SB 0524 - Fiscal Note

Fiscal Note - SB 0524 - Authorizes state income tax credit under federal claim of right statute

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 2191-02

BILL NO. Perfected SCS for SB 524

SUBJECT: Taxation and Revenue-General; Taxation and Revenue-Income

TYPE: Original

DATE: April 2, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	(unknown)	(unknown)	(unknown)
Total Estimated Net Effect on All State Funds	(expected to be less than $100,000)	(expected to be less than $100,000)	(expected to be less than $100,000)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 3 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Revenue (DOR) state this proposal would allow Missouri resident taxpayers to utilize the claim of right credit pursuant to section 1341 of the IRC against their Missouri income tax. DOR staff state the revenue impact is unknown, although it is anticipated that such loss would be less than $100,000 annually. This legislation would require modifications to the individual income tax system. These modifications would include programs, tables and reports, which would be completed by existing staff/resources.

Officials of the Office of Administration (COA) state they have not been able to locate any empirical basis to estimate the fiscal impact of this proposal.

While data is not available to accurately estimate the revenue impact of this proposal, Oversight assumes that the revenue loss would be less than $100,000 annually.

Oversight assumes this proposal would result in a decrease in Total State Revenues.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
Loss to General Revenue Fund
Claim of Right Credit	(unknown)	(unknown)	(unknown)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	0	0	0

FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

DESCRIPTION

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

is when a taxpayer claims income in a prior taxable year and pays tax on it, discovers at a later

time that the income should not have been claimed, and returns that amount in a later 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 but not the credit. This

act would authorize that credit.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Revenue

Office of Administration

Jeanne Jarrett, CPA

Director

April 2, 1998