CCS/SS/SCS/HS/HB 516 - This act makes the following changes in state tax law and procedure.

PERSONAL EXEMPTIONS - Increases the state income tax personal exemption amounts, for all taxable years beginning on or after January 1, 1999, as follows: for singles and for married taxpayers filing separate returns the personal exemption is increased from the current $1,200 to $2,100, and for married taxpayers filing a combined return, the amount is increased from $2,400 to $4,200, For a head of household or a surviving spouse the exemption amount is increased from the current $2,000 to $3,500. This provision is similar to SB 318.

CORPORATION FRANCHISE TAX - Increases the floor for requiring the payment of corporation franchise tax from the current $200,000 to one million dollars, and reduces the rate from the current 1/20 of one percent to 1/30 of one percent, for all taxable years beginning on or after January 1, 2000. This provision is similar to SB 162. Administration of the corporation franchise tax is transferred from the Secretary of State to the Director of Revenue.

SELF-EMPLOYED HEALTH INSURANCE COSTS - Authorizes a state income tax deduction for health insurance costs of a self-employed individual, his spouse and dependents if the amounts qualify as deductible under the Internal Revenue Code to the extent that the costs have not been deducted on the taxpayer's federal income tax return for the same year. The federal tax deduction increases to 100% of qualified costs in 2003. This provision is similar to SB 416 and SB 420.

SALES TAX EXEMPTIONS - Exempts from sales and use tax tangible personal property purchased for research or experimentation activities. The exemption is capped at $1.3 million and sunsets in 2003. This provision is similar to SB 380. Also exempted from sales and use tax are machines or parts used in commercial, coin-operated amusement and vending businesses if sales tax is paid on the gross receipts from use of the machines. This provision is contained in SB 358.

EXCLUSION OF LOCAL FUNDS - Excludes funds received or disbursed by the state on behalf of counties and cites, towns, and villages from deposit in the state treasury.

ADA TAX CREDIT - Authorizes an income tax credit equal to 50% of all qualified expenditures made to comply with the Americans with Disabilities Act. This provision is similar to SB 16.

BURDEN OF PROOF - Changes the burden of proof in state tax cases. State tax laws are to be strictly construed against the taxing authority and in favor of the taxpayer. The Director of Revenue bears the burden of proof only if the taxpayer has produced evidence of a reasonable dispute, has adequate records and provides reasonable access to those records, and for partnerships, corporations or trusts with a net worth of $7 million or less and with 500 or fewer employees at the time the Director's final decision is issued. A taxpayer may request in writing that audit findings be accompanied by supporting legal bases. The act also contains provisions concerning innocent spouse protection and fair debt collection practices. This provision is similar to SB 21.

PROPERTY TAX REPORT - Requires any taxing authority levying a tax on residential real property to report such amounts on a yearly basis to the State Tax Commission, which is then required to submit the aggregate data to the General Assembly by January 31 of each year. This provision is similar to SB 53.

PENSION INCOME LIMIT PHASE-OUT - Allows a dollar-for-dollar reduction of the pension deduction for income in excess of the current limits ($25,000/single; $32,000/married) and excludes rolled-over withdrawals from being considered retirement benefits. Taxpayers are limited to the maximum exemption on either a public pension or a private pension. This provision is similar to HB 120.
RUSS HEMBREE