HCS HB 1089 -- TAXATION

SPONSOR:  Stevenson

COMMITTEE ACTION:  Voted "do pass" by the Special Committee on
Tax Reform by a vote of 9 to 1.

This substitute changes the laws regarding taxation.  In its main
provisions, the substitute:

(1)  Changes the laws regarding the determination of whether a
substantial nexus exists for income tax and franchise tax
purposes with the state for certain corporations and individuals.
Substantial nexus will be determined without consideration of
whether an individual or a corporation owns, leases, or uses a
distribution or data storage facility in Missouri including those
selling property shipped from the facility or data stored at the
facility (Sections 32.130, 143.006, 144.605, and 147.010, RSMo);

(2)  Authorizes Perry County to levy, upon voter approval, a
sales tax of up to 1/4 of 1% to equally fund senior services and
youth programs.  The revenue received for senior services will be
administered by a senior services tax commission (Section
67.997);

(3)  Adds county assessors to the list of county officials who
must receive certified copies of the ordinances effecting a
concurrent detachment and annexation of property between
municipalities (Sections 71.011 and 71.012);

(4)  Authorizes the Motherhood/Fatherhood Stay-at-home Tax Credit
for a parent who stays at home to provide care for a child up to
24 months of age.  Any married parent who was gainfully employed
before the birth or adoption of a child whose annual salary was
less than $100,000 is eligible for a tax credit equal to 25% of
the stay-at-home parent's annual salary in the year before
choosing to become a stay-at-home parent.  The tax credit cannot
be refunded, transferred, sold, or assigned but can be carried
forward up to three years.  The annual cumulative amount of
credits issued may not exceed $2 million.  The Department of
Revenue will establish rules to implement the provisions of the
substitute (Section 135.636);

(5)  Requires operators of storage facilities beginning
January 1, 2008, to provide documentation including the owner's
name, address, county of residence, and a description of the
personal property to the county assessor where the rental or
leasing facility is located for property tax purposes.  The
substitute defines "personal property" as any house trailer,
manufactured home, boat, vessel, floating home, floating
structure, airplane, or aircraft.  Any storage facility that
fails to provide the required documentation will be assessed a
penalty and taxes for the personal property stored at its
location (Section 137.092);

(6)  Eliminates the corporate income tax, beginning January 1,
2008, for the first five taxable years of a new manufacturer's
existence in Missouri as certified by the Department of Economic
Development (Section 143.432);

(7)  Removes the "solely in interstate commerce" requirement for
the trucking exemption and exempts personal property and
utilities used in the research and development of
agricultural/biotechnology and plant genomics products and
prescription pharmaceuticals from local sales tax (Section
144.030);

(8)  Authorizes an exemption from state and local sales and use
tax for the cost of all utilities, chemicals, and materials used
in the manufacturing, processing, compounding, mining, or
production of a product; processing recovered materials; or
research and development related to manufacturing (Section
144.054);

(9)  Assigns school districts to metropolitan statistical areas
for the purpose of determining the dollar value modifier in the
school foundation formula.  When a school district contains
territory from more than one county, the district is assigned to
the county in which the district headquarters are located.  The
Monroe City R-II School District will be assigned to the county
that will yield the highest dollar value modifier (Section
163.016); and

(10)  Revises the definition of "community-based organizations"
to include any nonprofit corporations formed under Chapter 355
for which the department can approve to implement the Family
Development Account Program.  Currently, no more than 20% of the
moneys in the reserve fund account may be used for the
administrative costs of the program during its first two years
and 15% in subsequent years.  The amount will be reduced to 15%
for the first two years and 10% for subsequent years (Sections
208.750 and 208.755).

The provisions of the substitute regarding the
Motherhood/Fatherhood Stay-at-home Tax Credit will expire on
December 31 six years after the effective date.

The substitute contains an emergency clause.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of More than
$1,724,896 in FY 2008, More than $1,842,905 in FY 2009, and More
than $1,843,873 in FY 2010.  Estimated Cost on Other State Funds
of Unknown in FY 2008, FY 2009, and FY 2010.

PROPONENTS:  Supporters say that the bill makes sure Missouri
doesn't establish nexus that hurts economic development.  The
distributors want to protect their customers when they do
business in the state and to codify current practice.  Using a
distribution center will not create nexus under the bill.  The
fear of taxation has limited the use of Missouri's wholesalers.
The bill will encourage economic development.  South Carolina
passed a similar law in 2005 and the number of distributorships
in the state has increased.  A drop shipment occurs when a
product order is received over the telephone or Internet at an
out-of-state vendor and a distribution center in Missouri ships
it to a Missouri customer.  Currently, an out-of-state retailer
could have nexus with the use of a distribution center in
Missouri, and the distributors will stay out of this state if
their customers are subject to taxation.

Testifying for the bill were Representative Stevenson; Taxpayers
Research Institute of Missouri; Associated Industries of
Missouri; and Missouri Chamber of Commerce and Industry.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
94th General Assembly, 1st Regular Session
Last Updated July 25, 2007 at 11:21 am