Fiscal Note - SB 0170 - Allows Limited Liability Companies With Only One Member
L.R. NO. 0869-05
BILL NO. Truly Agreed To And Finally Passed HCS for SB 170
SUBJECT: Corporations: Business and Commerce
TYPE: Original
DATE: May 2, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($43,719)
to
(Unknown) (Unknown) (Unknown)
Total Estimated ($43,719)
Net Effect on All to
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 require non resident partners and shareholders that are now
subject to composite income tax return requirements 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 would 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 result in costs of $43,719 in FY 98 to implement the new corporation
type in SOS's computer system. The costs methodology used to determine
fiscal impact is based on the number and type of computer programs impacted
and increased data storage needs. The estimates have been based on usual
time and cost estimates and are for the number of service units needed based
on actual executions of processing similar to what would be required to
implement the new corporation type in the office's computer system. SOS
officials assume they would need to hire one Computer Information Specialist
(1 FTE at $33,000 per year) for FY 98 to analyze changes needed in computer
programs, the data base, forms and reports; to code computer program changes
and form changes; to code conversion program; to test new or changed
programs; to document changes and to remove old programs and reports.
Oversight assumes implementation of the new corporation type in SOS's
computer system could be achieved through contract labor and has included FTE
personal service costs as expense during FY 98.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
GENERAL REVENUE FUND
Costs-Office of the Secretary of State (SOS)
Expense for computer program changes ($43,719) $0 $0
Loss-Department of Revenue (DOR)
Individual tax returns filed in lieu of
composite income tax returns (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT TO ($43,719)
GENERAL REVENUE FUND to
(Unknown) (Unknown) (Unknown)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
$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.
In the area of the law governing the taxation of business entities, the bill
requires any nonresident partner or "S" corporation shareholder to agree to
file a state income tax return and be subject to personal jurisdiction (for
the purposes of collecting any state income tax due) before the partnership
or "S" corporation is released from the requirement of withholding state
income tax due from the partner or "S" corporation shareholder.
The proposal would repeal the definition of "limited liability company" that
required an LLC to be composed of two or more persons and would allow a LLC
with only one member.
The proposal would also make various changes relating to limited liability
companies, and limited liability partnerships.
In addition, the bill would create the entity "Limited Liability Limited
Partnership," whose members' personal liability will be limited as though
they were partners of a registered LLP, and would set forth the requirements
for forming such a partnership;
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.