Tax News

AIM Passes Priority Tax Legislation - ICC/Music City

2010-04-28T20:54:00.009-05:00

April 28, 2010 - AIM President Ray McCarty announced early this afternoon the Missouri House has finally passed SB 928, a top tax legislative priority of Associated Industries of Missouri.

"This bill corrects a misguided decision of the Missouri Supreme Court that would have resulted in a tax increase to be paid by all businesses selling goods and services to exempt organizations such as churches, government organizations, charities, and other exempt organizations," said McCarty. "Supreme Court justices were, in effect, legislating from the bench in enacting what amounts to a tax increase on those businesses that sell to these types of organizations. By their action today, the Missouri General Assembly rejected this judicial tax increase and we are thankful for their support."

Under the decision, businesses selling to these organizations and government entities would be responsible for paying tax on the purchase price of the items sold to those entities. This would increase costs for these businesses and result in higher costs for schools, government, churches, etc.

Associated Industries of Missouri began working to correct this problem as soon as the decision became final and the true impact of the decision was known. The AIM Tax Committee was instrumental in providing the expertise necessary to draft language that would, after many months of negotiation, be acceptable to the Missouri Department of Revenue in overturning this decision. Special thanks to Andy Zellars, Todd Iveson, and Trevor Bossert of the DOR, Rich Germinder of Senator Lager's office, and Jacinda Walters in Rep. Sutherland's office, who were very helpful in this effort.

The bill also addresses a similar decision relating to ticket sales.

The bill was sponsored by Senator Brad Lager, (R-12 Savannah, pictured above) and the bill was handled in the House by Representative Mike Sutherland, (R-99, Warrenton, pictured at left) - both long-standing supporters of Missouri business. WE THANK SENATOR LAGER AND REP. SUTHERLAND FOR THEIR LEADERSHIP IN FILING AND SHEPHERDING THIS BILL THROUGH THE LEGISLATIVE PROCESS. Governor Nixon is expected to sign the bill soon.

Click here for more information regarding SB 928.

Nixon Appoints Barragan-Scott Director of Revenue

2009-10-18T22:30:00.006-05:00

October 16, 2009 - Governor Jay Nixon today appointed Alana Barragan-Scott to the position of Director of Revenue. Barragan-Scott served most recently as acting Director of Revenue and previously as General Counsel to the Department of Revenue. Her appointment is subject to Senate confirmation. We met with Alana in her role as acting Director and believe Governor Nixon has made a sound choice in her appointment as Director of Revenue.

Here is the press release by Governor Nixon:
http://governor.mo.gov/newsroom/2009/Alana_Scott

Nixon Appoints Mitchell to Judgeship - Alana Barragan-Scott Named Acting Director of Revenue

2009-09-03T12:40:00.007-05:00

September 3, 2009 - On July 9, 2009, Governor Jay Nixon appointed Director of Revenue Karen King Mitchell to the Missouri Court of Appeals, Western District. Click here for the Governor's announcement.

The governor appointed Alana Barragan-Scott to the position of Acting Director of Revenue.

Chris Cudney, chair of the AIM/TRIM Tax Committee, Marc Ellinger, of Blitz, Bardgett and Deutsch and chairman of the AIM Board of Directors, and I recently met with the new acting director and the acting director of the Division of Taxation, Todd Iveson. The meeting produced an agreement to continue meetings started by the AIM/TRIM Tax Committee a couple of years ago that focus on efficiency measures and help increase understanding between taxpayers and the DOR.

Congratulations to Judge Mitchell and to Acting Director Barragan-Scott!

Governor-Elect Jay Nixon Names Director of Revenue: Karen K. Mitchell

2008-12-20T12:22:00.006-06:00

December 20, 2008 - Governor-elect Jay Nixon has his intention to name Karen K. Mitchell as the next Director of Revenue.

Ms. Mitchell, 50, currently serves as the Chief Deputy Attorney General, a position she has held since February, 1999. She graduated with a bachelors degree from the University of Missouri in 1981 and graduated from the University of Missouri - Kansas City law school in 1984. She is a recipient of the Missouri Bar Foundation Award for Outstanding Appellate Advocacy and the Ray Marvin Award, which recognizes outstanding assistant attorneys general nationally.

“During these challenging economic times, we must have a Director of Revenue who understands state government and has fresh ideas about how to make the Department more efficient, effective and responsive to the needs of Missourians,” Gov.-elect Nixon said. “I’ve worked closely with Karen Mitchell for the past 16 years, and I couldn’t ask for a better manager and professional to assume this important position in my administration. As Governor, I plan to revolutionize how the Department of Revenue does business, ending the system of political patronage for license fee offices and bringing many motor vehicle transactions online. Karen has been instrumental in developing these plans, and I know she’ll do an excellent job putting them into action. Together, we’re going to save money and improve service for Missourians.”

“Gov.-elect Nixon is committed to moving the Department of Revenue and the entire state government in a new direction, and I’m honored to have this opportunity to help bring about real change for Missourians,” Ms. Mitchell said. “From Day One, we’re going to hit the ground running. We’ll start the process of competitively bidding all the state’s license fee offices and expanding online services. As the national economic crisis continues, we’re going to use taxpayer dollars responsibly, and we will look for additional opportunities to save time and money for Missouri families. I look forward to continuing my career in public service under Gov.-elect Nixon’s administration.”

"Associated Industries of Missouri congratulates and welcomes Ms. Mitchell and we look forward to working with her to continue to achieve efficiencies in tax operations through informal meetings with the Department," said Ray McCarty, president of AIM and executive director of the Taxpayers Research Institute of Missouri. "These meetings have resulted in savings through elimination of unnecessary processes in the Departments of Revenue and Natural Resources and have increased cooperation between taxpayers and the tax collection department."

Official Withdrawal of State Tax Add Back Rule

2008-11-05T21:00:00.002-06:00

November 5, 2008 - As we first told you on August 28, 2008, the Missouri DOR agreed to withdraw the proposed rule on state tax addback. In the most recent Missouri Register dated November 3, 2008, the Secretary of State published the official order withdrawing the rule on behalf of the Director of Revenue.

This was the culmination of many months of work with the DOR, challenging the ability to issue this rule under the current statute. This is the third time the DOR has proposed the rule and the third time we have successfully challenged this rule that would have resulted in a tax increase for many employers that operate in multiple states.

Click here and look in the lower right hand corner for the official order withdrawing the rule.

If you have any questions, please contact me at the AIM offices.

Ray McCarty
President
Associated Industries of Missouri

Talks of Tax Increases Premature

2008-10-02T15:07:00.003-05:00

October 2, 2008 - The Missouri Budget Project has suggested the state budget is not sustainable with the current level of taxation and suggested that taxes must be increased, according to a story broadcast on KOMU-TV, Columbia, MO.

Ray McCarty, president of Associated Industries of Missouri, told KOMU's Brandon Lewis that holding the line on spending in Missouri has helped the state weather recent fiscal storms much better than other states. McCarty noted that Illinois faced budget challenges similar to those in Missouri several years ago. Illinois did not address spending and is still facing budget shortfalls and additional tax increases to fill their budget deficit. Missouri, on the other hand, took measures to reign in spending instead of tax increases and has enjoyed surplus revenues for several years.

McCarty reminded viewers that the Missouri Budget Project made dire predictions regarding the state budget in April and that TRIM had noted that the revenue shortfall was temporary due to automatic extensions of time to file income tax returnsin many counties that were ravaged by floods. When those returns were received, there was no budget crisis. See story on this subject below.

McCarty told Lewis that increasing taxes in a down economy is not the answer and that tax cuts such as the recent AIM/TRIM Manufacturing Inputs Sales Tax Exemption, have resulted in the creation of additional jobs and improved the economy in Missouri. McCarty said the position of Associated Industries of Missouri is that government must live within its means and if revenues decline, state government may need to more closely scrutinize spending. "Some expenditures may be wise uses of the taxpayers' money, but may not absolutely necessary," said McCarty. "Just as businesses tighten their spending as revenues decline, state government must do the same."

Click here for a link to the KOMU website where you may access a copy of the video.

DOR Withdraws State Tax Addback Regulation

2008-08-21T16:45:00.004-05:00

August 21, 2008 - We are happy to announce the Missouri Department of Revenue has withdrawn their proposed state tax add back regulation. See articles below for more information on why we opposed this regulation.

Thanks to all our Tax Committee members that worked hard to fight this over-reaching regulation!

Missouri Department of Revenue Publishes State Tax Addback Rule

2008-07-15T09:10:00.005-05:00

July 15, 2008 - As expected, the Missouri Department of Revenue today published a rule requiring taxpayers to add back state taxes.

Associated Industries of Missouri (AIM) and the Taxpayers Research Institute of Missouri (TRIM) are opposed to this regulation because it requires taxpayers to add back into income several state taxes that are NOT state income taxes. AIM and TRIM and several of our members have already met with the Department of Revenue to voice our concerns and will be filing an appeal with the Joint Committee on Administrative Rules. We were successful in defeating previous attempts to file this rule and will make every effort to protect taxpayers from this unreasonable and strained interpretation of Missouri statutes.

For the text of the rule, please click here. We will publish our appeal letter to the Joint Committee in the near future. Taxpayers wishing to have their comments included may send them to Ray McCarty, Executive Director of AIM's Taxpayers Research Institute of Missouri at ray@raymccarty.com.

UDITPA Changes Pondered by NCCUSL Committee

2008-07-11T16:27:00.007-05:00

The National Conference of Commissioners on Uniform State Laws (NCCUSL) Drafting Committee (the “Committee”), which will consider possible changes to the Uniform Division of Income for Tax Purposes Act (UDITPA), held its organizational meeting in Chicago May 30,2008. UDITPA is the model act that several states have adopted to govern their corporate income tax collection and is included in the Multistate Tax Compact (MTC). The Multistate Tax Commission was the primary proponent of the possible revision. Click here for a report prepared by Jim Eads, Director of Public Affairs for Ryan.

UPDATE: Jim Eads reports the NCCUSL has retreated a bit on this effort. Read his most current report here.

Mr. Eads also filed an additional report that you may find helpful if researching the issue. You may find the second report here.

You may also find a recent report by Robert Cline, Ernst & Young, on combined reporting of interest. The report was released by the Committee on State Taxation (COST).

DOR Extends Filing Deadlines for Flood Victims

2008-07-07T15:06:00.003-05:00

July 7, 2008 - The Missouri Department of Revenue announced today that the filing deadline for taxpayers in the counties of Clark, Lewis, Lincoln, Marion, Pike, Ralls and St. Charles will be extended to August 29, 2008, for any taxes due between June 1, 2008 and August 29, 2008.

On July 2, 2008, the federal government has also extended filing deadlines for these same counties which were declared federal disaster areas. Click here for the full press release from the Department of Revenue.

AIM and TRIM Commend Governor and Lawmakers for Real Property Tax Reform Bill

2008-07-02T14:05:00.012-05:00

By Christen Jackson

Associated Industries of Missouri (AIM) and its division the Taxpayers Research Institute of Missouri (TRIM) commend Gov. Matt Blunt for signing into law on Tuesday legislation that will finally provide all Missourians with real relief from rapidly rising property taxes.

Senate Bill 711, sponsored by Senate President Pro Tem Michael Gibbons, R-Kirkwood, closes tax increase loopholes, requires earlier notice and more information, and expands tax relief for seniors and the disabled.

“Owning your own home or business property is the backbone of the American dream, and yet for many Missourians ever increasing property taxes turned that dream into a nightmare,” said Gary Marble, president of Associated Industries of Missouri, who served eight years in the Missouri House of Representatives and helped lead the fight for property tax relief. “I commend Sen. Gibbons for succeeding in passing a reform measure that many of us have championed for more than a decade.”

This is the first legislation that significantly reduces real property taxes since the county sales tax was authorized in 1979, requiring counties to rollback their levies in amounts equal to the new sales tax revenue they would receive from the county sales tax.

“Throughout the process of writing and passing this new law, Associated Industries and the NFIB were the only two general business groups supporting this bill,” said Ray McCarty, executive director of the Taxpayers Research Institute of Missouri. “We supported the positive changes contained in the bill that will benefit the employers in Missouri.”

The new law closes a loophole that allows the taxing districts to apply new voter approved levies to future and unknown assessments. The Missouri Attorney General’s office issued an opinion in 2003 stating that taxing jurisdictions can take a tax increase approved by the voters, for example in 2006, and then apply that new tax rate to the higher reassessed value in 2007. “Many of our members have been upset with the drastic increase in their tax bills resulting from the reassessment of the value of their property every two years without a simultaneous roll-back in the tax rate,” said McCarty. “Because all taxing districts have not been required to roll-back their rates, employers and other property owners receive astronomical increases in their property tax bills. One of our members noted an increase of more than 30 percent.”

McCarty said that SB 711 will require taxing districts to roll-back their rates, and brings transparency to the property tax system by requiring taxing districts that want additional tax money to adopt a policy statement. “This reform measure returns accountability to the real property tax assessment system,” McCarty added. “Associated Industries is proud to have supported this legislation from introduction through final passage.”

Governor Blunt Extends Unemployment Tax Filing Deadline in Flood Damaged Areas

2008-06-27T16:01:00.005-05:00

June 27, 2008 - In a press release today, Governor Matt Blunt announced he has requested the Missouri Department of Labor and Industrial Relations extend the filing deadline for unemployment tax reports by 30 days, for employers in counties damaged by recent floods. The second quarter reports would normally be due July 31, but that deadline would be extended to August 31 according to the Governor's press release.

