HB 2587
Modifies provisions relating to business entities
Sponsor:
LR Number:
4416S.09F
Last Action:
5/13/2022 - Informal Calendar H Bills for Third Reading
Journal Page:
Title:
SS HCS HB 2587
Calendar Position:
Effective Date:
August 28, 2022
House Handler:

Current Bill Summary

SS/HCS/HB 2587 - This act modifies provisions relating to business entities.

RIGHT-TO-START ACT

By no later than June 30, 2024, and annually thereafter, this act requires the Commissioner of Administration to file a report with the General Assembly that includes information on contracts awarded to businesses that have been in operation for less than three years, as described in the act.

This act also requires the Commissioner of Administration, in conjunction with the Office of Entrepreneurship, which is established by the act, to file a report with the General Assembly making recommendations on improving access and resources for new Missouri businesses that have been in operation for less than three years, including minority-owned businesses. (Section 34.195)

This provision is identical to a provision in HCS/SS/SB 807 (2022) and HCS/HB 1590 (2022).

ZONING REGULATIONS ON HOME-BASED WORK BY POLITICAL SUBDIVISIONS

The act creates new provisions governing the regulation of home-based work, as defined in the act, by certain political subdivisions. Specifically, counties, municipalities, and townships are prohibited from enacting a zoning ordinance or regulation that:

· Prohibits mail order or telephone sales for home-based work;

· Prohibits service by appointment within the home or accessory structure;

· Prohibits or requires structural modifications to the home or accessory structure;

· Restricts the hours of operation for home-based work; or

· Restricts storage or the use of equipment that does not produce effects outside the home or accessory structure.

Furthermore, any such zoning ordinance or regulation may not explicitly restrict or prohibit a particular occupation.

These provisions do not supersede any deed restriction, covenant or agreement restricting the use of land nor any master deed, by law or other document applicable to a common interest ownership community. (Sections 64.008, 65.710, and 89.500)

These provisions are substantially similar to provisions in SS/HCS/HB 1662 (2022), SCS/HB 2593 (2022), HCS/SS/SCS/SB 931 (2022), HCS/SS/SB 807 (2022), and SCS/SB 809 (2022).

LOCAL RESTRICTIONS ON HOME-BASED BUSINESSES

This act provides that a political subdivision shall not prohibit the operation of a no-impact, home-based business or require a person to apply for any permit or license to operate such a business. However, a political subdivision may establish reasonable regulations on such businesses that are narrowly tailored for the purpose of protecting public health and ensuring the businesses are compliant with state and federal law. (Section 71.990)

This provision is identical to a provision in SCS/HB 2593 (2022) and is substantially similar to a provision in SS/HCS/HB 1662 (2022), HCS/SS/SB 807 (2022), and HCS/SS/SCS/SB 931 (2022).

LLC CAMPAIGN CONTRIBUTIONS

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 electronically files with 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. (Section 130.029)

This provision is identical to a provision in SS/HB 2400 (2022) and is substantially similar to a provision in HCS/SS#2/SCS/SB 968 (2022), HCS/HB 1803 (2022), and HCS/HB 2157 (2022).

TAXATION OF BUSINESSES

Current law allows a taxpayer to subtract a percentage of the taxpayer's business income from the taxpayer's federal adjusted gross income. This act allows a taxpayer that begins business operations on or after January 1, 2023, to reduce such taxpayer's remaining business income by a further twenty percent for the first three years in which the taxpayer's business is in operation. (Section 143.022)

Current law provides for a corporate income tax of 4%. For all tax years beginning on or after January 1, 2023, for corporations beginning operations in this state on or after January 1, 2023, this act reduces such rate of tax to 3% for the first $100,000 of income, with the corporation's remaining income to be taxed at 4%. Beginning with the fourth year in which the corporation maintains operations in this state, all of such corporation's income shall be taxed at 4%. (Section 143.071)

This provision is identical to a provision in HCS/SS/SB 807 (2022) and HCS/HB 1590 (2022).

S CORP TAX CREDIT

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. (Section 143.081)

This provision is identical to SB 410 (2021) and to a provision in HCS/SS/SB 807 (2022), HCS/SS/SCS/SB 931 (2022), HCS/SS#2/SCS/SB 968 (2022), HCS/HB 1803 (2022), HCS/HB 2157 (2022), and SS/HB 2400 (2022).

