COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3290-01
Bill No.: SB 820
Subject: Children and Minors; Family Services Division; Social Services Dept.; Taxation and Revenue-Income
Type: Original
Date: January 8, 2002
FISCAL SUMMARY
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| General Revenue | ($68,971) | ($437,104) | ($454,588) |
| Total Estimated
Net Effect on All State Funds |
($68,971) | ($437,104) | ($454,588) |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Local Government | $0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
ASSUMPTION
Officials of the Office of Administration - Budget and Planning (BAP) state this bill will allow foster parents that care for a child for at least 10 months out of the calendar year to claim the dependent deduction. According to the Department of Social Services, in 2000 there were 18,186 children in foster care in Missouri and 5,397 of these stayed with the same family for at least 10 months. The dependency deduction is $1,200 and a marginal tax rate of 6% is assumed. Since this proposal does not have an effective date the Department of Revenue indicated that the deduction would not go into effect until tax year 2003. A 4% annual growth rate is assumed.
Officials of the Department of Revenue (DOR) state this legislation authorizes a foster parent to claim a dependency deduction on their state income tax return for foster children in their custody at least ten months.
According to a similar fiscal note, there were 5,397 children in foster care staying with the same family for ten months. Therefore, the impact to income tax processing will be low enough to administer this deduction with existing personnel. However, if the number of taxpayers eligible for this deduction increases, DOR will request additional FTE through the normal budget process. At that time, DOR will request one temporary tax season employee (a cost of $6,067) for every 150,000 returns filed claiming this deduction (key entry) and one Tax Processing Tech I for every 4,000 pieces of correspondence received regarding the credit will be needed. The Division of Taxation will also need one Tax Processing Tech I for every 20,000 additional errors generated by this legislation.
This legislation will require modifications, including edits to the individual income tax systems. The Division of Taxation estimates these modifications, including programming changes, will require 1,730 hours of contract labor, at a cost of $57,713. State Data Center implementation costs will be $11,258. Modifications to the income tax returns and schedules will be completed with existing resources.
Officials of the Department of Social Services (DOS) assume this proposal while it may be a recruitment tool or morale booster, it would not fiscally impact their agency.
This legislation will decrease Total State Revenues.
| FISCAL IMPACT - State Government | FY 2003
(6 Mo.) |
FY 2004 | FY 2005 |
| GENERAL REVENUE FUND | |||
|
Loss - General Revenue Fund Dependency exemption for qualified foster child |
$0 |
($437,104) |
($454,588) |
|
Cost - Department of Revenue Reprogramming costs |
($68,971) |
$0 |
$0 |
| ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND |
($68,971) |
($437,104) |
($454,588) |
| FISCAL IMPACT - Local Government | FY 2003
(6 Mo.) |
FY 2004 | FY 2005 |
| $0 | $0 | $0 | |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This act allows foster parents to receive a dependency exemption on their state income tax returns. Section 143.161 currently describes who is entitled to a dependency exemption. A new subsection is added to waive the fifty percent support threshold for foster parents if any foster child has lived within the home for at least ten months of the year.
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
Office of Administration - Budget and Planning
Department of Revenue
Department of Social Services
Mickey Wilson, CPA
Acting Director
January 8, 2002