The deadline extension is NOT automatic, however. Employers in the affected counties may request the extension in writing or electronically through the Unemployment State Tax Automated Reporting System (USTARS).

Counties affected by the disaster declaration and this extension are:
The counties of Andrew, Atchison, Buchanan, Cape Girardeau, Clark, Holt, Jefferson, Lewis, Lincoln, Marion, Mississippi, New Madrid, Nodaway, Pemiscot, Perry, Pike, Platte, Ralls, St. Charles, St. Louis, Ste. Genevieve and Scott and the City of St. Louis.

Click here for the full press release.

Governor Blunt Signs TRIM/DOR/DNR Efficiency Measure

2008-06-19T16:56:00.003-05:00

June 19, 2008 - Governor Matt Blunt today signed HB 1670, legislation sponsored by Rep. Shannon Cooper at the request of the Tax Committee of Associated Industries of Missouri and the Taxpayers Research Institute of Missouri.

The bill will eliminate the unnecessary certification of pollution control equipment as a prerequisite for sales and use tax exemption. AIM/TRIM pushed for the legislation when we found, as a result of ongoing meetings with the Missouri Department of Revenue, the certification served no practical purpose. After further meetings with the Missouri Department of Natural Resources and the Department of Revenue, it was decided that the certification could be eliminated without negative consequence. The elimination of the certification step will save taxpayers money directly when they purchase exempt equipment and machinery to abate air and water pollution. It will also save all taxpayers money through elimination of unnecessary governmental red tape and will result in a modest cost savings to the state.

AIM/TRIM applaud Governor Blunt's signature of this important bill and thank Rep. Shannon Cooper for his sponsorship of yet another taxpayer friendly bill.

DOR Informational Letter Regarding DSL Fees

2008-06-09T10:37:00.002-05:00

The Missouri Department of Revenue has released an informational letter regarding the application of sales tax to DSL fees.

In the information letter, the Department states Missouri will have no ability to apply sales or use taxes to DSL services, effective June 30, 2008. For a copy of the informational letter, please click here.

This action was a result of federal legislation. The Internet Tax Freedom Act of 2007 prohibited the application of sales tax after June 30, 2008, by states that taxed the telecommunications service provided with the Internet service.

The Missouri Department of Revenue has claimed Internet access fees were subject to sales and use taxes in Missouri based on an exception to the original Internet Tax Freedom Act that allowed states that already applied sales taxes to Internet access fees to continue that practice. The original Act prohibited states that were not already collecting such taxes from imposing any sales tax on Internet access fees. According to informal surveys conducted as the Internet Tax Freedom Act was originally considered by Congress, Missouri's telecommunications companies were NOT collecting sales tax on DSL fees at the time the original Act was passed; therefore, the ability of Missouri to apply sales tax to DSL services has always been questionable. At least now the federal government has erased all doubt and effective June 30, 2008, the Missouri DOR will no longer ask our telecommunications companies to collect sales and use taxes on DSL services.

The letter states questions should be directed to Roger Freudenberg, Missouri Department of Revenue, Office of General Counsel, P.O. Box 475, Jefferson City, MO 65105-0475, or you may contact by phone at (573) 751-2633.

Taxpayers Research Institute of Missouri (TRIM) Not Surprised By May State Revenue Report

2008-06-07T00:35:00.005-05:00

June 5, 2008 - About one month ago, shortly before the end of the legislative session, the Office of Administration released year-to-date state revenue collection figures for April that showed 2.2% growth over the previous fiscal year. This growth was less than the growth originally projected in the consensus revenue estimate developed by the Office of Administration and House and Senate budget staff.

Some legislators and the Missouri Budget Project immediately announced the decline was indicative of a major problem with state revenues. In a report, the Missouri Budget Project predicted a budget shortfall of a half billion dollars by 2010, and cited the revenue numbers as support for their estimate.

When legislators asked about the revenue numbers, the Taxpayers Research Institute of Missouri responded that the collection data did not reflect a true comparison with the previous year because tax collections for more than one fourth of Missouri's counties were included in the previous years' totals, but not included in the current year-to-date figures. TRIM noted more than 30 counties that were ravaged by natural disasters were granted extra time to file their income tax returns for 2007, until May 19, 2008. TRIM Executive Director Ray McCarty pointed out that the counties involved included many counties with substantial income and that to use the data to predict a revenue problem was a mistake. McCarty urged patience until after the May revenue data were published before declaring any type of budget crisis.

This week, the Office of Administration released the year-to-date state revenue collection data for May and, as predicted by TRIM, the revenue numbers now show there was no real cause for concern. The Office says the 3.6% revenue growth indicates state revenues are back on track with previous estimates of growth. "While the national economy continues to show cause for concern, and Missouri will certainly not be immune from the effect of such national economic cycles, the use of incomplete data to predict a problem with state revenues was inaccurate," said McCarty. "We are pleased the state revenue data now show there was no cause for concern in the first place and that the panic surrounding the revenue estimates was premature."

Tax and Economic Development Legislation in the 2008 Legislative Session

2008-05-22T14:53:00.004-05:00

Property Tax Reform

For the first time in nearly 30 years, the Missouri General Assembly has passed legislation that will reduce real property tax rates through roll backs of levies, bring transparency to the property tax levy system, and provide more efficient appeals procedures for taxpayers. This is the first legislation to significantly reduce real property taxes since the county sales tax was authorized in 1979, requiring counties to rollback their levies in amounts equal to the new sales tax revenue they would receive from the county sales tax.

Throughout the process, Associated Industries of Missouri and the NFIB were the only two general business groups supporting the bill. We supported the positive changes contained in the bill that will benefit employers in Missouri. We applaud Senate President Pro Tem Mike Gibbons, and congratulate him on passing SB 711.

Many of our members have been upset with the drastic increase in their tax bills resulting from the reassessment of the value of their property every two years without a simultaneous roll-back in tax rate. Because all taxing districts are not required to roll-back their rates, employers and other taxpayers receive astronomical increases in their property tax bills. One of our members noted an increase of more than 30%!

SB 711 will require taxing districts to roll-back their rates. It will also bring transparency to the property tax system by requiring taxing districts that want additional tax money to adopt a policy statement, ordinance or resolution explaining tax increases in non-reassessment years. The bill also requires taxing districts to play fair with taxpayers by requiring tax increases to be adjusted so they reflect the amount of assessed tax that would be equal to the assessed valuation in effect at the time voters adopted the tax increase multiplied by the new tax rate. The current system allows an automatic double dip tax increase because the tax increase is adopted and then applied to the higher assessed valuations resulting from reassessment. The bill also clarifies procedures that must be followed when taxpayers appeal property tax assessments.

The bill returns some accountability to the real property tax assessment system. Associated Industries of Missouri is proud to have supported this legislation from introduction through final passage and look forward to Governor Blunt’s signature on the new law.

Defense Sales to Foreign Governments

Associated Industries of Missouri was proud to support legislation codifying the exemption of sales of items on the federal munitions list from state and local sales taxes. Only items on the federal munitions list are included in the exemption and it applies to the sale of such items to foreign governments.

Efficiency in Government

AIM asked Representative Shannon Cooper to file our bill to eliminate wasteful and unnecessary certification of pollution control equipment for sales tax exemption purposes. Rep. Cooper agreed and, thanks to his strong leadership, the legislation passed the General Assembly by nearly unanimous votes in both the House and Senate.

The bill is the product of ongoing meetings the AIM/TRIM Tax Committee has conducted with the Missouri Department of Revenue. Through these meetings, and subsequent meetings with the Department of Natural Resources, we found the certification of this equipment was completely unnecessary. We took action to eliminate the red tape, saving money for employer taxpayers directly and, because we are eliminating an unnecessary duty for government, the bill will save all taxpayers money. If approved by Governor Blunt, taxpayers will no longer need to seek certification of air and water pollution control equipment before receiving exemption from sales tax.

Again this year, Associated Industries of Missouri supported legislation that would send to voters a proposal to amend the Missouri Constitution to limit the amount that may be spent by state government. While the proposal bears some similarities to the Hancock Amendment, that amendment only addresses the amount of revenue that may be collected from taxpayers. This new amendment would limit the amount that could be spent by state government and move any excess revenues to savings accounts for use in leaner budget years, protecting the state’s ability to provide necessary services. If enough money is put back in these funds to adequately provide for future service needs, the balance would be used to provide tax relief for all taxpayers. This legislation did not survive the legislative process this year, but was passed by the House and was approved by a Senate committee. We will continue to press for improvements in the way the state government handles your tax dollars.

Economic Development Legislation

Associated Industries of Missouri supported the concepts of mega projects legislation, providing tax incentives to large employers that choose to locate in Missouri. This legislation was specifically drafted to attract a large airplane manufacturer from Canada to the Kansas City area. AIM supported the concept of the plan, but allowed the legislators latitude to determine the details of the deal. In the end, the terms of the deal were adjusted to provide that the company will not receive any benefits until five years after the initial deal, the incentive will be based on a percentage of payroll that is actually created, and the incentives must be repaid through sales of aircraft produced at the facility.

AIM also supported the major economic development bills that were also passed in the legislative session, providing a $20 million increase in the Missouri Quality Jobs program tax credit limitation. The Quality Jobs program is used by existing Missouri employers that are expanding and benefits are available for small companies, high tech companies, and high impact projects. Employers must create a minimum number of jobs paying at least county average wage and provide health benefits for employees in the new jobs. The Taxpayers Research Institute of Missouri compiled a report on the results of the program last year and found that at least $3 in tax benefit is reaped from each tax dollar invested in the program, making the program a win-win for employers and state and local governments, as well as the workers in the new jobs. The bill would also revive the job retention tax credit and that credit would expire in 2013.

Also included in the economic development bills were increases in the tax credit limits for Enhanced Enterprise Zones, maintaining an increase in the Development Tax Credit, and several other items that are important to current and future Missouri employers.

Entrepreneurial Development Council

This bill helps protect small businesses that have developed new products or processes from having their ideas stolen by interests that have a greater ability to afford litigation expenses. This cutting edge legislation could make Missouri the first “entrepreneur-friendly state” – a state that helps its corporate citizens, no matter how small, protect their intellectual property such as patents, copyrights and trademarks. The protections provided by the legislation will encourage innovation in Missouri.

The fund created in HB 2058 could be used for legal defense of intellectual property owned by registered entrepreneurs and for low interest loans and grants to support those entrepreneur’s new products.

Associated Industries of Missouri was the only statewide employer group supporting this legislation, joining universities and economic development groups in the effort. We thank Senator Frank Barnitz and Representative David Pearce for working together in passing this legislation that will help protect Missouri-born intellectual property.

Voice Over Internet Protocol (VoIP)

In response to increasing competition in voice communications and ever-changing telecom technology, legislation was passed to update Missouri laws and allow Missouri consumers to receive the full benefit of competition in the Voice Over Internet Protocol (VoIP) field.

Associated Industries of Missouri supported the bill that was prompted primarily by the need to respond to changes caused by new Internet technology and services that affect all voice providers. The legislation removes from state law barriers to competition between providers of voice services.

Wood Energy Tax Credit Sunset

Senator Brad Lager introduced legislation to sunset the Wood Energy Tax Credit in 2010. We brought together members of the industry to meet with Sen. Lager and were successful in convincing him to extend the sunset by three additional years. The Wood Energy Tax Credit provides an economic incentive to recycle wood byproducts and is used by charcoal producers and others. The charcoal producers are usually found in more rural areas of the states and the jobs provided by those operations are extremely important to local communities. AIM also solicited the assistance of Senator Frank Barnitz as he has one of these facilities in his district and he was extremely helpful in achieving this victory. The Wood Energy Tax Credit will now expire June 30, 2013, provided HB 2058 is signed into law.

Research and Development Tax Credits

Associated Industries of Missouri worked to reinstate a research and development tax credit that had previously expired, but that legislation was not successful this year. AIM will support this effort in the future. But even more importantly, AIM will introduce legislation in the next legislative session that will provide a more comprehensive research and development tax credit – one that will recognize and encourage research and development activities of all companies in a manner similar to the federal research and development tax credit. We worked diligently with experts in our membership and legislative sponsors, but were not able to develop language in time to pass the legislation this session.

Defense Pays Off

Everyone knows defense is important to our legislative efforts every session. This year was no exception. For example, one Senator introduced a bill to decouple from the federal accelerated depreciation that was included in the most recently approved economic stimulus package. We worked hard behind the scenes to successfully thwart that effort, meaning Missouri employers will now be able to fully enjoy the benefits of the accelerated depreciation when calculating their federal and state income tax liabilities.

We were also successful in convincing groups to drop their effort to remove the local use tax exemption that was provided in last years’ AIM/TRIM Manufacturing Inputs Exemption. While well meaning, the effort would have resulted in a tax increase to Missouri manufacturers and we were successful in defeating that effort.

Property Tax Bill Taken Up Briefly In House

2008-05-12T20:10:00.004-05:00

Monday, May 12, 2008 - The Missouri House, led by Chairman of the House Ways and Means Committee Rep. Mike Sutherland, briefly took up the property tax legislation sponsored by Senate President Pro Tem Mike Gibbons.

