SECOND REGULAR SESSION

SENATE COMMITTEE SUBSTITUTE FOR

HOUSE COMMITTEE SUBSTITUTE FOR

HOUSE BILL NO. 1295

97TH GENERAL ASSEMBLY

     Reported from the Committee on Ways and Means, April 10, 2014, with recommendation that the Senate Committee Substitute do pass.

TERRY L. SPIELER, Secretary.

4669S.07C

AN ACT

To repeal sections 143.071 and 143.221, RSMo, and to enact in lieu thereof three new sections relating to income taxes.

Be it enacted by the General Assembly of the State of Missouri, as follows:

            Section A.  Sections 143.071 and 143.221, RSMo, are repealed and three new sections enacted in lieu thereof, to be known as sections 143.022, 143.071, and 143.221, to read as follows:

            143.022.  1.  As used in this section, "business income" means the income greater than zero arising from transactions in the regular course of all of a taxpayer's trade or business and shall be limited to the Missouri source net profit from the combination of the following:

            (1)  The total combined profit as properly reported to the Internal Revenue Service on each Schedule C, or its successor form, filed; and

            (2)  The total partnership and S corporation income or loss properly reported to the Internal Revenue Service on Part II of Schedule E, or its successor form.

            2.  In addition to all other modifications allowed by law, there shall be subtracted from the federal adjusted gross income of an individual taxpayer a percentage of such individual's business income, to the extent that such amounts are included in federal adjusted gross income when determining such individual's Missouri adjusted gross income.

            3.  In the case of an S corporation described in section 143.471 or a partnership, computing the deduction allowed under subsection 2 of this section, taxpayers described in subdivisions (1) or (2) of this subsection shall be allowed such deduction apportioned in proportion to their share of ownership of the business as reported on the taxpayer's schedule K-1, or its successor form, for the tax period for which such deduction is being claimed when determining the Missouri adjusted gross income of:

            (1)  The shareholders of an S corporation as described in section 143.471;

            (2)  The partners in a partnership.

            4.  The percentage to be subtracted under subsection 2 of this section shall be increased over a period of years.  Each increase in the percentage shall be by ten percent and no more than one increase shall occur in a calendar year.  The maximum percentage that may be subtracted is fifty percent of business income.  Any increase in the percentage that may be subtracted shall take effect on January first of a calendar year and such percentage shall continue in effect until the next percentage increase occurs.  An increase shall only apply to tax years that begin on or after the increase takes effect.

            5.  An increase in the percentage that may be subtracted under subsection 2 of this section shall only occur if the amount of net general revenue collected in the previous fiscal year exceeds the highest amount of net general revenue collected in any of the three fiscal years prior to such fiscal year by at least one hundred fifty million dollars.

            6.  The first year that a taxpayer may make the subtraction under subsection 2 of this section is 2015, provided that the provisions of subsection 5 of this section are met.  If the provisions of subsection 5 of this section are met, the percentage that may be subtracted in 2015 is ten percent.

            143.071.  1.  For all tax years beginning before September 1, 1993, a tax is hereby imposed upon the Missouri taxable income of corporations in an amount equal to five percent of Missouri taxable income.  

            2.  For all tax years beginning on or after September 1, 1993, but before January 1, 2015, a tax is hereby imposed upon the Missouri taxable income of corporations in an amount equal to six and one-fourth percent of Missouri taxable income.

            3.  Beginning with the 2015 calendar year, the rate of tax on Missouri taxable income of corporations may be reduced over a period of years.  Each reduction in the rate of tax shall be by three-fifths of a percent and no more than one reduction shall occur in a calendar year.  The top rate of tax shall not be reduced below three and one-fourth percent.  Reductions in the rate of tax shall take effect on January first of a calendar year and such reduced rates shall continue in effect until the next reduction occurs.

            4.  A reduction in the rate of tax shall only occur if the amount of net general revenue collected in the previous fiscal year exceeds the highest amount of net general revenue collected in any of the three fiscal years prior to such fiscal year by at least one hundred fifty million dollars.

            5.  Any modification of tax rates under this subsection shall only apply to tax years that begin on or after a modification takes effect.

            143.221.  1.  Every employer required to deduct and withhold tax under sections 143.011 to 143.996 shall, for each calendar quarter, on or before the last day of the month following the close of such calendar quarter, file a withholding return as prescribed by the director of revenue and pay over to the director of revenue or to a depository designated by the director of revenue the taxes so required to be deducted and withheld.  

            2.  Where the aggregate amount required to be deducted and withheld by any employer exceeds fifty dollars for at least two of the preceding twelve months, the director, by regulation, may require a monthly return.  The due dates of the monthly return and the monthly payment or deposit for the first two months of each quarter shall be by the fifteenth day of the succeeding month.  The due dates of the monthly return and the monthly payment or deposit for the last month of each quarter shall be by the last day of the succeeding month.  The director may increase the amount required for making a monthly employer withholding payment and return to more than fifty dollars or decrease such required amount, however, the decreased amount shall not be less than fifty dollars.  

            3.  Where the aggregate amount required to be deducted and withheld by any employer is less than [twenty] one hundred dollars in each of the four preceding quarters, and to the extent the employer does not meet the requirements in subsection 1 or 2 of this section for filing a withholding return on a quarterly or monthly basis, the employer shall file a withholding return for a calendar year.  The director, by regulation, may also allow other employers to file annual returns.  The return shall be filed and the taxes if any paid on or before January thirty-first of the succeeding year.  The director may increase the amount required for making an annual employer withholding payment and return to more than [twenty] one hundred dollars or decrease such required amount, however, the decreased amount shall not be less than [twenty] one hundred dollars.  

            4.  If the director of revenue finds that the collection of taxes required to be deducted and withheld by an employer may be jeopardized by delay, he may require the employer to pay over the tax or make a return at any time.  A lien outstanding with regard to any tax administered by the director shall be a sufficient basis for this action.

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