Fiscal Note - SB 0269 - Regulation of Limited Liability Companies and Other Business Entities
L.R. NO. 0801-01
BILL NO. SB 269
SUBJECT: Business and Commerce; Corporations
TYPE: Original
DATE: February 3, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
State Funds (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None $0 $0 $0
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue (DOR) assume the proposed
legislation would result in no administrative impact to DOR. The proposal
would appear to let non resident partners and shareholders that are now
subject to composite income tax return requirements to make an election to
file under the provisions of Section 143.481, RSMo. Section 143.481, RSMo,
establishes the income tax return filing requirements for a non resident
individual. It is therefore assumed that any non resident partner or
shareholder that is required to file on a composite return could make an
election under this legislation to file a non resident individual income tax
return, which would result in a tax savings to the non resident individual.
However, this assumption would result in a loss to general revenue. During
1995, there were 454 composite income tax returns filed by partnerships and S
corporations. These entities paid $9.7 million in income tax.
Officials from the Office of the Secretary of State (SOS) assume the proposal
would have no fiscal impact on their agency. However, if certain components
of this bill related to registered limited liability partnerships entail
software changes, there could be a fiscal impact to the SOS.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE FUND
Loss-Department of Revenue (DOR)
Individual tax returns filed in lieu of
composite income tax returns (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND (Unknown) (Unknown) (Unknown)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
This proposal could result in a direct fiscal impact to small businesses.
DESCRIPTION
The proposed legislation would pertain to taxation of partnerships and S
corporations and to merger and consolidation of limited liability companies.
A partnership would be required to pay all of a nonresident partner's taxes
on such partner's income and be subject to jurisdiction in Missouri in order
to include a nonresident partner's income tax in its composite return. The
same requirements would apply to S corporations.
LIMITED LIABILITY PARTNERSHIPS: If a limited partner who withdraws from a
partnership does not demand his interest in the partnership, and the
operating agreement of the partnership is silent as to distribution of such
interest, the partnership would be allowed to purchase the interest of such
partner for fair value. A limited liability partnership would not be allowed
to distribute partnership assets to any partner if such distribution would
create excess liability for such partnership. Any partner who makes a
prohibited distribution would be liable to the limited liability partnership
for three years following the date of distribution.
A partnership that dissolves would be required to notify its known claimants
of such dissolution. All claims must be filed with the partnership within
ninety days of such notice. Such partnership would also be required to file
a notice of winding up for all unknown creditors. Such unknown claims must be
made within three years of such notice.
LIMITED LIABILITY COMPANIES: A member that withdraws from a limited
liability company would be required to account for any profit gained without
the informed consent of more than one-half of the disinterested partners.
Each limited liability company or limited partnership party to a merger or
consolidation would be required to enter into a written agreement setting
forth certain information and file such agreement with the Secretary of
State.
REGISTERED LIMITED LIABILITY LIMITED PARTNERSHIPS: This act would create a
new entity known as a registered limited liability limited partnership and
would set out the necessary requirements for forming such partnership.
Partners of such partnerships would have the same protections afforded to
partners of limited liability partnerships.
This act contains an emergency clause.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
This legislation could affect Total State Revenues.
SOURCES OF INFORMATION
Department of Revenue
Office of the Secretary of State
This Fiscal Note is not an official copy and should not be quoted or cited.