Associated Industries of Missouri is pleased to be the only statewide general business group other than the NFIB to support this comprehensive property tax reform bill. We thank both House handler Rep. Mike Sutherland and Senate President Pro Tem Mike Gibbons for their leadership on this legislation.

State Tax Add-Back Rule is BACK!

2008-05-02T16:47:00.001-05:00

Since 2005, Associated Industries of Missouri and the Taxpayers Research Institute of Missouri have fought to prevent the Missouri Department of Revenue from enacting a regulation that we believe exceeds current statutory authority and we have been successful in our previous attempts to convince the DOR to withdraw the rule. But just like the villain in a horror movie, the issue is back on the table.

At issue is which state taxes must be “added back” into Missouri income. Missouri requires any state income taxes that have been deducted to be “added back”, but the law does not specify which state taxes are truly “income taxes”. The issue can be confusing, especially when a state tax has some features of an income tax and some features of another type of tax, such as a franchise tax. For example, the DOR believes the California Franchise Tax should be considered an “income tax”, even though they have argued in at least one case before the Administrative Hearing Commission that the California Franchise Tax is NOT an income tax. Regardless, the DOR believes it is better for taxpayers to know where they stand on the issue, while we represent taxpayers that do not want the DOR to attempt to expand the statute by regulation. If the rule is broader than existing law allows, the DOR would in effect be legislating through regulation, a power reserved for the legislature by the Missouri Constitution.

At the invitation of Rep. Bryan Stevenson, Chairman of the Joint Committee on Administrative Rules, AIM and TRIM, along with other business representatives, are forming a group to work with key staff from the Missouri Department of Revenue. The goal of the group will be to see if there is common ground that may allow the DOR to produce a rule that does not go beyond the current statute and case law on the subject. Director of Revenue Omar Davis has indicated he is willing to listen to our concerns and indicated they intend to file the proposed regulation around the end of May. If you would like to work with the group, please contact Ray McCarty, Executive Director of TRIM, at ray@raymccarty.com as soon as possible.

Gibbons' Property Tax Reform Bill on Calendar

2008-04-21T18:16:00.007-05:00

April 21, 2008 - Senate President Pro Tem Mike Gibbons' SB 711 has passed the House committee and is awaiting further debate on the House floor. In the House committee hearing, as in the Senate committee hearing, the Taxpayers Research Institute of Missouri and NFIB were the only statewide employer groups that spoke in favor of the bill.

Property tax reform is extremely important to our members and we are pleased to be leading the charge in supporting these changes to the property tax system. For a copy of the most current version of the bill, click HERE.

AIM/TRIM Again Support President Pro Tem Gibbons' Property Tax Reform Bill

2008-04-03T15:26:00.006-06:00

April 3, 2008 - The House Ways and Means Committee today heard testimony on SB 711, sponsored by Senate President Pro Tem Mike Gibbons, a bill that will begin to reform Missouri's property tax system.

Associated Industries of Missouri and the NFIB remain the only two general business groups supporting the bill. We support the positive changes the bill makes for our taxpaying employers.

Many of our members have been upset with the tax bills resulting from the reassessment of the value of their property every two years without a simultaneous roll-back in tax rate. Because all taxing districts are not required to roll-back their rates, employers and other taxpayers receive astronomical increases in their property tax bills. One of our members noted an increase of more than 30%!

SB 711 would require taxing districts to roll-back their rates. It would also bring transparency to the property tax system by requiring taxing districts that want additional tax money to adopt a policy statement, ordinance or resolution explaining tax increases in non-reassessment years. The bill also requires taxing districts to play fair with taxpayers by requiring tax increases to be adjusted so they reflect the amount of assessed tax that would be equal to the assessed valuation in effect at the time voters adopted the tax increase multiplied by the new tax rate. The current system allows an automatic double dip tax increase because the tax increase is adopted and then applied to the higher assessed valuations resulting from reassessment.

County collectors, county assessors, the State Tax Commission and a citizens group in St. Louis County also support the bill.

Associated Industries of Missouri and Taxpayers Research Institute of Missouri Representing Your Interests on Key Issues

2008-02-29T16:10:00.007-06:00

ATTENTION MISSOURI BUSINESSES: AIM/TRIM are looking out for your best interests at the Missouri Capitol. AIM/TRIM were the only general business associations testifying on behalf of, and working to pass, the following key legislative issues:

HJR 70 – House Budget Chairman Allen Icet – Limits growth in state government to growth in the CPI and population. Excess revenues would be placed in two funds to help even out the ebb and flow of revenues and to provide for fiscal emergencies as well as natural disasters. When a certain percentage of total General Revenue has been placed in these funds, the excess would be used to reduce ALL income tax rates, both corporation income and individual income. This clearly helps all businesses in the state in at least two ways:

keeping government spending under control avoids tax increases that are usually designed to increase taxes for the non-voting business community; and,
reduction of the corporation income tax rate helps corporations and reduction of the individual income tax rate helps partnerships, S corporations, and sole proprietors.

HB 1981 – Rep. Michael Spreng/ Rep. David Pearce – Income tax credit for sales tax paid on motor vehicles assembled and purchased in Missouri. AIM/TRIM was the only general business group to register testimony in favor of this bill at the hearing this week by the House Special Committee on Job Creation and Economic Development.

AIM and TRIM were joined by NFIB as the only general business representatives supporting SB 711 – Senate President Pro Tem Gibbons’ property tax reform bill.
See article, flyer, and video below for more details of this pro-taxpayer legislation. Property tax increases have hit our business members hard and we want to support Senator Gibbons' effort to bring common sense back to the property tax process. AIM and TRIM also stood alone in support of the companion bill in the Missouri House, HB 2079, sponsored by Rep. Rick Stream and House Ways and Means Chairman Rep. Mike Sutherland.

AIM/TRIM Priority Bill Making Progress
HB 1670 – Rep. Shannon Cooper – our bill to eliminate wasteful and unnecessary certification of pollution control equipment for sales tax exemption purposes has passed the House and now awaits further action in the Missouri Senate. This bill is the product of ongoing meetings the AIM/TRIM Tax Committee has conducted with the Missouri Department of Revenue. Through these meetings, and subsequent meetings with the Department of Natural Resources, we found the certification of this equipment was completely unnecessary. We took action to eliminate the red tape, saving money for employer taxpayers directly and, because we are eliminating an unnecessary duty for government, the bill will save all taxpayers money.

Gibbons' Property Tax Reform Bill Clears Senate

2008-02-27T15:25:00.004-06:00

February 27, 2008 - Senate President Pro Tem Michael Gibbons' bill to reform property taxes in Missouri, SB 711, today cleared the Missouri Senate and will now move to the Missouri House. Click on the banner above for a flyer denoting the benefits to business from passage of the bill.

The bill provides important rate rollback provisions and provides transparency in the setting of property tax levies, while eliminating some problems with appeal notification. All of the changes are positive for all Missouri property taxpayers, including all Missouri businesses and we are very supportive of this effort.

Click on the banner above for a flyer on the business impact of SB 711 and click on the picture link below to see an interview with the President Pro Tem regarding this bill.

President Pro Tem Gibbons' Property Tax Bill Takes First Step In Senate

2008-02-21T17:57:00.006-06:00

February 21, 2008 - Senate President Pro Tem Michael Gibbons' Property Tax Reform bill, SB 711, received first round approval in the Missouri Senate today.

The bill, supported by Associated Industries of Missouri and the Taxpayers Research Institute of Missouri, helps taxpayers by providing transparency in the setting of property tax rates, requires local taxing districts to roll back their rates in keeping with the spirit of the Hancock Amendment, and enacts several needed changes to allow taxpayers to have more information regarding property tax increases sooner. The sooner taxpayers are aware of runaway tax assessments, the sooner they may prepare to appeal and challenge their property tax assessments. The bill also simplifies the appeals process for taxpayers and eliminates some problems that have surfaced recently that have effectively stopped taxpayers from appealing inappropriate tax assessments.

"This bill provides the transparency and restores the vital role of taxpayers in the taxation of their real and personal property," said Ray McCarty, Executive Director of the Taxpayers Research Institute of Missouri. "We applaud Pro Tem Gibbons' efforts on behalf of Missouri business taxpayers, some of whom have seen 60% increases in their property taxes this year." Click on the picture above for a video of an interview with President Pro Tem Gibbons regarding this bill.

The bill will face a final vote in the Missouri Senate before moving to the House for further debate. Don't forget to check our our new video service with more important tax video information at www.aimcapitolcast.com.

Corporation Income Tax Phaseout Approved by House Committee

2008-02-12T21:49:00.004-06:00

HB 1551, a bill to phase-out the corporation income tax filed by Rep. Bryan Stevenson (R-128, Webb City), was approved by the House Special Committee on Tax Reform.

SB 380 in 1993 was the largest tax increase in Missouri’s history. The bill limited the deductibility of federal income taxes and increased the corporation income tax by 25% to 6.25%. This tax increase affects all businesses – large businesses through the increased corporation income tax and the reduction of deductibility of federal income taxes, and small businesses through limitation of the FIT deduction for individuals.

This bill would phase out the corporation income tax 20% per year for 5 years, beginning in tax year 2009 and completely eliminating the tax in tax year 2013. We support eliminating the tax and applaud Representative Stevenson's efforts to improve the business climate in Missouri.

In the hearing on this bill, we offered one word of caution: other states that have eliminated taxes have later re-established similar taxes but circumvented case law and federal protections that have evolved for the former taxes. For example, Ohio is phasing out their franchise tax (similar to our income tax) and instituting a “Commercial Activity Tax” (CAT) in its place. The CAT does not have the long case history of the former franchise tax. It also does not contain federal protections against inappropriate taxation of certain activities (such as P.L. 86-272 that prohibits states from imposing income taxes on activities that are solely solicitation of orders).

We cautioned against the replacement of our current tax with a new tax and support either phasing the tax out completely and not replacing it with another tax, or reducing the rate to a point that makes Missouri more competitive with other states and nations.

The bill will now be eligible for debate by the full House.

Lt. Governor Peter Kinder Decides To Focus on Re-Election as Lt. Governor - Out of Governor's Race

2008-02-08T21:08:00.000-06:00

Springfield – Lt. Governor Peter Kinder tonight issued the following statement announcing he will not run for Governor, and will ask Missourians to re-elect him so he can continue to be an effective champion for Missouri values, veterans, seniors and a state government that makes every dollar count:

"I have taken on a cause as Lt. Governor to fight for the values I believe in - the values my mom taught me to believe in - faith, family, personal responsibility, service and keeping commitments to those who have sacrificed for this great nation.

"Missourians can be proud of what we have accomplished together in the Lt. Governor's office for the men and women in uniform who have given so much to this great country and who need an advocate who will fight for them, for the seniors who have worked and saved to build up this nation and who deserve our respect and a higher quality of life and for our workers and employers who deserve a state government that understands how to help Missourians create jobs and grow the economy.

"Working together we have delivered positive change that Missourians deserve and I want to continue keeping the change working for our state. It will take a combined effort of every Republican, ever Democrat, every leader and every Missourian to create jobs, advocate for our veterans, fight illegal immigration and deliver world class schools for our students and I want to continue being an advocate for change on these important issues.

"Since I was elected Lt. Governor in 2004 many Missourians have told me personally they would support me if I ever decided to run for governor. I never expected to make that decision this year.

"Since Gov. Blunt's announcement I have been overwhelmed by the support I have received from many Missourians who want to join my campaign for governor. After a great deal of thought and prayer over the last several weeks I have decided I will not run for governor this year, and will ask Missourians for their vote for Lt. Governor so we can continue our accomplishments for our veterans, seniors, workers and our shared Missouri values.

"This is a campaign I believe I would have won, but I also believe in my heart that this is the right decision. I hope it will help our Party unite so together we can tell Missourians a remarkable story of how together we turned our state around by turning a $1.1 billion deficit into three straight surpluses without raising taxes, ended the cuts to education while increasing funding for classrooms, transformed Missouri's health care system and helped bring nearly 90,000 new jobs to our state by supporting job-creating initiatives and investing in tourism as we did by bringing the Tour of Missouri to our state.

"I am enormously grateful and appreciative of everyone who supported me for governor. I know I can count on their support for my re-election. We must unite and let Missourians know how much is at stake in this election. We cannot afford to return to the failed policies of the past. We must elect a governor who will keep the change working for Missouri and that makes every dollar count."

President Bush Announces Bipartisan Economic Growth Agreement

2008-01-25T11:28:00.001-06:00

January 25, 2008 - President George W. Bush yesterday announced agreement with House leaders on an economic stimulus package that will benefit businesses as well as individual taxpayers.

The package includes a full tax break of $600 for individuals with less than $75,000 in income (phased out above that income level), and $1,200 for couples with less than $150,000 in income (also phased out above that income level) in 2008. The package also includes an additional $300 per child for eligible taxpayers.

To stimulate business investment, the package would allow businesses an additional deduction of 50% of the cost of new investment in equipment, software and other tangible property made in 2008. It is not clear from the fact sheet if this is accelerated depreciation or a bonus deduction, but it appears to be the latter.

Senate leaders have indicated they will have their own version of a package ready by the time the House completes their work on the bill, which could receive floor time as early as next week.

You may click on the picture to watch the news conference and here to see a fact sheet on the contents of the package as contained in the White House press package.

CAAP Program May Benefit Your Company When Audited

2008-01-24T11:58:00.002-06:00

The Computer Assisted Audit Program (CAAP): A program that can help cut the time a DOR auditor spends in your business during an audit.

