HB 0542 Authorizes tax credits/income tax deductions, reduces corporate franchise tax and allows family development accts.
Bill Summary
- Prepared by Senate Research -

SCS/HB 542 - This act contains the following tax provisions relating to tax audits, tax law administration, income tax deductions, corporate franchise tax and authorizes family development accounts.

TAX CREDITS - The income tax credit for adoption expenses for a special needs child shall include up to $10,000 of nonrecurring expenses. The credits may be assigned, transferred or sold (Sections 135.326-135.333).

Allows contributions for maternity homes and shelters for victims of domestic violence to include donations of cash, stock, bonds or other marketable securities, or real property (Sections 135.550-135.600).

Authorizes a state income tax credit for contributions to unplanned pregnancy resource centers, including donations of cash, stock, bonds or other marketable securities, or real property. The credit is equal to fifty percent of the amount of such contributions (Section 135.630).

Allows a state income tax credit equal to 10% of the federal earned income tax credit. The credit is refundable, and the department of revenue is required to notify qualified claimants of potential eligibility (Section 135.760).

TAX LAW ADMINISTRATION - Requires all tax laws of the state involving the tax liability of a taxpayer to be strictly construed against the taxing authority and in favor of the taxpayer. The Director of Revenue bears the burden of proof on factual issues if the taxpayer has produced evidence of a reasonable dispute over an issue and has complied with reasonable requests for documents and other information. Upon written request of a taxpayer under audit, the Department of Revenue is required to provide a statement as to the legal basis for any audit findings. An invalid tax exemption certificate accepted in good faith from the purchaser will relieve the taxpayer of liability for the tax (Sections 136.300-136.303).

The act allows sales taxpayer to claim a prior period adjustment on the sales tax return. It requires the Director of Revenue to make tax refunds within 120 days of receiving proper documentation from the taxpayer. Entities are liable for improper sales tax exemption certificates. Interest will be owed from the date the tax was collected.

CORPORATE FRANCHISE TAX - Lowers the corporate franchise tax rate from the current 1/20 of 1% to 1/25 of 1% and raises the cap below which a corporation does not have to pay franchise tax from the current $200,000 to $1 million (Section 147.010);

TAX DEDUCTIONS - The act authorizes a state income tax deduction for health insurance premiums of self-employed individuals (Sections 143.111-143.113).

Increases the personal exemption for individual income taxpayers as follows: for 1999, from the current $1,200 to $1,700 ($3,400 for married taxpayers); for 2000, to $1,800 ($3,600); for 2001, to $1,900 ($3,800), and for 2002 and later years, to $2,000 ($4,000 for married taxpayers) - (Section 143.151).

FAMILY DEVELOPMENT ACCOUNTS - Establishes the Family Development Account Program within the Department of Economic Development. This is the SS/SB 97 version which establishes the special savings accounts for moneys to be used for secondary education, postsecondary education, job training, home ownership, home improvement or small business capitalization. Eligible families or individuals will have household income less than or equal to 200% of the federal poverty level. Withdrawals must be approved by the community-based organization that administers the accounts. Deposits into a single account are limited to no more than $2,500 per calendar year, or $50,000 total. Deposits and withdrawals are exempt from state income tax, except for withholding; interest on the accounts is also exempt. Program contributors are also eligible for tax credits. Total tax credits cannot exceed $15 million in any one fiscal year (Sections 620.1487-620.1505).
RUSS HEMBREE

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