified military projects for which a notice of intent has been submitted under the program prior to August 28, 2022.

JAMIE ANDREWS