During our regular discussions with the Department of Revenue regarding efficiency measures that can help save taxpayers and state tax collectors time and money, it was suggested that we communicate to our readers the benefits of the CAAP. The program allows you to assemble electronic records in a way that allows them to be used by the state's auditors to more efficiently audit your records. The benefit to taxpayers is that the auditors can spend less time disrupting your normal workflow and the accuracy of the audit calculations should be enhanced because you eliminate some errors in transposition. The DOR has a website that tells more about the program:

DOR - Computer Assisted Audit Program Link

We encourage taxpayers to educate themselves about this tool and implement the CAAP program where appropriate.

Governor Blunt's State of the State Address

2008-01-15T23:00:00.002-06:00

January 15, 2008 - Did you miss the State of the State? Click HERE for a link to YouTube to watch the entire address.

Does the State Owe Your Company???

2008-01-07T16:19:00.000-06:00

January 7, 2008 - TRIM has been conducting informal meetings with the Missouri Department of Revenue in an effort to increase efficiency and eliminate unnecessary work on the part of taxpayers and tax collectors.

We became aware that there were a large number of sales and use tax cash bonds that rightfully belong to taxpayers, but had not been returned to taxpayers because they had not asked for a refund. Our idea was to have the DOR automatically refund those bonds, but in many cases, the taxpayers are out-of-business or have moved, so that suggestion was rejected. Also, the statute that governs the bonds seems to indicate the bonds are to be "released" but there is nothing requiring DOR to spend time looking for taxpayers that have bond money due them.

So, DOR has asked for our help in spreading the word to businesses (and former businesses). If you meet the following criteria, you may be entitled to a refund of your cash bond:

Your business posted a cash bond when you opened a sales and/or use tax account;

AND

Your business has completed at least two years of compliance with the tax laws and has had no delinquencies; OR
You have closed your business and are no longer operating.

If you meet these criteria, you should complete a Bond Refund Application form (click on the link for a form) and and mail it to:

Missouri Department of Revenue
Taxation Bureau
P.O. Box 358
Jefferson City, MO 65105-0358

Or fax it to: (573) 522-1722.

If you have questions about completing this form, you may call the DOR at (573) 751-5860 or e-mail them at businesstaxregister@dor.mo.gov.

Governor Matt Blunt Names Omar Davis Director of Revenue

2007-12-27T14:15:00.000-06:00

JEFFERSON CITY - December 27, 2007 - Gov. Matt Blunt today announced Omar Davis will head the Department of Revenue and Todd Smith will serve as the director of the Department of Labor and Industrial Relations.

"Both Omar Davis and Todd Smith have helped me reduce the size of state government by answering my call to implement new efficiencies and reduce fraud and waste all while improving customer service for Missourians," Gov. Blunt said. "I am confident they will continue to make significant and valuable contributions to benefit our state and provide Missourians with accountable and transparent government services that provide the best value for every dollar we invest."

Mr. Davis, 32 of Columbia, will leave his post as the director of the Department of Labor and Industrial Relations to head up the Department of Revenue. He previously served as the director of Legal Services Division and general counsel for the Department of Revenue. Davis also worked as Deputy General Counsel in the Office of Gov. Matt Blunt and Securities Enforcement Council for Blunt when he was Secretary of State. Mr. Davis holds a bachelor's degree in psychology from Kansas State University and a juris doctorate from the University of Missouri School of Law.

The governor also announced he approves the Labor and Industrial Relations Commission's nomination of Todd Smith to replace Mr. Davis as the director of the Department of Labor and Industrial Relations.

Mr. Smith, 48 of Sedalia, is currently the Deputy Director for the Department of Labor and Industrial Relations. He previously worked as Director of Legislative Affairs in the Office of Gov. Matt Blunt and is a former state representative. Mr. Smith served in the Missouri General Assembly from 1984-1994 and from 2002-2006. Smith also served as the Presiding Commissioner of Pettis County in between his service in the state legislature. He also worked in manufacturing and was co-owner of an advertising and public relations company.

President Bush Extends Internet Tax Moratorium

2007-11-02T08:29:00.000-06:00

October 31 - President George W. Bush has signed an extension of the Internet Tax moratorium that protects consumers from state and local taxes levied on internet access until November 1, 2014. Without this action, the previous moratorium would have expired November 1, 2007.

Missouri tax officials claim they are "grandfathered" in and may continue to collect tax on internet access because they collect them today and have collected such taxes prior to October of 1998. However, most (if not all) telecommunications companies are not now charging, nor have they charged, state or local sales taxes on fees charged to customers for internet access. Photo credit: allen.senate.gov

Click here for the entire article from Deloitte.

October 24, 2007 - DOR Extends Credit Process for Utility Vendors

2007-10-24T20:30:00.000-05:00

October 24, 2007 - The Taxpayers Research Institute of Missouri, a division of Associated Industries of Missouri, contacted the Missouri Department of Revenue today regarding the simplified credit process for sales of energy sources and water on behalf of Missouri utility vendors. The simplified process was to have expired October 28, 2007.

Following our contact with the Department, late this afternoon the DOR issued an extension of this credit process until January 31, 2008. They also stated this deadline will NOT be extended. An extension of this simplified process was important in helping utility companies and the DOR avoid thousands of refund requests and amended sales tax returns that would have been required to properly account for sales of utilities that are entitled to exemption from state and local use tax and state sales tax under the AIM/TRIM Manufacturing Inputs Exemption in SB 30. The simplified process furthers the Department of Revenue's stated goal of allowing as many manufacturers as possible to take full advantage of the new exemption without delay while minimizing paperwork as much as possible for the sellers for the sellers of the exempt items.

Utility vendors are in a unique situation in that all manufacturers obtain energy from a relatively small number of utility providers in the state, making the concentration of exempt transactions much higher than for other vendors. In other words, all utility companies will be affected by the exemption and every manufacturer obtains power from one of the utility companies. The process of receiving and tracking exemption certificates and making the necessary bookkeeping adjustments to charge only the local tax is an overwhelming task, especially since many manufacturers are just now discovering they are entitled to the AIM/TRIM exemption. As they provide exemption certificates to their utility vendors, all bills after August 28, 2007 will be affected by the new exemption and only local sales tax will be charged on the appropriate manufacturing percentage as determined by the manufacturer. If a manufacturer uses at least 76% of the energy purchased for one of the exempt processes in SB 30 (manufacturing, mining, producing, compounding, processing a product), all of their utility purchases for that facility will be subject to local sales tax only under the AIM/TRIM Manufacturing Inputs Exemption.

AIM/TRIM applauds the Missouri Department of Revenue and its leadership, particularly Director of Revenue Trish Vincent and Deputy Director of Revenue Lowell Pearson for implementing the AIM/TRIM Manufacturing Inputs Exemption in a fair and reasonable manner that upholds the spirit of the exemption: to make Missouri manufacturers more competitive with manufacturers in other states.

You may find the new extension at the top of the list of SB 30 documents at the top of this page.

DOR Codifies Guidance in Proposed and Emergency Rules

2007-10-11T21:03:00.000-05:00

October 10, 2007 - The DOR has filed a proposed and accompanying emergency rule that codifies their previous "DOR Guidance" document with some changes. You may find the new rules by following the links at the top of this page.

DOR: Treatment of Lease Payments

2007-10-09T18:58:00.000-05:00

October 9, 2007 - We have learned the DOR has decided lease payments on qualifying equipment will be exempted or taxed based on the date of such lease payments.

As a result, even though a lease was initiated prior to August 28, 2007, lease payments made on or after that date for equipment covered under the new AIM/TRIM Manufacturing Inputs Tax Exemption will be exempted from state and local use taxes and state sales taxes. Local sales taxes will continue to apply to such lease payments.

This makes sense because Missouri's sales tax law is a gross receipts tax. Gross receipts on leases occur when the lease payment is made, so the law in effect when the lease payment is made should govern the transaction, even though the lease was initiated prior to the effective date of the new AIM/TRIM Manufacturing Inputs Tax Exemption.

Proposed and Emergency Rules Filed

2007-09-26T13:59:00.001-05:00

September 26, 2007 - The Missouri Department of Revenue filed a set of emergency rules and regular proposed rules with the Secretary of State and those rules have been published in the September 17, 2007, edition of the Missouri Register.

The rules include the manufacturing rules that have been modified or established to reflect the Department's interpretation of the recently implemented AIM/TRIM Manufacturing Inputs exemption contained in SB 30. While the emergency rules are in effect and will expire February 23, 2008, taxpayers may file comments on the regular proposed rules prior to October 17, 2007. Comments in support of or in opposition to the proposed rules should be sent to:

Missouri Department of Revenue
Legal Services Division
Governmental Affairs Bureau
P.O. Box 475
Jefferson City, MO 65105-0475

Visit the following links to view the emergency and proposed rules (the links are also included at the top of this page):
Emergency Rules Published September 17, 2007
Proposed Rules Published September 17, 2007

If you like, you may also send copies of any comments you make to us via email at ray@raymccarty.com or via regular mail at:

Ray McCarty
Executive Director
Taxpayers Research Institute of Missouri
3234 W. Truman Blvd.
Jefferson City, MO 65109

DOR Decides Repair Parts Included in AIM/TRIM Exemption

2007-09-11T10:18:00.000-05:00

September 11, 2007 - The Department of Revenue has decided parts purchased for use on machinery and equipment that is entitled to the AIM/TRIM Manufacturing Inputs sales tax exemption would also be exempt. As such, the purchase of such parts will be exempt from state sales tax and state and local use taxes.

Many taxpayers may recall previous administrations of the Department of Revenue that forced taxpayers to seek and eventually obtain a legislative change to include parts in the original manufacturing machinery and equipment exemptions. The decision by this administration to treat parts the same as the machinery and equipment to which it is attached is refreshing.

See articles below for additional details regarding the exemption that have been provided by the Department of Revenue.

DOR Answers Questions

2007-09-07T11:48:00.000-05:00

Here are the Department of Revenue's responses to the questions asked by manufacturers at a recent meeting in Neosho, MO, regarding the AIM/TRIM Manufacturing Inputs state sales and use tax (and local use tax) exemption in section 144.054 of SB 30:

Water used in cleaning products during in the manufacturing process (such as prior to painting, for example) is exempt from state and local use taxes and state sales taxes under the AIM/TRIM Manufacturing Inputs Exemption in section 144.054 of SB 30;
Water used to cool equipment that is used in manufacturing is a material that is exempt from state and local use taxes and state sales taxes under the AIM/TRIM exemption;
Coolant used in manufacturing machinery and equipment is exempt from state and local use taxes and state sales taxes;
Water used in the form of steam or used in chillers in a manufacturing facility is exempt from state and local use taxes and state sales taxes ;
Warehousing utilities are exempt from state and local use taxes and state sales taxes (even if held to be taxable, warehousing utilities that are part of the manufacturing facility should be covered under the tier system established by DOR, so if 76% or more of the total energy purchased is for manufacturing, the entire energy purchase would be exempt from state and local use taxes and state sales taxes);
Quality control processes in the manufacturing facility are exempt processes under the AIM/TRIM exemption for state and local use taxes and state sales tax;
Laboratory materials and supplies used for quality control or other manufacturing processes are exempt from state and local use taxes and state sales taxes;
Gloves, ear plugs, goggles and other safety equipment are exempt from state and local use taxes and state sales taxes;
Processes used to preserve products at the production facility are part of the production process and machinery, equipment, materials and energy purchased for use in those processes are exempt from state and local use taxes and state sales taxes;
Wastewater treatment, both pre- and post-production, would be included as part of the manufacturing process, so chemicals, water, materials, machinery, equipment, etc., would qualify for exemption from state and local use taxes and state sales taxes under the AIM/TRIM exemption;
Epoxy or other floor coatings would NOT be included as a material used in manufacturing, producing, etc., a product and are NOT entitled to exemption;
Racks used in the production process are exempt from state and local use taxes and state sales taxes, even if those racks are used to ship the products to customers. The fact they are used in the production process allows them to be included under section 144.054;
Safety posters would NOT be considered safety equipment and the purchase of such posters would NOT be exempt under section 144.054;
Warehousing of raw materials is considered to be part of the manufacturing process and energy, machinery and equipment purchased for use or consumption in such warehousing of raw materials would be exempt from state and local use taxes and state sales taxes under section 144.054;
The purchase of equipment used in a maintenance department of a manufacturing or production facility to maintain other production equipment is entitled to exemption from state and local use taxes and state sales taxes.

As we receive additional information, we will post it here, so please check back often for updates.

Letter Ruling Form Now Available from Taxpayers Research Institute

2007-09-05T12:07:00.001-05:00

September 5, 2007 - Do you have a question regarding a tax issue and you have not been successful in finding an answer? Have you inquired of the Department of Revenue and been asked to submit a letter ruling request? Feeling overwhelmed by the thought of possibly skipping information that would be required in a "letter ruling request"? Well, fear no more.

With TRIM's free "Letter Ruling Request Template" (click the "Resources" tab at the top of this screen), you may now download a fill-in-the-blank Word template to your computer, open the form with Word, fill in the blanks, print and mail the finished document to the Missouri Department of Revenue.

If you do not want to use a Word template, you may still open the document in Word, print, and use it as a guide to be sure you have all the required elements of a letter ruling request.

If you have questions, please contact us at rmccarty@aimo.com.