SALT PARITY ACT

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. (Section 143.436)

This provision is identical to a provision in HCS/SS/SB 807 (2022), HCS/SS/SCS/SB 931 (2022), HCS/SS#2/SCS/SB 968 (2022), and SS/HB 2400 (2022), and is substantially similar to SB 1154 (2022) and HB 2845 (2022), and to a provision in HCS/HB 1803 (2022), HCS/HB 2157 (2022).

FARM MACHINERY AND EQUIPMENT SALES TAX EXEMPTION

The act modifies a sales tax exemption for certain farm machinery and equipment by providing that the term "farm machinery and equipment" shall include utility vehicles, as defined in the act, that are used for any agricultural purposes. (Section 144.030)

This provision is identical to SB 1152 (2022) and to a provision in CCS/SS/SCS/HCS/HB 1720 (2022).

PROFESSIONAL EMPLOYER ORGANIZATIONS

This act provides that both a client and a registered professional employer organization (PEO) shall each be deemed an employer for purposes of sponsoring retirement and welfare benefits plans for its covered employees. A fully insured welfare benefit plan sponsored by a registered PEO for the benefit of its covered employees shall be treated for the purposes of state law as a single employer welfare benefit plan. For purposes of sponsoring welfare benefit plans for its eligible covered employees, a registered PEO shall be considered the employer of all of its eligible covered employees, and all eligible covered employees of one or more clients participating in a health benefit plan sponsored by a registered PEO shall be considered employees of such registered PEO. (Section 285.730)

This provision is identical to SB 904 (2022) and to a provision in SS/HB 2400 (2022) and HCS/HB 2799 (2022).

CHARITABLE ORGANIZATIONS

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. (Section 407.475)

This provision is identical to a provision in HCS/SS#2/SCS/SB 968 (2022), HCS/SS/SCS/SB 931 (2022), and SS/HB 2400 (2022), and is substantially similar to HB 1490 (2022), HB 245 (2021), and to provisions in CCS/HCS/SS/SB 333 (2021).

OFFICE OF ENTREPRENEURSHIP

This act creates the Office of Entrepreneurship within the Department of Economic Development. The Office shall employ an individual to promote policies and initiatives to support the growth of entrepreneurship, including minority entrepreneurship, in this state. (Section 620.3800)

This provision is identical to a provision in HCS/SS/SB 807 (2022) and HCS/HB 1590 (2022).

REGULATORY SANDBOX ACT

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 two-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)

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 ten 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 forty-five 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 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 eleven 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 two-thirds majority vote of the members of the Advisory Committee, and further provided that such vote shall be taken within fifteen 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. (Section 620.3910)

Upon approval of an application, a sandbox participant shall have twenty-four 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 forty-five 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 twelve months, and a participant may seek multiple extensions. If a demonstration includes an innovative offering that requires ongoing services or duties beyond the two-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 two 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 forty-five 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 thirty 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 substantially similar to SB 1068 (2022) and to provisions in HCS/SS/SCS/SB 931 (2022), HCS/SS/SB 807 (2022), and HCS/SS#2/SCS/SB 968 (2022).

JOSH NORBERG

SA #1 - ADDS A PROVISION MODIFYING THE HISTORIC PRESERVATION TAX CREDIT

SA #2 - ADDS PROVISIONS ALLOWING RURAL ELECTRIC COOPERATIVES TO RECEIVE FUNDS FROM THE MISSOURI DISASTER FUND

SA #3 - ADDS A PROVISION RELATING TO GRANTS TO NOT-FOR-PROFIT RELIGIOUS ORGANIZATIONS FOR ENHANCING PHYSICAL SECURITY

SA #4 - ADDS A PROVISION RELATING TO RESTRICTIVE COVENANTS

SA #6, A.A. - ADDS A PROVISION ESTABLISHING A TAX CREDIT FOR GROCERY STORES LOCATED IN FOOD DESERTS

SA #7 - REMOVES A PROVISION RELATING TO RESTRICTIONS ON HOME-BASED BUSINESSES

SA #8 - ADDS A PROVISION RELATING TO COUNTY FINANCIAL STATEMENTS

SA #9 - ADDS A PROVISION RELATING TO SELF-SERVICE STORAGE FACILITIES

SA #10 - ADDS A PROVISION RELATING TO THE PERSONAL PRIVACY PROTECTION ACT

SA #11 - ADDS A PROVISION RELATING TO PREFILLED AUTO SYRINGES

SA #12 - ADDS A PROVISION RELATING TO PROCESSED RECYCLED ASPHALT SHINGLES

SA #13 - ADDS A PROVISION RELATING TO THE ASSESSMENT RATE FOR PERSONAL PROPERTY IN ST. CHARLES COUNTY