SB 1388 - This act establishes the doctrine of claim of right for income tax purposes in Missouri. Under the claim of right provision of federal law, a taxpayer is allowed to recalculate taxes previously paid, but subsequently determined to have been paid in error. The usual situation occurs when a taxpayer claims income in a taxable year and pays tax on the income, and then discovers at a later time that the income should not have been claimed, and later returns that income to its source in another tax year. The federal statute allows that taxpayer to calculate income tax for the year in which the amount is returned and to take either a deduction or a credit.
Under current law, Missouri Taxpayers are allowed to take the deduction in these circumstances because the federal deduction flows through to the Missouri return. However, the law does not provide for the credit option. This act would enable this second option of a credit.
JEFF CRAVER