FREE Information on the AIM/TRIM Manufacturing Inputs Tax Exemption

2007-08-30T01:46:00.000-05:00

NOTICE TO MANUFACTURERS:

Associated Industries of Missouri and the Taxpayers Research Institute of Missouri hosted a symposium in July. We taped that session with intentions of making a DVD available, free of charge, to our members. We discovered, however, before we could even get the video in a form that could be distributed, the information in the video had changed, due to the ever-evolving interpretations of the Missouri Department of Revenue. We fear distributing that video may lead our members to rely on information in the video that is now outdated.

In fact, the interpretations and application of the exemption are changing so rapidly that we decided the best way to communicate the most current information to our members was to keep our website updated with the most current information. This has already worked to our members’ advantage because we recently received an updated interpretation from the Missouri Department of Revenue and posted it to our website within minutes of receipt. Maintaining the website will ensure our members have access to the most accurate information available with which to make their business decisions and to maximize their ability to take full advantage of the new AIM/TRIM Manufacturing Inputs exemption.

On this website, you will find links to the Missouri Department of Revenue’s website containing proposed rules. The proposed and emergency rules can be confusing for taxpayers that do not regularly read such rules. As you read these rules, the language that is enclosed in brackets ( [ ] ) is intended to be deleted and language appearing in bold is intended to be added to the rule. The most important rule developed by the DOR so far that relates to all manufacturers, producers, etc., is 12 CSR 10-111.011, which you will find here: http://dor.mo.gov/tax/pros/proposedrules/P-RUL-111-011-dor-vw.pdf

No special application is required to take advantage of the AIM/TRIM Manufacturing Inputs Exemption. You need to complete a Sales/Use Tax Exemption Certificate, DOR Form 149, and provide that certificate once to each of your vendors. As long as the vendor has the exemption certificate on file, you do not need to complete a new exemption certificate for each purchase. The exemption certificate may be found here: http://dor.mo.gov/tax/business/sales/forms/149f.pdf

To determine what processes are exempted under the new AIM/TRIM Manufacturing Inputs Exemption, you need to make a determination based on the most recently available information from the Department of Revenue. Here is the link to the most current information provided by the Department of Revenue: http://dor.mo.gov/tax/pros/proposedrules/P-RUL-111-011-dor-vw.pdf

All energy sources (electricity, gas, coal), water, machinery, equipment and chemicals that are used or consumed in the manufacturing, processing, compounding, mining or producing of any product are exempt from state sales taxes and state and local use taxes under the AIM/TRIM Manufacturing Inputs Exemption. If the items are used directly in the process, they will be exempted by the new law (from state sales taxes and state and local use taxes – local sales taxes continue to apply).

Some have asked what types of businesses qualify as a “manufacturer” that is able to receive the exemption. It is important to note that you are not required to be a “manufacturer” to obtain the exemption. You must be performing one of the exempt activities: manufacturing, processing, compounding, mining or producing a product. There is no requirement in the law that the product be a taxable product. The Department of Revenue will continue to refine its interpretation and any updates will be posted on this website.

Regarding the purchase of energy from utility providers, if your company is entitled to the exemption, you must complete and provide an exemption certificate (DOR 149) to your energy provider. Use box 5b on the form to estimate the percentage of your utility purchases that are exempt based on the table provided in the following rule: http://dor.mo.gov/tax/pros/proposedrules/E-RUL-110-601-dor-vw.pdf

Associated Industries of Missouri and the Taxpayers Research Institute of Missouri is happy to have achieved this exemption and to provide this information to you free of charge. We encourage you to check our website often because we will have the most current information posted here for you. Feel free to forward links to our website to your corporate or branch offices, and thank you for your continued support of AIM and TRIM.

ADDITIONAL RESOURCES:
MISSOURI DEPARTMENT OF REVENUE WEBSITE ON AIM/TRIM MANUFACTURING EXEMPTION

AIM/TRIM MANUFACTURING INPUTS SALES TAX EXEMPTION - EFFECTIVE TUESDAY, AUGUST 28

2007-08-24T13:17:00.000-05:00

JEFFERSON CITY -- On Tuesday, Aug. 28, the AIM/TRIM Manufacturing Input Sales Tax Exemption will go into effect, and will save Missouri’s manufacturers millions of dollars every year. Associated Industries of Missouri (AIM) and the Taxpayers Research Institute of Missouri (TRIM), worked for more than two years to get this measure enacted.

Passed as part of Senate Bill 30, this legislation will exempt energy sources (such as electricity, gas, and coal), water, chemicals, machinery, equipment and materials from state sales taxes and state and local use taxes when used or consumed in manufacturing, mining, compounding, processing or producing any product. The bill also exempts these items when used in research and development related to manufacturing. The exemption extends only to state sales and use taxes and local use taxes; local sales taxes will continue to apply.

With Missouri’s 4.225 percent sales tax rate, the exemption will save a manufacturer $4,225 on a $100,000 purchase.

“This is landmark legislation that will give a huge boost to the manufacturers of this state,” said Ray McCarty, executive director of TRIM. “This exemption allows Missouri to better compete with other states for manufacturing operations.”

Since the measure was signed into law by Gov. Matt Blunt on June 13, AIM and TRIM is working closely with the Missouri Department of Revenue to make implementation of the exemption run as smoothly as possible. The Missouri Department of Revenue has posted some additional information regarding the AIM/TRIM Manufacturing Inputs sales tax exemption.

For general information, links to the exemption certificates and other valuable information from the Department of Revenue, click here.

NEW AUGUST 28, 2007:
The Department of Revenue has issued additional guidance on application of the exemption. To see the new guidance, click here.

If you would like to view the proposed rules, please click here. PLEASE NOTE THAT THE LANGUAGE THAT APPEARS IN BRACKETS IN THE TEXT OF THE PROPOSED RULES IS INTENDED TO BE DELETED AND NEW LANGUAGE THAT IS INTENDED TO BE ADDED APPEARS AS BOLD-FACE TEXT.

The AIM/TRIM Manufacturing Inputs Sales Tax Exemption will be an agenda item at two upcoming AIM conferences – the 2007 Tax Conference, scheduled for Oct. 18 and 19 at the Lodge of the Four Seasons, Lake Ozark; and the 2007 Manufacturing Conference, Nov. 14 and 15, at the Courtyard Marriott, Columbia. For more information on these conferences, go to the AIM website – www.aimo.com – and click on conference/seminars.

If you have any further questions, please contact the Missouri Department of Revenue by phone at (573) 751-2836 or by email at: salesuse@dor.mo.gov

As always, Associated Industries and the Taxpayers Research Institute stands ready to assist you with the exemption. You may contact Ray McCarty, Executive Director of the Institute at rmccarty@aimo.com.

Rebuttable Presumption Passes House in Economic Development Bill

2007-08-23T16:33:00.001-05:00

August 23 - The Missouri House today gave first round approval to the economic development bill, HB 1. The bill contains the Quality Jobs program cap increase and the "rebuttable presumption" that auto makers are entitled to the electrical energy sales tax exemption. Both provisions were supported by Associated Industries of Missouri and the Taxpayers Research Institute of Missouri. You may find a copy of the bill here.

The "rebuttable presumption" language simply codifies an existing procedure that was agreed upon by a subcommittee of the Associated Industries of Missouri Tax Committee and the Missouri Department of Revenue. The agreement, and this statutory change, will save automakers hundreds of thousands of dollars annually in unnecessary bookkeeping costs. All automakers in Missouri are already eligible for the exemption and would continue to be eligible under the bill.

Although there were many amendments offered, only one amendment was found to be in order and passed by the House, a technical correction in the title of the bill. The emergency clause was NOT adopted in the House. The new caps for Quality Jobs, the "rebuttable presumption" language, and all other provisions of the bill will become effective ninety days after the end of the special legislative session.

Rep. Ron Richard handled the bill expertly to pass the bill in a bipartisan fashion. The bill now moves to the Senate for consideration next week.

Neosho Meeting RESCHEDULED Due To Special Session

2007-08-20T15:31:00.000-05:00

RESCHEDULED!

AIM/TRIM Manufacturing Inputs Sales Tax Summit

F R E E

La-Z-Boy Midwest

4301 Howard Bush Drive

Neosho, MO 64850

September 6, 2007

8:30 a.m. – 11:30 a.m.

Breakfast is complimentary

During the 2007 Legislative Session, the General Assembly passed the AIM/TRIM Manufacturing Inputs Sales Tax Exemption (Senate Bill 30), which exempts from state sales and use tax and local use tax all utilities, chemicals, machinery, and equipment used in manufacturing.

To find out how this new law will impact your business, plan to attend this FREE symposium from 8:30 a.m. to 11:30 a.m. on Thursday, September 6, 2007 at the La-Z-Boy Midwest Facility, 4301 Howard Bush Drive, Neosho, MO 64850. A complimentary breakfast will be provided.

The Taxpayers Research Institute (TRIM) will provide a history of the exemption and an overview of the new law. The Missouri Department of Revenue will also address the crowd regarding requirements for claiming the exemption.

SPEAKERS:

Ray McCarty, Executive Director of TRIM

We will discuss the passage of the AIM/TRIM Manufacturing Input Exemption, history of the exemption, etc.

Missouri Department of Revenue Leadership (by telephone)

We will discuss their vision for implementation of the exemption:

How DOR plans to determine manufacturing vs. non-manufacturing use
Taxpayer record keeping requirements
Forms that will be required
Acceptable methods of calculating utility use for manufacturing
Issue resolution process – for resolving taxpayer questions
Question and answer period to allow attendees to ask questions of the DOR experts relating to their manufacturing business.

Breakfast provided by: La-Z-Boy Midwest.

Please complete the registration below and fax it to (573) 634-4406. Attendance will be limited, so register now.

F R E E

Manufacturing Input Sales Tax Summit

September 6, 2007

8:30 a.m. – 11:30 a.m.

Location: La-Z-Boy Midwest

4301 Howard Bush Drive

Neosho, MO 64850

Mark Your calendar to attend this F R E E breakfast meeting!

Name ____________________________

Company __________________________

Phone # _________ E-mail ____________

Number of attendees: _______

Membership in (please circle one): AIM TRIM MTD NONE

Please complete this form and return to:

Jan Schanbacher

Associated Industries of Missouri

Fax # (573) 634-4406

jschanbacher@aimo.com

Phone: (573) 634-2246

DOR Clarifies AIM/TRIM Manufacturing Exemption for EEDPA Taxpayers

2007-08-17T22:42:00.000-05:00

We have been working with the DOR to implement the provisions of the AIM/TRIM Manufacturing Inputs Exemption and we have received more information from Deputy Director of Revenue Lowell Pearson regarding the proper procedure for claiming exemption under SB 30 if you are already using the Electrical Energy Direct Pay Authorization (EEDPA).

Mr. Pearson indicates currently authorized users of the EEDPA may continue to give the utility companies their full exemption certificate and self accrue/pay the local sales tax only on the appropriate part of their purchases. There is no need to use a second exemption certificate.

Please let us know of any comments and we will return them to the DOR. Thank you for your patience as we work to implement this exemption. To send us an email, please click here.

Department of Revenue Information on AIM/TRIM Manufacturing Inputs Exemption Posted

2007-08-14T12:19:00.000-05:00

The Missouri Department of Revenue has just posted some additional information regarding the AIM/TRIM Manufacturing Inputs sales tax exemption. AIM and the Taxpayers Research Institute continue to work closely with the Department of Revenue to resolve issues surrounding the implementation of this exemption.

For general information, links to the exemption certificates and other valuable information, click here.

If you would like to view the proposed rules, please click here. PLEASE NOTE THAT THE LANGUAGE THAT APPEARS IN BRACKETS IN THE TEXT OF THE PROPOSED RULES IS INTENDED TO BE DELETED AND NEW LANGUAGE THAT IS INTENDED TO BE ADDED APPEARS AS BOLD-FACE TEXT.

If you have any further questions, please contact the Missouri Department of Revenue by phone at (573) 751-2836 or by email at: salesuse@dor.mo.gov

As always, Associated Industries and the Taxpayers Research Institute stands ready to assist you with the exemption. You may contact Ray McCarty, Executive Director of the Institute at rmccarty@aimo.com.

Symposium A Great Success!!!

2007-07-30T16:21:00.000-05:00

Thanks to the support of our sponsors (KCP&L and Ameren), more than 125 manufacturers, utility companies and suppliers were treated to lunch and details regarding the new AIM/TRIM Manufacturing Inputs Sales Tax Exemption that was contained in SB 30 and signed by Governor Matt Blunt into law effective August 28, 2007. Associated Industries of Missouri and the Taxpayers Research Institute of Missouri were pleased to coordinate this meeting to help ensure the bill is implemented as we intended when we drafted the language and we are pleased to report it appears the DOR will interpret our language as we intended.

Director of Revenue Trish Vincent and Deputy Director Lowell Pearson addressed the crowd and explained that the manufacturing tax break was a priority of Governor Blunt and that the Department of Revenue would interpret the language as they believed the legislature and Governor intended for it to be interpreted: as a benefit to Missouri manufacturers. During the talk and the responses to the questions that followed, it became apparent that the Department of Revenue, under Director Vincent's leadership, is committed to providing the exemption in as broad a manner as possible, exactly as we drafted and explained it during its course through the legislature.

