SB 0933 - Fiscal Note

Fiscal Note - SB 0933 - Allows for tax credits and tax credit assignments in the placement and adoption of special needs children

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3734-04

BILL NO. SB 933

SUBJECT: Children and Minors; Taxation and Revenue-Income

TYPE: Original

DATE: March 9, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	$0	(unknown)	(unknown)
Total Estimated Net Effect on All state FuNds	$0	(unknown)*	(unknown)*

*Could be expected to exceed ($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 Social Services (DOS) state this proposal would not fiscally impact their agency.

Officials of the Department of Revenue (DOR) state this proposal would expand the adoption credit and allow a taxpayer who "proceeds in good faith to adopt" a special needs child the tax credit. Currently, the law states that the taxpayer must legally adopt the child before a tax credit can be taken.

ADMINISTRATIVE IMPACT:

The Division of Taxation does not anticipate a large increase in the volume of returns with the revised adoption credit. However, it could take multiple tax seasons for the taxpayers to complete the adoption. The Division of Taxation would have to track each credit claimer to assure that the $10,000 per child adoption fees are not exceeded. The Information Systems Division would have to modify the MO-TC form and change the table system for tax credits, error messages and notice messages. These modifications would be completed with existing staff and resources.

Oversight assumes that this proposal would allow parents or businesses to make tax credit claims on their nonrecurring adoption expenses throughout the adoption process (up to a total of $10,000). Current law only allows credits in the year that the adoption becomes finalized. Approximately $900,000 in Special Needs Adoption Tax Credits are claimed annually. Oversight assumes this proposal would allow those claiming credits to do so sooner in many cases. However, it would also allow credits to be claimed for adoption expenses which do not actually culminate in legally adopting a special needs child. The increased credits due to passage of this proposal are unknown.

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
Increase Tax credits for Special
Needs Nonrecurring
Adoption Expenses	$0	(unknown)*	(unknown)*
*could be expected to exceed ($100,000)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	0	0	0
FISCAL IMPACT - Small Business

Small businesses would be expected to be fiscally impacted to the extent that they are involved and incur nonrecurring adoption expenses for a special needs child. Small businesses who incur these expenses may claim a tax credit for those expenses of up to $10,000 per child.

DESCRIPTION

This act allows parents to make tax credit claims on their nonrecurring adoption expenses throughout the child placement/adoption process (up to a total of $10,000). Current law only allows credits in the year that the adoption becomes finalized. The bill also allows taxpayers who receive this particular tax credit to assign the credit to the not for profit organization that was involved in the adoption proceedings. Tax credits that are assigned to not for profit organizations may be assigned in their entirety notwithstanding the taxpayer's tax due.

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

Department of Social Services

Jeanne Jarrett, CPA

Director

March 9, 1998