SB 0390 Income Tax Changes: Interest, Protest, Exemption
Committee:FINALR Number:S1347.01I
Last Action:02/27/95 - Hearing Conducted S Financial & Governmental Operations Committee
Effective Date:August 28, 1995
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Current Bill Summary

SB 390 - This act makes numerous changes to various tax statute sections, including:

Section 32.065

Allows the Director of Revenue to set an adjusted rate of interest below 12%, which is more reflective of the current market based interest rate.

Section 136.315

Changes the definition of "party" to include natural persons, partnerships, corporations and other organizations. Currently, an income limitation is placed on sole proprietors, corporations and partnerships. This legislation removes those limits.

Allows a court or administrative hearing commission to award the Department of Revenue reasonable litigation expenses if the tribunal finds the position of the party to be patently frivolous.

Section 143.451

Removes a confusing paragraph which was a source for much litigation. The paragraph dealt with interstate transactions when the other state(s) do not have jurisdiction to impose a tax. By removing this paragraph, the computation of the taxation of this type of interstate transaction will be consistent with other interstate transactions.

Section 143.631

A taxpayer's protest may now include a request for an informal hearing. This is currently being done in some situations. This legislation would make the practice universal.

Section 143.751

Requires the Director to state the reason why a taxpayer was negligent at the time an assessment is proposed. This change would help eliminate the automatic assessment of penalties. Rules and regulations of the Department which are inconsistent with state laws may not be the basis for the assessment of a penalty.

Sections 143.781 and 143.811

Requires interest to be paid to the taxpayer on both refunds and credits. Currently, credits taken as a result of an overpayment of tax are not paid interest, even though refunds taken as a result of an overpayment are paid interest.

Section 144.030

Allows the current sales/use tax exemption for replacement of machinery and equipment due to design or product changes to be expanded to replacements of machinery and equipment for any reason. This change should end the litigation under the current statute which is being interpreted broadly anyway.

Expands the current sales/use tax exemption for the sale of electricity used in manufacturing, processing, mining, etc. if the total cost of the electrical energy exceeds 10% of the total cost of production to include gas energy.

Section 144.190

Refunds of overpayments of sales/use taxes shall be paid with interest. RONALD J. LEONE