Although many finer details such as forms and detailed processes are still being determined, the Director and Deputy Director fielded many questions and provided attendees with insight on their view of the new law. One of the most important determinations that was made is that, because we drafted the language without requiring direct use of items in the manufacturing process as a prerequisite for exemption, energy used to provide lighting and heating and air conditioning for manufacturing plants would be included. This helps ease the administrative burden of implementing the exemption for energy suppliers because the Department plans to allow manufacturers to claim exemption for all of their energy if their non-manufacturing use is minimal in relation to their manufacturing use of the energy.

Taxpayers with specific questions regarding their operations were encouraged to submit letter rulings to the Department of Revenue. The letter ruling process provides taxpayers with a firm determination based on facts submitted by the taxpayer and is binding on the DOR for three (3) years. You may find more information and guidelines on letter rulings here, and you may access the Department's Power Point Presentation here.

AIM and TRIM are organizing another free meeting for late August in the southwest part of the state. Attendance at that meeting will be limited and advance reservations will be required. AIM and TRIM are continuing our dialog with the Department of Revenue and will post additional information regarding the implementation of the exemption as it becomes available on this website.

If you have any questions, please contact Ray McCarty at ray@raymccarty.com.

Synopsis

2007-07-10T00:05:00.000-05:00

A Division of Associated Industries of Missouri

AIM/TRIM Manufacturing Inputs Exemption

OVERVIEW:

Associated Industries of Missouri and the Taxpayers Research Institute of Missouri drafted this legislation in the 2006 legislative session and were successful in passing it in the 2007 legislative session. All energy, machinery, equipment, chemicals and raw materials used or consumed in manufacturing, mining, compounding, processing, or producing any product will be exempt from state sales and use taxes, as well as any of these items or services that are used in research and development related to one of these processes (manufacturing, mining, compounding, processing or producing any product). The new exemption will be effective August 28, 2007.

State Taxes Only

Local sales taxes will continue to apply, but in most cases, taxpayers’ sales and use tax bill will be reduced by at least 50% on these items because the state tax rate of 4.225% is usually the largest portion of the total sales and use tax rate.

Limitations Removed

Prior to passage of the AIM/TRIM Manufacturing Inputs Exemption, many of these items were only exempt if the taxpayer met certain conditions. For example, taxpayers were only entitled to the exemption for machinery and equipment if you could prove to the Missouri Department of Revenue that the purchase would result in expanded plant capacity or that the purchase replaced equipment that was already in service. The new exemption will allow taxpayers to purchase new equipment that is not necessarily replacing equipment, taxpayers will not have to show expanded plant production capacity, and taxpayers do not necessarily have to be manufacturing a taxable product.

Previous Exemptions Still Allowed

Taxpayers that were entitled to the previous exemption from state and local sales and use taxes will continue to enjoy the full exemption. Under the former law, taxpayers could purchase electricity exempt from state and local sales taxes if their cost of electricity used in manufacturing was more than 10% of their entire production costs (including labor and other overhead). Many companies could not meet this threshold. Also, taxpayer’s electricity purchases could be exempted under the former law if more than 25% of all raw materials were recycled materials. This latter provision required the manufacturer to keep records of the recycled content of raw materials and was a source of regular disputes between taxpayers and the state tax auditors.

All Energy Included

The AIM/TRIM Manufacturing Inputs Exemption will exempt from state sales and use taxes ALL energy purchases used in manufacturing, including gas, coal and any other energy sources. This is a big improvement for taxpayers because the former exemption was limited to electrical energy only. For companies that were not entitled to these former exemptions under current law, the AIM/TRIM Manufacturing Inputs Exemption will result in major tax savings.

Chemicals

Also, chemicals that are used or consumed in manufacturing, mining, compounding, processing or producing any product will also be exempt from state sales and use taxes. Under the former law, taxpayers could only claim exemption for chemicals that became a part of the finished product. Many companies will see significant tax savings from this exemption.

Raw Materials

Finally, any raw materials that are necessary to the manufacturing operation but are not present in the finished product would also be exempted from state sales tax. The former law limited the raw materials exemption to raw materials that became an ingredient or component part of the finished product. Disputes between taxpayers and tax auditors have arisen regarding the exemption of materials that were consumed in the process and did not appear in the finished product. The new AIM/TRIM Exemption should eliminate this dispute because there are no limitations in the AIM/TRIM Exemption requiring the materials to be present in the finished product. Again, raw materials that are exempted under the previous law would continue to be completely exempt from state and local sales and use taxes and the new exemption only applies to state sales and use taxes.

AIM/TRIM Working With DOR

The staff of AIM/TRIM drafted this bill and worked for two years to provide major tax savings for manufacturers and eliminate most of the red tape associated with the former exemptions. We will continue to work with the DOR to make sure this law is interpreted as it was intended and will vigorously defend a broad interpretation of the new AIM/TRIM Manufacturing Inputs Exemption.

Still Have Questions?

Please be aware that many questions may remain unanswered until close to August 28, 2007, the effective date of the AIM/TRIM Manufacturing Inputs Exemption. You may check the Taxpayers Research Institute website for information updates as they become available. You will find the information under the “NEWS” link at www.motaxpayers.com. You may also contact Ray McCarty, Executive Director of the Taxpayers Research Institute of Missouri, at ray@raymccarty.com for more information.

Governor Blunt Approves Health Insurance Premiums Deduction Supported by AIM and TRIM

2007-07-05T13:17:00.000-05:00

Governor Matt Blunt today signed HB 444, a bill that exempts social security benefits from state income taxes. But the bill, sponsored by House Speaker Rod Jetton (pictured at right), also provides a deduction for health insurance premiums paid by some self-employed business owners and other taxpayers that are not able to deduct such premiums under current law. Associated Industries of Missouri and the Taxpayers Research Institute of Missouri supported these changes during the 2007 legislative session.

Self-employed business owners, partners and partners in S Corporations may already deduct 100% of their health insurance premiums from their federal taxes and that deduction "flows through" to the state tax return. But these business owners may not take the 100% deduction if they are eligible for coverage under a spouse's insurance plan. Some business owners may find they may obtain insurance coverage at less cost without using their spouse's plan, although they may trade higher deductibles and less coverage for the savings. These self-employed business owners would have to pay federal and state taxes on their premiums under the current law, unless they qualified for deduction as a medical expense.

Taxpayers may only deduct as a medical expense the amount of health insurance premiums and all other medical expenses that exceed 7.5% of their adjusted gross income.

HB 444 eliminates the tax on health insurance premiums for ALL taxpayers, including these self-employed business owners that are eligible for coverage under a spouse's plan and other taxpayers whose medical expenses are not greater than 7.5% of their adjusted gross income.

For more information on the deductibility of health insurance premiums and other medical expenses, see IRS Publication 502. For more information on HB 444, click here.

Associated Industries and Taxpayers Research Institute Host FREE Exemption Symposium

2007-07-02T08:56:00.000-05:00

Associated Industries of Missouri and the Taxpayers Research Institute of Missouri were successful in passing the AIM/TRIM Manufacturing Inputs Sales Tax Exemption during the recently completed 2007 Legislative Session. This exemption will provide a valuable benefit for manufacturers, miners, processors and producers of all products in Missouri by eliminating the state sales tax on all energy, materials, chemicals, machinery and equipment used in these operations.

To learn more about the exemption, we would like to invite you to attend a FREE meeting on July 27^th, from 12:00 p.m. to 3:00 p.m. at the Capital Plaza Hotel in Jefferson City, MO, and lunch will be served. The Taxpayers Research Institute will provide a history of the exemption and an overview of the new law. The Missouri Department of Revenue will also address the crowd regarding requirements for claiming the exemption.

Although the event will be free, we ask that you register for the event. A flyer with more detailed information and a registration form will be posted here soon.

MAKE PLANS NOW TO ATTEND THIS FREE EVENT BROUGHT TO YOU BY ASSOCIATED INDUSTRIES OF MISSOURI AND THE TAXPAYERS RESEARCH INSTITUTE OF MISSOURI.

Governor Matt Blunt Signs AIM/TRIM Manufacturing Exemption

2007-06-14T01:31:00.000-05:00

June 13, 2007 - Governor Matt Blunt today signed SB 30 containing the AIM/TRIM Manufacturing Inputs Exemption. The law will be effective August 28, 2007, and will exempt all utilities, machinery, equipment and chemicals used in manufacturing, production, processing or mining from state sales taxes.

“This is the most significant tax development regarding manufacturing that has been enacted in decades,” said Gary Marble, President of Associated Industries of Missouri. “This exemption should help us compete for good paying, high quality manufacturing jobs with other states and countries.”

Ray McCarty, Executive Director of the Taxpayers Research Institute of Missouri, echoed Marble’s comments. “This exemption was the top legislative priority of the Taxpayers Research Institute this year and we thank Governor Matt Blunt for his leadership in signing this landmark legislation into law."

The bill represents two years of hard work on the exemption by the Taxpayers Research Institute of Missouri.

Letter to Governor Regarding HB 327

2007-06-01T15:42:00.000-05:00

To view a copy of a letter recently delivered to Governor Matt Blunt regarding HB 327, an omnibus economic development bill for 2007, please click here.

Respected Business Journal Highlights AIM/TRIM Manufacturing Exemption

2007-05-27T22:51:00.000-05:00

May 26, 2007 - In a copyrighted article by Randy McConnell, published in the June 2007 edition of the Jefferson City Business Times (picture at left), special mention is made of the successful effort by Associated Industries of Missouri to pass the landmark AIM/TRIM manufacturing inputs sales tax exemption.

The first line of the article says, "...Associated Industries of Missouri (AIM), the state's main manufacturing lobby, struck gold when it gained passage of its top tax priority, an exemption from state sales tax for utilities, chemicals and materials used for production."

Please visit the Jefferson City Business Times website for a complete copy of the online version of the article by clicking here or on the picture at left.

House Summaries of Finally Passed Bills Now Available

2007-05-23T13:29:00.001-05:00

May 23, 2007 - The Missouri House has published the "Summaries of Truly Agreed To and Finally Passed Bills" for the recently completed 2007 regular legislative session.

This annual publication by the professional staff of House Research has long been respected as an excellent tool for finding information on the legislation that passed during the session. You may even find legislation of interest that you may have previously overlooked. While no summary is perfect 100% of the time, these summaries are carefully assembled and usually very reliable.

To access this valuable publication, click here.

General Assembly Passes AIM/TRIM Supported MoDOT Supplier Sales Tax Exemption

2007-05-22T15:10:00.000-05:00

May 22, 2007 - You may recall in an earlier post, we highlighted HB 248, sponsored by Rep. Neal St. Onge (R-88, Ellisville) that would allow contractors doing business with MoDOT to use project exemption certificates and eliminate sales tax on purchases made in fulfilling the contracts. Similar legislation was also filed by Rep. Sally Faith and Senator Chuck Gross.

We are pleased to announce that this exemption was included in SB 22 that was Truly Agreed and Finally Passed on the final day of session.

At the hearing, the Institute's Ray McCarty testified that the current situation places Missouri suppliers at a competitive disadvantage with suppliers in other states and actually encourages even Missouri contractors to use out-of-state suppliers for highway projects with our own state highway department. Requiring the payment of sales tax on such purchases also results in a diversion of money from the Highway Fund to General Revenue as the highway projects are paid for with highway funds. Joe DeLong, DeLong's Inc., a steel fabricator of highway bridges, testified that the current law causes the already tight profit margin to completely disappear for a Missouri contractor while it encourages MoDOT to use steel fabricated outside Missouri. He testified the 1-2% difference between Missouri sales and use tax rates can make the difference between winning and losing such contracts.

SB 22 now awaits approval from Governor Blunt. If signed, the bill would become effective August 28, 2007.

AIM/TRIM Manufacturing Inputs Exemption Language

2007-05-21T10:03:00.000-05:00

May 21, 2007 - We have scanned the final version of SB 30 that was Truly Agreed and Finally Passed by the Legislature. You may access the bill by clicking here: CCS SB 30 TAFP

AIM/TRIM Manufacturing Inputs Exemption Passed by Missouri Legislature AGAIN!!!

2007-05-16T21:35:00.000-05:00

May 16, 2007 - The Missouri legislature today gave final passage today to SB 30, a bill that contains our state sales tax exemption for manufacturing inputs. The bill is the culmination of two years of effort to pass this exemption. The bill will now go to Governor Blunt for signature.

The manufacturing inputs sales tax exemption helps us be more competitive with other states when competing for manufacturing operations. This exemption is limited to the state sales tax only, so local sales taxes will continue to apply. But the exemption covers nearly all manufacturing inputs, including machinery, equipment, electricity, gas and other energy sources and chemicals used or consumed in manufacturing, mining, processing, compounding or producing of any product.

We wish to thank Rep. Shannon Cooper who championed these issues all the way through the legislative process, Senator Gary Nodler who worked hard to successfully pass the bill in the Missouri Senate, Senator Jason Crowell who worked extremely hard with me on the manufacturing inputs exemption for the last two years, and Rep. Bryan Stevenson that advanced and handled the bill in the Missouri House. These four legislators helped us greatly and we appreciate their support and efforts on our behalf. We also thank the other legislators that put our need to pass this legislation and to remain competitive ahead of their personal and political concerns and allowed us to get the bill through the legislature.

