HB 1370 -- Tax Credit Accountability

Sponsor:  Dempsey

This bill makes changes to the laws regarding tax credits.  The
bill:

(1)  Establishes a system of classifications for tax credits and
minimum requirements for each classification.  The administering
state agencies may promulgate rules to include additional
requirements or to explain the listed requirements;

(2)  Implements reporting requirements to assist future
legislatures in assessing the value of tax credit programs.
Reporting occurs over a period of three years for most credits.
Annual reports will be due June 30 each year.  Reporting will be
the duty of the recipient of the credit, except in the case of
certain contribution-based credits.  The bill requires that a
taxpayer receiving a credit be made aware of the future reporting
requirements prior to issuance;

(3)  Implements a compliance system for reporting.  Failure to
meet the annual reporting requirements will result in graduated
penalties.  A six-month grace period and at least one notice by
certified mail to the last known address of the taxpayer is
included.  If fraud is found by a court of competent
jurisdiction, a 100% penalty will be incurred.  Penalties will be
assessed against a noncompliant taxpayer at the end of the
taxpayer's taxable year and due on the last date of filing of the
taxpayer's return.  Collection procedures follow current
procedures for income taxes;

(4)  Requires that prior to approval of any tax credit
application, an administering agency will verify through the
Department of Revenue that the tax credit applicant does not owe
any delinquent taxes, including penalties and interest.  A tax
delinquency will not affect the approval of the application for
the tax credits, except that the amount of credits issued will be
reduced by the applicant's tax delinquency;

(5)  Requires two months' notice to the Department of Revenue
whenever more than $1 million of income tax credits are going to
be redeemed.  The notice must come prior to the assessment of tax
liability whenever a large sum of credits are going to be claimed
against a taxpayer's income tax liability.  The bill provides
that an early filing of tax liability will count as notice so
long as it is at least two months prior to the assessment date;

(6)  Provides that the minimum application requirements are made
open records once the credits have been issued.  When state
approval of a credit application occurs prior to actual issuance,
the application data will become an open record at the time the
application is approved.  Information relating to the application
for a special needs adoption tax credit are excluded from the
open record requirement;

(7)  Expands the existing audit statutes for state-sponsored cost
benefit analysis to require periodic examination of all credits.
Currently, only credits administered by the Department of
Economic Development are subject to analysis.  All audits will be
provided to the Governor, the legislature, and the Joint
Committee on Tax Policy; and

(8)  Charges the Joint Committee on Tax Policy with an automatic
review of the State Auditor's tax credit program audits.  After
this period of review, the committee will be given the option to
make an official recommendation to the General Assembly on its
merit and to suggest future treatment of each credit.

Missouri House of Representatives
92nd General Assembly, 2nd Regular Session
Last Updated September 23, 2004 at 11:15 am