HCS SB 936 -- TAXATION

SPONSOR: Childers (Bray)

COMMITTEE ACTION: Voted "do pass" by the Committee on Ways and Means by a vote of 18 to 0 with 1 present.

This substitute makes numerous changes related to taxation.

TOURISM TAXES

The substitute:

(1) Creates personal liability for the collection of certain tourism taxes. Tourism tax statutes do not currently provide that the individual responsible for filing the taxes is personally liable, as is the case in state sales taxes. This change expands the individual liability only to Branson tourism taxes, not tourism taxes in general; and

(2) Allows the cities of Bethany, New Madrid, Bloomfield, Caruthersville, and St. James and New Madrid and Stoddard counties, upon voter approval, to impose a tax of at least 2% but not more than 5% on the charges for all sleeping rooms of hotels, motels, bed and breakfast inns, campgrounds, and any docking facility which rents slips to recreation boats used by transient guests for sleeping. These authorizations are subject to an emergency clause.

SALES AND USE TAX

The substitute:

(1) Exempts the sale of bullion and investment coins from state and local sales and use taxes;

(2) Exempts from state and local sales and use taxes all purchases of tangible personal property and all items converted into tangible personal property which are donated to the state of Missouri;

(3) Allows charges of mandatory gratuities incident to the serving of food or beverage to be excluded from gross receipts in the calculation of sales and use tax owed by a seller; and

(4) Exempts from state and local sales and use taxes all sales to certain air transportation common carriers with national headquarters located in this state and that use an airport in this state as a hub which: (a) pays an aggregate amount of state and local sales and use taxes of $150,000 or more and purchases, stores, or consumes less than 3 million gallons of jet fuel per month on average during the calendar year; or (b) pays an aggregate of $1,500,000 or more of the state and local sales and use taxes and purchases, stores, or consumes 3 million gallons or more of jet fuel per month on average during the calendar year. The substitute also extends the current sunset on the state and local sales and use tax exemption on purchases of jet fuel consumed by certain air transportation common carriers headquartered in the state from an expiration of December 31, 2003, to December 31, 2005.

PROPERTY TAX

The substitute:

(1) Removes language from the oath required to be signed by a personal property taxpayer attesting all personal property owned by the taxpayer in the state. The current oath refers to real property which is not required to be listed on the statement. The substitute also makes the personal property tax oath used in counties of the first classification the oath for all other counties; and

(2) Extends the time period for refund or credit of an overpayment of property taxes that has been erroneously or mistakenly levied upon a taxpayer from one to 3 years. Interest will also be required to be paid on the overpayment. Current law prohibits payment of interest to the taxpayer. The substitute also allows collectors of revenue to offset future distributions of property tax revenues to political subdivisions in an amount equal to any refund or credit granted.

INCOME TAX

The substitute:

(1) Expands the pharmaceutical income tax credit to include certain disabled persons and certain taxpayers who have reached the age of 60 years and receive surviving spouse benefits under Social Security and requires the Department of Revenue to review returns and advise eligible taxpayers who have not applied for the pharmaceutical income tax credit that they may be eligible to take the credit;

(2) Creates the Home Disability Tax Credit Program. The substitute authorizes a state individual income tax credit for purchases of certain assistive technology products, devices, and equipment by a taxpayer on behalf of an eligible disabled individual. The tax credit will be equal to 50% of the cost of the assistive technology products or devices if the taxpayer's federal adjusted gross income is $30,000 or less. The tax credit will be equal to 30% of the cost if the taxpayer's federal adjusted gross income is greater than $30,000. The maximum credit for any one taxpayer cannot exceed $3,000. If the taxpayer's federal adjusted gross income is $30,000 or less, any unused credit will be refunded up to $300. The tax credit applies to tax year 2000 and thereafter;

(3) Authorizes individual income tax credits to taxpayers equal to 50% of any contribution to a qualified sexual violence crisis service center offering specific services to victims up to a maximum credit of $50,000 per year. The minimum contribution must be equal to or greater than $100 to receive the credit. The credit may be carried over for 4 years, but may not exceed tax liability in any one year. The substitute requires the Department of Public Safety to determine qualified facilities and to apportion the tax credits among all qualified facilities located in the state. The maximum statewide credits granted cannot exceed $500,000 per year. These provisions will become effective January 1, 2001;

(4) Establishes several income tax credits for installing equipment that generates electricity from renewable energy sources and for making improvements that increase energy efficiency. All credits are non-refundable and may be carried forward for up to 5 years. Homeowners may apply for a credit of the lesser of $3,750 or 25% of the costs of installing solar electric generating equipment in their principal residence or a credit of the lesser of $2,000 or 25% of the costs of installing electric generating equipment that uses energy from renewable sources in their principal residence. Business owners are eligible for a credit of the lesser of $250,000 or 35% of the costs of installing electric generating equipment that uses energy from renewable sources. To claim these credits, the applicant must submit plans to the Department of Natural Resources (DNR) before installation, including proof that the equipment is expected to remain in use for at least 5 years, and file a second application with DNR upon project completion, including proof that the building will remain in use as a principal residence or business.