AIM/TRIM Manufacturing Inputs Exemption Passed by Missouri Legislature

2007-05-11T17:28:00.000-05:00

May 11, 2007 - Yesterday, the Missouri House, led by House Job Creation and Economic Development Chairman Rep. Ron Richard, voted to accept ALL Senate amendments and finally pass the omnibus economic development bill. The bill contains the AIM/TRIM Manufacturing Inputs Sales Tax Exemption, allowing manufacturers a sales tax exemption for all utilities, chemicals, machinery and equipment used in manufacturing. The exemption currently provides an exemption for all state and local sales taxes, but will likely be amended by another bill to provide the exemption only for state sales taxes to uphold an agreement reached with the Governor's office and key legislators. The agreed upon language is contained in the compromise language in SB 30 which awaits adoption by the Senate and House next week.

HB 327 also contains an increase in the tax credit limits for the Missouri Quality Jobs program (from $12 million to $30 million) and Enhanced Enterprise Zone program (from $7 million to $25 million), a ten-year extension of the New Jobs Training program, and many, many, many more provisions. The bill is 163 pages plus 53 pages of amendments - altogether 216 pages!

Although there are some problems with language that was included in the bill, the bill will be presented to Governor Blunt for signature, following the ceremonial signing of the bill by the Speaker of the House and the Senate President Pro Tem.

We applaud the efforts of Rep. Richard, Sen. John Griesheimer, and leadership of the House and Senate in passing this bill. You may download the final bill by clicking on the following link.

LINKS TO THE FINAL BILL:
Truly Agreed and Finally Passed HB 327

AIM/TRIM Manufacturing Inputs Exemption Back on Track!

2007-05-08T15:05:00.000-05:00

May 8, 2007 - The Conference Committee on SB 30, led by Senator Gary Nodler (pictured at left) and Rep. Bryan Stevenson, included the AIM/TRIM Manufacturing Exemption in the Conference Committee Substitute for the bill. The Substitute was again voted out of the conference committee and will now move to the Senate and House for a final vote before passage.

AIM and TRIM have worked with all involved parties to resolve problems with the bill and we believe the bill is on the right track. A compromise was struck that eliminates the state tax only on utilities not currently exempted, while preserving the current exemption for those that are able to meet the 10% production cost threshold or the 25% recycled raw materials requirement.

Please contact your Senators and Representatives and let them the importance of SB 30 in attracting and retaining Missouri manufacturing jobs. It could come up for a vote anytime.

SB 30 Back to Conference

2007-05-08T10:51:00.000-05:00

Senate Bill 30, the bill that contains the AIM/TRIM manufacturing inputs sales tax exemption, has been scheduled for another conference committee meeting that will occur early this afternoon. The committee wants to fix a couple of items and add one additional provision. So far, the planned changes are not problematic for our part of the bill, but other provisions of the bill could cause problems with some Senators expressing their opposition. We have been working with the sponsors and other interested parties to keep our provision in the bill.

Please contact your legislators and let them know your position on the AIM/TRIM manufacturing sales tax exemption in SB 30. This bill has the potential to be the most important manufacturing legislation introduced in the last decade.

We will report on the status of the bill following the conference committee meeting today.

AIM/TRIM Manufacturing Exemption Clears Conference Committee

2007-05-03T15:39:00.000-05:00

(May 3, 2007) Senate Bill 30, sponsored by Sen. Gary Nodler, began as a bill to address one sales tax issue for trucking companies and we certainly appreciate his willingness to use his bill as a vehicle to accomplish the AIM/TRIM Tax Committee’s top tax priority for 2007. The Conference Committee for SB 30 met today and decided to include the AIM/TRIM manufacturing inputs sales tax exemption in the final version of the bill. The final version must be approved by both the House and the Senate.

The exemption is for state sales tax only on all manufacturing inputs: utilities, machinery, equipment, and other chemicals and materials that are consumed or used in the manufacturing process. Several other exemptions were also included, most of which codify existing agreements with the Department of Revenue or resolve tax disputes in a way that makes the most sense for the state and taxpayers.

The Taxpayers Research Institute of Missouri thanks all legislators involved in this process and urges support for this bill that is of utmost importance to manufacturers.

UPDATE: HB 131 Approved by Senate Committee

2007-05-02T10:02:00.000-05:00

(May 2, 2007) The Senate Committee on Ways and Means today approved HB 131, AIM/TRIM's manufacturing inputs sales tax exemption. The bill will now be eligible for debate by the full Senate. The bill is sponsored by Rep. Shannon Cooper, who is also responsible for similar language on HB 327 and SB 30. All three bills are very much alive with a little more than two weeks to go in the 2007 legislative session.

AIM/TRIM thanks the chairman, Sen. Carl Vogel, and the other members of the Committee for moving this bill out of committee and to the Senate floor.

Quality Jobs Bill Allows Tax Credits to be Transferred

2007-05-02T08:42:00.000-05:00

The current version of HB 327 would allow all tax credits that are not currently transferable to become transferable. AIM/TRIM supports this concept for two reasons: it makes the tax credits currently earned by our members more useful; and it allows more accurate budget projections, leading to more fiscally responsible allocation of resources by budget officials. Currently, budget officials have no way of knowing how many credits will be redeemed in any particular fiscal year because the tax credits may be carried forward or backward in many cases. By making the tax credits transferable, the tax credits should be redeemed quicker and this reduces the uncertainty caused by the tax credits, allowing budget officials to more accurately allocate the use of state resources.

What does this have to do with business taxes, you ask? Ask yourself this question: If the state is irresponsible with the use of its resources and additional revenue is necessary, where is the most likely source of any tax increase? I think the 90’s taught us that businesses are the first targets of any additional “revenue enhancing” tax increases. So allowing budget officials to use state resources more wisely actually helps us protect against the need for future tax increases that would otherwise result from faulty spending practices.

AIM/TRIM Manufacturing Inputs Exemption Negotiations Continue

2007-05-01T22:58:00.000-05:00

(May 1, 2007) The Taxpayers Research Institute of Missouri has been working with legislative leaders, state officials and the governor's office to craft language that is acceptable to all those involved and that accomplishes our top tax legislative priority for the 2007 session: the manufacturing inputs sales tax exemption. The final product would allow the sales tax exemption for state tax only and would allow companies that may qualify under the existing sales tax exemptions to continue to receive the full benefit of state and local sales tax exemption.

The legislation is now contained in the Conference Committee Substitute on HB 327. We are also working to ensure its inclusion in SB 30 as that conference is formed and begins work on a conference committee substitute for that bill.

Those interested in helping this bill become law should contact their legislators now and let them know you support the AIM/TRIM manufacturing inputs sales tax exemption in SB 30 and HB 327.

The legislature has plenty of time to pass both of these bills and we have crafted them to work in harmony should both pass and become law. The legislature will adjourn Friday, May 18.

AIM/TRIM Manufacturing Inputs Exemption and Other Tax Priorities Alive & Well

2007-04-27T14:05:00.000-05:00

April 27, 2007 - Thanks to the hard work of dedicated sponsors and support of many business-friendly legislators, tax legislation proposed and drafted by Associated Industries of Missouri and the Taxpayers Research Institute of Missouri is alive and well as the 2007 legislative session enters its final three weeks.

Rep. Bryan Stevenson, second from the left in this picture, added our top tax priority, the exemption of manufacturing inputs from sales and use taxes, to Senate Bill 30, a bill sponsored by Assistant Majority Floor Leader Senator Gary Nodler. The bill is in conference, meaning legislators will negotiate the final language of the bill. The bill must then be approved by both the House and Senate before it may be sent to the Governor. The cost of the AIM/TRIM manufacturing inputs exemption has been exaggerated by some. See Ray McCarty's letter to the editor of the Southeast Missourian, which addresses the true cost of this legislation.

Also, Rep. Mike Sutherland included AIM/TRIM legislation addressing net operating loss problems caused by decoupling from the federal tax code several years ago in a committee substitute for SB 582. The bill was approved by Sutherland's Ways and Means Committee and will be eligible for debate by the full House. The bill's sponsor is Senator Wes Shoemyer. AIM and TRIM thank both for allowing this legislation to be included in this bill.

House Bill 327, an omnibus economic development bill, also contains the AIM/TRIM manufacturing inputs sales tax exemption and will be the subject of a conference committee meeting on Tuesday, May 1. We have been working closely with the sponsor of the legislation to be sure the exemption is included in the final bill. HB 327 is sponsored by Rep. Ron Richard and handled in the Senate by Senator John Griesheimer.

And House Bill 131, sponsored by Rep. Shannon Cooper, has been heard in the Senate committee. Rep. Cooper initially sponsored both of these priority bills and is responsible for their inclusion in all of the bills mentioned above. We thank him and all the other legislators involved in the various bills for allowing our tax priorities to be considered for final passage.

Several of these bills contained a change in the "nexus" standard proposed by one business group that would allow out-of-state companies to unfairly compete with Missouri businesses without incurring tax liability in the state. Objections from Associated Industries of Missouri, the Taxpayers Research Institute of Missouri, the Missouri Retailers Association and state officials have led to the removal of this unfair provision from consideration this legislative session.

With three weeks to go in the 2007 legislative session, please check back often for updates on the progress of these and other priorities of the Taxpayers Research Institute of Missouri.

AIM/TRIM Manufacturing Inputs Exemption Advances on Several Bills

2007-04-20T18:39:00.000-05:00

(April 20, 2007) The Missouri House debated and approved Senate Bill 30, a bill that now contains AIM/TRIM's exemption of manufacturing inputs we have discussed extensively in other articles on this blog. SB 30 will now return to the Senate and will then be sent to a conference committee to strike a compromise. After a compromise has been reached, the Senate and the House must approve the compromise bill. But for now, this is a victory and the issue is alive with four more weeks of the legislative session to go. Sen. Gary Nodler is the sponsor of the bill in the Senate and Rep. Bryan Stevenson is handling the bill in the House.

We are continuing to work with Rep. Ron Richard, Sen. John Griesheimer, the Missouri Department of Economic Development, and others on the compromise language for House Bill 327. The bill is now the omnibus economic development bill containing several important economic development programs and the AIM/TRIM manufacturing utility sales and use tax exemption.

Also this week, the Senate Committee on Ways and Means heard House Bill 131, which also contains the AIM/TRIM manufacturing inputs sales tax exemption. That bill is sponsored by Rep. Shannon Cooper and will be handled in the Senate by Sen. Jason Crowell. The bill is also in good position for passage this session.

Please contact your legislators and let them know you support SB 30, HB 327 and HB 131! If you need to find your legislator, please use the "Legislator Lookup" link under the "Resources" tab at the left side of this screen.

Senate Ways and Means Hears AIM/TRIM Manufacturing Inputs Exemption

2007-04-18T22:20:00.000-05:00

(April 18, 2007) The Senate Committee on Ways and Means today heard testimony on HB 131, sponsored by Rep. Shannon Cooper. The bill contains the AIM/TRIM sales tax exemption for manufacturing inputs and several other tax provisions. The Committee took no action on the bill at today's hearing. HB 131 will be handled in the Senate by Senator Jason Crowell.

AIM/TRIM Manufacturing Exemption Continues to Progress

2007-04-16T18:30:00.000-05:00

(April 16, 2007) A key committee in the Missouri Senate today gave its approval to allow HB 327 to advance. The Missouri Senate followed suit and approved the final motion on the bill. As anticipated, the House refused to concur in the Senate position and asked the Senate for a conference on the legislation, which was granted. The contents of the bill will now be determined by a conference committee made up of five Senators and five Representatives. Once they have reached consensus, the compromise bill must be approved again by both the House and the Senate. The Senate conferees are: Senators Griesheimer, Koster, Crowell, Callahan, and Kennedy. The House conferees have yet to be appointed (probably sometime tomorrow). This is the first bill containing this priority legislation to reach this stage in the process this year and we are very thankful to Rep. Ron Richard and Sen. John Griesheimer and leadership in the House and Senate for continuing to make this legislation a priority.

Also, a hearing has been scheduled on HB 131 for Wednesday, April 18, 9:00 a.m. in the Senate Lounge before the Senate Ways and Means Committee. Please contact members of the Senate Ways and Means Committee and express your support for the manufacturing inputs sales tax exemption. We are very grateful to our sponsor, Rep. Shannon Cooper, and our handler in the Senate, Senator Carl Vogel.

For more information on these bills, please contact Ray McCarty at rmccarty@aimo.com.

AIM/TRIM Proposal to Exempt Manufacturing Inputs from Sales Tax Advances

2007-04-13T15:40:00.000-05:00

(April 13, 2007) On Wednesday evening, the Missouri Senate debated and gave initial approval to HB 327, the Missouri Quality Jobs Act. Language drafted and championed by Associated Industries of Missouri and the Taxpayers Research Institute of Missouri that would exempt all manufacturing inputs from sales and use taxes was included in the bill.

The Taxpayers Research Institute has prepared a report on the fiscal impact of the exemption based on federal data published by the U.S. Department of Commerce. The total impact to state funds resulting from the exemption would be approximately $8.5 million and the estimated statewide local sales tax impact would be approximately $3 million, according to the source data. You may find the report under the "REPORTS" tab at left.

