This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0843 - Clarifies Provisions of the Circuit Breaker
L.R. NO. 2790-02
BILL NO. SB 843
SUBJECT: Elderly; Income tax; Property tax; Veterans
TYPE: Updated
DATE: February 5, 1996
#Updated to provide more detailed assumptions
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
General Revenue (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
State Funds (UNKNOWN) (UNKNOWN) (UNKNOWN)
* Could exceed $1,000,000 annually.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials of the Department of Revenue and the State Tax Commission indicate
this proposal would not fiscally impact their agencies.
Officials of the Office of Administration assume the purpose of this
legislation is to permit disabled people who were not gainfully employed
prior to becoming disabled to be eligible for a property tax credit.
The TAFP fiscal note 3398-9 for HB 1745 OA Budget & Planning estimated the
maximum loss for the disabled tax credit to be $23.3 million. In 1995, (the
first year of filing) the Department of Revenue reported that about $700,000
was paid out in disabled persons property tax credit. OA assumed the
difference between $23.3 million and $700,000 would be the impact associated
with this proposal.
#Oversight obtained additional information regarding the population of
estates which may file on behalf of a person who dies during the calendar
year. Approximately, 40,516 deaths occurred in 1994 of persons age 65 or
older. The total "over 65" population in Missouri is 744,000, of which
64,000 currently claim the circuit breaker credit. This represents 8.6% of
the population claiming the credit. Assuming the same claim rate, 3,485
estates would be expected to claim the credit at an average of $280 per
claim. A total amount of $975,800 annually in additional circuit breaker
credits would be expected to be paid out. Oversight assumes that the
combination of paying the credit the year of death for deceased persons and
the change in interpretation by DOR could result in a loss to the General
Revenue Fund in excess of $1,000,000 annually.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
Loss to General Revenue Fund
There would be a loss to General Revenue in an indeterminable amount for
the circuit breaker credit refund, which could exceed $1,000,000 annually.
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
0 0 0
DESCRIPTION
Under current senior citizen property tax credit ("circuit breaker") law, a
surviving spouse may claim the income tax credit if a spouse meeting the
qualifications dies before the end of the year, but a decedent's estate is
not allowed the credit on the final return. This legislation deems the
residency requirement fulfilled for claimants who die before December 31 and
who meet all of the other qualifications for the credit. This act also
clarifies that a disability need not occur after gainful employment in order
to qualify for the credit. Currently, the Department of Revenue interprets
the law to require a disabled person to have been gainfully employed prior to
such disability in order to qualify for the credit.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Revenue
State Tax Commission
Office of Administration