COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION



FISCAL NOTE



L.R. No.: 4828-04

Bill No.: HCS for SB 1394

Subject: Taxation and Revenue: Sales and Use, Income

Type: Original

Date: May 7, 2004



FISCAL SUMMARY



ESTIMATED NET EFFECT ON GENERAL REVENUE FUND
FUND AFFECTED FY 2005 FY 2006 FY 2007
General Revenue $5,386,019 to Unknown Unknown Unknown
Total Estimated

Net Effect on

General Revenue

Fund

 $5,386,019 to Unknown Unknown Unknown



ESTIMATED NET EFFECT ON OTHER STATE FUNDS
FUND AFFECTED FY 2005 FY 2006 FY 2007
School District Trust Unknown Unknown Unknown
Conservation Unknown Unknown Unknown
State Soil and Water Unknown Unknown Unknown
State Parks Unknown Unknown Unknown
Total Estimated

Net Effect on Other

State Funds

 Unknown Unknown Unknown



Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 5 pages.











ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 2005 FY 2006 FY 2007
Total Estimated

Net Effect on All

Federal Funds

 $0 $0 $0



ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 2005 FY 2006 FY 2007
Local Government Unknown Unknown Unknown




FISCAL ANALYSIS



ASSUMPTION



Officials of the Department of Revenue stated that eliminating the requirement that the Department inform local taxing officials of sales tax delinquencies before turning a case over to the Attorney General for collection would result in savings of about $4,000 per year in printing and postage.



They noted that there would be programing costs to change the Withholding Tax System to notify the Missouri Integrated Tax System (MITS) that an account's sales tax license should be revoked, to add new revocation codes to the MITS, and to change the Missouri Individual Income Tax Systems (MINITS) to allow offsetting of property tax credit (PTC) refunds against income tax or PTC claim delinquencies. Officials estimate these changes would require 519 hours of programming at a cost of $17,314.



Department of Revenue officials stated that there is approximately $7,100,000 in delinquent withholding tax owed by 1,930 accounts which also have sales tax delinquencies of more than $10. These accounts could have their licenses revoked for sales or withholding tax delinquencies. There is about $20,300,000 in delinquent withholding tax owed by 2,832 accounts which have ASSUMPTION (continued)



sales tax delinquencies of less than $10 or have no sales tax delinquencies. These accounts could be revoked for withholding tax delinquencies.



DOR officials estimate that twenty percent (20%) to forty percent (40%) of withholding tax delinquencies ($5,400,000 to $10,800,000) would be collected due to the possibility of sales tax license revocation. They also note that there would be some increase in sales tax collections.



St. Louis County officials note that the county has not imposed a sales tax for storm water control or parks. They estimate that exempting food (as defined) would reduce tax collections twelve percent (12%) from what collections would have been in the absence of this proposal.

FISCAL IMPACT - State Government FY 2004

(10 Mo.)

 FY 2005 FY 2006
GENERAL REVENUE FUND
Income - Department of Revenue (DOR)
Increased Withholding Tax Collections $5,400,000 to $10,800,000 Unknown Unknown
Increased Sales Tax Collections Unknown Unknown Unknown
Savings - Department of Revenue (DOR)
Decreased Printing and Postage $3,333 $4,000 $4,000
Cost - Department of Revenue (DOR)
Programming ($17,314) $0 $0
ESTIMATED NET EFFECT ON GENERAL REVENUE FUND $5,386,019 to Unknown $4,000 to Unknown $4,000 to Unknown
SCHOOL DISTRICT TRUST FUND
Income - Increased Sales Tax Collections Unknown Unknown Unknown
ESTIMATED NET EFFECT ON SCHOOL DISTRICT TRUST FUND



Unknown

Unknown

Unknown
CONSERVATION FUND
Income - Increased Sales Tax Collections Unknown Unknown Unknown
ESTIMATED NET EFFECT ON CONSERVATION FUND

Unknown

Unknown

Unknown
STATE SOIL AND WATER FUND
Income - Increased Sales Tax Collections Unknown Unknown Unknown
ESTIMATED NET EFFECT ON STATE SOIL AND WATER FUND

Unknown

Unknown

Unknown
STATE PARKS FUND
Income - Increased Sales Tax Collections Unknown Unknown Unknown
ESTIMATED NET EFFECT ON STATE PARKS FUND

Unknown

Unknown

Unknown


FISCAL IMPACT - Local Government FY 2005

(10 Mo.)

 FY 2006 FY 2007
POLITICAL SUBDIVISIONS
Income - Increased Sales Tax Collections Unknown Unknown Unknown
ESTIMATED NET EFFECT ON POLITICAL SUBDIVISIONS*



Unknown

Unknown

Unknown

*Does not include possible forgone income to St. Louis County.





FISCAL IMPACT - Small Business



Small businesses which were delinquent in paying withholding or sales taxes would be affected by this proposal.





DESCRIPTION



This proposal would revise tax collection laws by:



1) repealing the requirement that the Department of Revenue notify affected local taxing entities before turning a delinquent tax case to the Attorney General for collection and making the Department always include local taxes in a suit against a delinquent taxpayer;



2) allowing the Department to offset property tax credit (circuit breaker) refunds against income tax delinquencies or property tax credit delinquencies;



3) allowing the Department to revoke sales tax licenses for failure to pay employer withholding tax; and



4) specifying that if St. Louis County voters approved a local-option sales tax for storm water control or local parks (section 644.032), the tax would not be imposed on the sales of foods which are exempt from the general revenue part of the state sales tax.



This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. This proposal could affect Total State Revenue.



SOURCES OF INFORMATION



Department of Revenue

St. Louis County









Mickey Wilson, CPA

Director

May 7, 2004