Homeowners are also eligible for a credit of the lesser of $2,000 or 25% of the costs of making improvements in heating, cooling, lighting, insulation, or other systems that increase the energy efficiency of their principal residence. The improvements must increase the efficiency of an existing residence by at least 25% or, for a new residence, exceed the requirements of the latest Model Energy Code by at least 30%, as determined by a certified home energy rating technician. Single family homes and individual residences in multi-dwelling structures are eligible. To claim this credit, homeowners must submit an application to DNR with certification of the efficiency improvements. Those who qualify for this credit may also apply for a one-time credit of the lesser of $250 or the costs of the services of a certified home energy rating technician.

Owners of commercial buildings and residential structures of more than 3 stories are eligible for a credit of the lesser of $2,000 or 25% of the costs of improvements in heating, cooling, lighting, insulation, or other systems that increase the energy efficiency of an existing structure by at least 25%, as determined by a nationally recognized energy analysis process, or, for a new structure, exceed the requirements of the latest applicable building energy code by at least 30%, as determined by a licensed professional architect or engineer. To claim this credit, owners must submit an application to DNR with verification of the efficiency improvements. Those who qualify for this credit may also apply for a one-time credit of the lesser of $50,000 or 10% of the costs of a technical energy study by an architect or engineer.

The substitute also requires electric service companies to provide two-directional net energy metering to customers with electric generating systems that are powered by renewable energy sources and capable of producing no more than 100 kilowatts. A standard net metering contract must be approved by the Public Service Commission and allow customers to feed excess electricity back into the power grid to offset consumption costs over an annual substituting period. Net metering will be provided on a first-come, first-served basis until statewide capacity equals the lesser of 10,000 kilowatts or 10% of the state's peak electricity demand. By January 1, 2006, the commission, in consultation with DNR, must submit a progress report to the General Assembly and the Governor and offer recommendations on increasing the amount of allowable net metering.

All renewable energy equipment tax credits will become effective January 1, 2001; and

(5) For tax years 2000 to 2004, the substitute establishes an income tax credit of the lesser of $9,000 or 30% of the cost of purchasing or leasing an alternative fuel vehicle. To be eligible, leases must be for a term of at least 3 years. The credit is non-refundable and may be carried forward for up to 5 years if the taxpayer maintains registration of the vehicle. Eligible vehicles are those powered by electricity or those powered by electricity and gasoline with fuel economy greater than 60 miles per gallon. The substitute also establishes a tax credit of the lesser of $20,000 or 25% of the cost of constructing a vehicle charging facility open to the public. This credit may be carried forward for 7 years if the taxpayer maintains operation of the facility.

Alternative fuel vehicles must be registered and titled, and manufacturers are required to provide information on purchase incentives and certification that the vehicle meets alternative fuel capability requirements. The substitute also bans electric vehicles not capable of speeds over 25 miles per hour from roads with speed limits of more than 35 miles per hour.

GENERAL TAXATION PROVISIONS

The substitute:

(1) Clarifies the existing burden of proof statutes relating to taxation by including the requirements in conflicting statutes; and

(2) Prohibits the state or any county from entering into a contract or arrangement for the examination of a taxpayer's books and records if the compensation for the service is contingent upon or otherwise related to the amount of tax, interest, court cost, or penalty assessed or collected from the taxpayer.

COMMUNITY COMEBACK ACT

The substitute establishes the Community Comeback Act. In its main provisions, the act:

(1) Authorizes the establishment of a community comeback trust for St. Louis County, whose primary duties include the prevention of neighborhood decline, demolition of abandoned buildings, cleaning of polluted sites, and the promotion of neighborhood reinvestment;

(2) Provides that the county executive is to appoint the 7 members of the community trust board from a list of nominees supplied by any member of the St. Louis County Council and the chief elected officer of any municipality wholly within St. Louis County. The criteria for and terms of board membership are outlined;

(3) Gives exclusive control of the expenditure of moneys collected to the credit of the trust, subject to annual appropriation by the county council, to the trust board and limits the administrative costs of the trust to no more than 5% of the trust's annual budget;

(4) Requires the county government to provide trust staff;

(5) Authorizes the trust to issue and refund bonds, notes, or other obligations for any proposal and to receive and liquidate property; the trust is not, however, authorized to use the power of eminent domain. Bonds issued by the trust are exempt from state income taxes;

(6) Requires the trust board to notify all municipalities within St. Louis County and the county council of the requirement to conduct a planning process and adopt a community comeback plan;

(7) Requires the board to hold public hearings and to solicit input from the county and municipalities regarding the development of the community comeback plan. The board and the county council are to annually revise and adopt a plan;

(8) Requires each plan to include a housing stock and market analysis of the impediments to attracting home buyers. In addition, each plan is to address the factors related to the occurrence of assessed values below the county average, median household incomes below the county median, unemployment rates above the county average, building vacancies, and lack of home value growth;

(9) Requires each plan to outline the specific strategies to address the specific problems encountered in various regions and neighborhoods in the county;

(10) Requires the board to produce an annual report outlining what has been accomplished in relation to the goals outlined in the community comeback plan;

(11) Requires the board to commission an annual financial audit and an independent management audit every 5 years;

(12) Requires the board to establish an 11-member advisory committee, with members appointed by the county executive. The qualifications and length of terms of committee members are outlined. The advisory committee is charged with advising the board, board staff, or petitioners who include the governing body of any municipality or St. Louis County, any land clearance for redevelopment authority in St. Louis County, or any not-for- profit organization;

(13) Authorizes the board to begin accepting petitions for funding from the trust one month after the community comeback plan is adopted. The criteria which must be addressed in a petition are outlined and include addressing how the reinvestment needs of a neighborhood will be met by reducing or removing impediments to home buyers; providing physical infrastructure to promote job growth; or reducing or removing threats to public health, safety, morals, or welfare;

(14) Authorizes the board to award funding to a petitioner if the petitioner's proposal involves an eligible project with eligible expenses and is well planned, realistic, creative, resourceful, cost-effective, and benefits the local community;

(15) Requires the board to establish a Select Neighborhood Action Program (SNAP), which provides neighborhood improvement grants requiring a 10% cash or in-kind match from applicants. SNAP grants may only be made for projects capable of being completed within 12 months, which do not duplicate existing programs, do not require ongoing funding or services, and do not conflict with the community comeback plan;

(16) Outlines the categories for eligible SNAP grants, including neighborhood beautification projects, neighborhood organization or capacity projects, neighborhood-school partnership projects, capital purchase projects which include the acquisition of equipment or property, and neighborhood local infrastructure improvements;

(17) Allocates a minimum of 5% of trust funds, not to exceed $500,000, for SNAP grants;

(18) Authorizes one-half of the county use tax (if imposition of the use tax is approved by voters as required in current law) to be used for funding the community comeback trust;

(19) Changes the ballot language for submitting the use tax for voter approval, so that a description of the purposes for which the use tax will be used is included on the ballot;

(20) Authorizes the use tax to be described as the equivalent of a sales tax on purchases made from out-of-state sellers by in-state buyers and on certain intrabusiness taxable transactions; and

(21) Adds St. Louis County to the definition of "city" for the purpose of qualifying for Chapter 353, RSMo urban redevelopment assistance.

The Community Comeback Act provisions are subject to an emergency clause.

FISCAL NOTE: Partial Net Cost to General Revenue Fund of $7,978,572 to $11,111,072 in FY 2001, $15,255,697 to $26,086,497 in FY 2002, and $15,643,856 to $26,908,856 in FY 2003. Cost to Highway Fund of Unknown in FY 2001, FY 2002, and FY 2003. Loss to Aviation Trust Fund of $1,183,432 in FY 2001, $1,420,118 in FY 2002, and $1,420,118 in FY 2003. Partial Net Loss to School District Trust Fund of $400,196 in FY 2001, $481,380 in FY 2002, and $481,781 in FY 2003. Partial Net Loss to Conservation Fund of $50,025 in FY 2001, $60,173 in FY 2002, and $60,223 in FY 2003. Partial Net Loss to Parks and Soil Fund of $40,020 in FY 2001, $48,138 in FY 2002, and $48,178 in FY 2003.

PROPONENTS: Supporters say that the original bill would allow the collection of tourism taxes in Branson to have the same collection safeguards as local sales taxes have.

Testifying for the bill were Senator Childers; Tri-City Lodging Association; and City of Branson.

OPPONENTS: There was no opposition voiced to the committee.

Bill Tucker, Assistant Director of Research