The reason the impact is so low is that nearly all manufacturing inputs are already exempt, including nearly all raw materials, chemicals, utilities, machinery and equipment that is used in the manufacturing or production process, including those items used for research and development related to manufacturing. While nearly all manufacturing inputs are exempted, Missouri statutes and the courts have created uncertainty for manufacturers by creating complex and seemingly arbitrary thresholds and special requirements. For example, for electricity to be exempted, the cost of electricity must exceed 10% of the manufacturer's total cost of production OR the manufacturer must use raw materials that contain more than 25% recycled material content. But if gas is used instead of electricity, no exemption is allowed. For manufacturing operations that require gas or some other utility, the current exemption is useless. For taxpayers that qualify, they must constantly monitor their operations to see if they continue to qualify for the exemption.

By contrast, other states welcome manufacturers by providing a full sales and use tax exemption for all manufacturing inputs. Language similar to that proposed by the AIM/TRIM proposal is already in effect in Kansas. Because we want Missouri to attract and retain vital, good paying manufacturing jobs, this proposal makes good economic sense. By making the exemption slightly more broad than current law, the uncertainty is erased.

The AIM/TRIM manufacturing inputs exemption is also on several other bills that will be considered in the coming weeks. Check back for further updates.

House Approves Manufacturing Inputs Exemption!

2007-04-05T14:24:00.000-05:00

(April 5, 2007) The Missouri House today approved HB 131, sponsored by Rep. Shannon Cooper, exempting all utilities and other business inputs from sales tax. The bill also contains several other important tax changes (see additional information below). The Taxpayers Research Institute of Missouri thanks Rep. Cooper for his leadership in passing this legislation. "This legislation is the most important tax legislation to manufacturers in nearly a decade," said Ray McCarty, Executive Director of the Institute. "Manufacturers considering locating or staying in Missouri would have an incentive to stay in Missouri as a result of this legislation." Gary Marble, President of Associated Industries of Missouri echoed McCarty's comments. "The certainty provided to manufacturers by the passage of this bill will allow us to better compete with other states to retain existing manufacturing operations and to attract new ones to Missouri," said Marble. The bill was reported to the Senate.

Also today, Rep. Bryan Stevenson, chairman of the House Tax Reform Committee, led his committee in approving a committee substitute for SB 30 that also contains the same exemption language found in HB 131. The Senate bill will now be referred to the full House for further debate and consideration. This represents the bill that is furthest in the legislative process on this issue and we thank Rep. Stevenson and the House Tax Reform Committee for their efforts on behalf of Missouri manufacturers.

Although the exemption contained in these bills provide certainty, the cost to state and local governments is not large because nearly all business inputs are already exempted under other provisions of the sales tax law. The problem for taxpayers is that fine lines of distinction may be drawn by aggressive tax auditors, reducing the economic development benefits of these exemptions. "When we are not sure how the taxing authority will rule on certain items, it is difficult to promise the exemption to manufacturers that are looking at Missouri for a plant expansion or location," McCarty said. "This bill will eliminate confusion and allow us to aggressively pursue the attraction and retention of manufacturing operations in Missouri."

The Taxpayers Research Institute of Missouri and Associated Industries of Missouri will continue to aggressively pursue this manufacturing exemption throughout the 2007 Legislative Session.

AIM/TRIM Effort on Manufacturing Inputs Sales Tax Exemption and Franchise Tax Elimination Continue to Receive Attention

2007-03-30T10:17:00.000-06:00

(March 30, 2007) This week, the House gave first round approval to HB 131, sponsored by Rep. Shannon Cooper (R-120, Clinton, pictured at left). This is the bill we drafted and have championed for the past two legislative sessions that would exempt all manufacturing utilities, chemicals, machinery and equipment used in manufacturing and processing from sales and use taxes. The bill was amended to include several different tax issues, but no problematic amendments were adopted. The bill now includes:

Railroad rolling stock tax credit;
Mass transit motor fuel tax exemption;
Jackson County Sports Authority flow-through sales tax exemption;
Broadcasting equipment sales tax exemption;
Federal defense contractor sales tax exemption;
Temporary storage use tax exemption;
Flow-through exemption to provide a level playing field for Missouri suppliers on MoDOT contracts;
Certainty in the taxation of coin-operated amusement devices; and,
A provision requiring DOR to work on new rules for motor fuel tax exemptions and refunds.

Under the House rules, the bill was referred to the House Fiscal Review Committee and we prepared an analysis of the fiscal impact of all parts of the bill. The bill will actually generate additional state money through savings in the Highway Fund resulting from the flow-through exemption, while it will cost local governments. The cost to local governments for the bill without considering the MoDOT provision is approximately $5.3 million. The Committee approved the measure and the bill may now receive a final House vote when the legislators return next week.

If approved, the measure will then be sent to the Senate for further consideration. Senator Carl Vogel (R-6, Jefferson City, pictured at left), Chairman of the Senate Ways and Means Committee, has graciously accepted our invitation to handle the bill in the Missouri Senate and we are anxious to bring the bill before that committee for further action.

We will be asking you to contact your Senators when the time is right, so be prepared. In the meantime, if you see your senator or representative, please let them know how important this bill is to manufacturing and associated businesses in the state. We will need much support to get the bill passed in the Senate.

Senator Jason Crowell (R-27, Cape Girardeau, pictured at left) has also introduced SB 585 on this issue. We have provided Senator Crowell with the same language we drafted as a substitute for HB 131 - language that includes the reinstatement of the research and development sales tax exemption that was recently voided by the Missouri Supreme Court in the Emerson case. The bill will be heard by the Senate Ways and Means Committee on Monday, April 2, in Senate Committee Room 1. Also this week, Senator Crowell added this language to the economic development bill, HB 327.

In the same hearing on Monday, the Senate Ways and Means Committee plans to hear testimony on the House version of a plan to phase-out the Missouri Corporation Franchise Tax, also a top legislative priority of the Taxpayers Research Institute and Associated Industries of Missouri. HB 458, sponsored by Rep. Mike Sutherland (R-99, Warrenton, pictured at right), has advanced faster than other bills on this subject and is likely to be the vehicle for the issue this session. The Institute fully supports eliminating this tax and will work to see that the exemption is phased out in a manner that provides tax relief for all franchise taxpayers.

House Perfects Manufacturing Sales Tax Exemption!

2007-03-26T18:37:00.000-06:00

(March 26, 2007) The Missouri House, led by sponsor Rep. Shannon Cooper (R-120, pictured at left), gave initial approval to HB 131, an exemption of all manufacturing inputs from sales and use taxes.

"This bill is the culmination of two years' hard work that has paid off, thanks to the strong leadership of Rep. Cooper and the willingness of leadership in the Missouri House to make this bill a priority," said Ray McCarty, Executive Director of the Taxpayers Research Institute. If the bill receives final approval of the House, it will move to the Senate for further consideration. "This bill will improve the ability of Missouri manufacturers to compete with manufacturers in other states and other countries and represents one of the biggest boosts to manufacturing we have seen in some time," said Gary Marble, President of Associated Industries of Missouri.

You may find more detailed information about the bill by clicking on the "Legislative Alerts" tab at the left and selecting HB 131.

2007 Legislative Session Status Update

2007-03-17T23:57:00.000-06:00

(March 16, 2007) The Taxpayers Research Institute of Missouri has enjoyed some early success in our legislative priorities for the 2007 Legislative Session.

Our top sales and use tax priority, the exemption of manufacturing inputs, is poised for passage from the House following the legislative spring break. House Bill 131, sponsored by Rep. Shannon Cooper (R-120, Clinton) represents two years of hard work on this issue by the Taxpayers Research Institute. Last year our bill focused on eliminating the different tax treatment of gas and electricity purchased for use in manufacturing. This year, we drafted the proposal to also include other manufacturing inputs such as chemicals and other materials that are not currently exempt from sales and use taxes, and research and development machinery and equipment that was recently ruled taxable by the Missouri Supreme Court. The bill will erase a government burden on the manufacturing industry and allow Missouri manufacturers to enjoy exemptions that are already allowed in other states, such as Kansas. Missouri’s ability to compete with these other states will be greatly improved when this legislation becomes law. Disagreements between the taxing authority and taxpayers will also be minimized by this legislation. Currently, many disputes arise because of limitations on the exemptions in current law and differences in the interpretation of those limitations by auditors and taxpayers. Representatives of the Board of Directors and staff of Associated Industries of Missouri and the Taxpayers Research Institute of Missouri met with leadership in the House and Senate and the Governor’s staff regarding this proposal early in the session.

Three bills that would gradually eliminate the Missouri Corporation Franchise Tax are receiving attention this year. Legislators have debated eliminating the tax only for businesses that offer health insurance and pay part of the premiums for their employees – a proposal first recommended by Governor Matt Blunt. Senate Bill 590, sponsored by President Pro Tem Michael Gibbons (R-15, Kirkwood) allows all taxpayers to enjoy the reduction of franchise tax rate, but businesses that offer health insurance may avoid paying the tax altogether by paying a portion of their employees’ premiums. House Bill 219 (sponsored by Rep. Bryan Stevenson) and House Bill 458 (sponsored by Rep. Mike Sutherland) originally contained no health insurance requirement, but the requirement was added during the House debate on HB 458. The chances of one of these bills becoming law this legislative session are good as HB 458 has been approved by the House and sent to the Senate for further consideration.

Efforts are also underway to reduce or eliminate the Missouri Corporation Income Tax. House Bill 218, sponsored by Rep. Bryan Stevenson, would eliminate the corporation income tax over five years. Beginning with the 2012 tax year, no corporation income tax would be due. House Bill 621, sponsored by Rep. Scott Muschany, would reinstate the federal income tax deduction for individual and corporate taxpayers. We have provided the sponsor with language that would eliminate the negative impact to the Outstanding Schools Trust Fund. The bill received a hearing, but no further action has been taken on the bill.

A subcommittee of the AIM Tax Committee drafted a legislative change to the net operating loss calculation in House Bill 129, sponsored by Rep. Shannon Cooper. Companies that experience years of net operating losses could lose their ability to fully claim the net operating loss on their Missouri return under current law. This bill addresses the problem. The House Committee on Ways and Means has approved the bill.

Other bills of interest and their current status:

ADDITIONAL BILLS OF INTEREST 2007 SESSION
Bill Number(s)	Description	Status
HB 360	Provides additional film production tax credits	HOUSE PERFECTION CALENDAR
HCS HB 364	Health insurance deduction for small businesses	PERFECTED in HOUSE
HB 448	Tax credit for state sales tax paid on Missouri manufactured automobile purchased in Missouri	HOUSE PERFECTION CALENDAR
HB 725	Provides tax incentives to encourage the use of alternative fuels and alternative fuel vehicles	HOUSE COMMITTEE PASSED AS PART OF HCS HB 624
HB 768	Sales tax exemption for contractors performing contracts with MoDOT	HOUSE PERFECTION CALENDAR
HB 1000	Eliminates the Corporation Income Tax for the first five years of a new manufacturer’s existence in Missouri	HOUSE COMMITTEE HEARING COMPLETED
HB 1089	Provides certain activities will not create nexus	REFERRED TO HOUSE COMMITTEE
HJR 1	Constitutional amendment restricting Missouri courts’ authority in the areas of taxation, spending and budgeting	PASSED HOUSE - SENATE COMMITTEE HEARING COMPLETED
SB 30	Expands the current sales tax exemption for common carriers to include intrastate carriers	PASSED SENATE - AWAITING COMMITTEE REFERRAL IN HOUSE
SB 40	Creates tax incentives to encourage the use of alternative fuels and alternative fuel vehicles	SENATE INFORMAL PERFECTION CALENDAR
SB 199	Sales tax exemption for contractors performing contracts with MoDOT	PASSED SENATE - AWAITING COMMITTEE REFERRAL IN HOUSE
SB 294	Mandatory electronic filing for certain taxpayers	APPROVED BY SENATE COMMITTEE
SB 400	Provides additional film production tax credits	SENATE PERFECTION CALENDAR
SB 687	Provides certain activities will not create nexus	REFERRED TO SENATE COMMITTEE

For more information on this or other tax legislation, please contact Ray McCarty, Executive Director of the Taxpayers Research Institute of Missouri at raythetaxman@earthlink.net.

Senate Committee Approves Franchise Tax Cut Bill and Others

2007-03-14T09:21:00.000-06:00

(March 14, 2007) The Senate Ways and Means Committee, chaired by Senator Carl Vogel (R-6, Jefferson City, pictured at left), today approved several bills of interest, including SB 590, the phase-out of the franchise tax proposed by President Pro Tem Michael R. Gibbons (see article below for full details).

The bill was amended to add language that would also phase out the bank tax as the franchise tax phases out. The bill will now move to the Senate floor for full debate. Please contact your senators and let them know you support the franchise tax phase-out bill.

In other action, the Committee approved SB 294, (requiring electronic filing of certain taxpayers that meet minimum thresholds in the bill), SB 42 (allowing Missouri retailers to advertise absorption of the sales tax), SB 582 (tax sales), SB 501 (public transit sales tax exemption), HB 453 (food pantry tax credit), SB 554 (transparency in the setting of property tax rates), SJR13 (military personnel property tax exemption), and SB 224 (MOST contributions tax credit). A motion to move forward SB 540, a bill that would authorize a school district sales tax for the Mehlville School District, failed.

Franchise Tax Cut Passes House

2007-03-12T17:50:00.000-06:00

(March 12, 2007) The Missouri House today gave preliminary approval to HB 458, a reduction of the franchise tax. This bill is a priority of the Taxpayers Research Institute of Missouri. We congratulate the sponsor, Rep. Mike Sutherland (R-99, Warrenton) for his leadership in passing this pro-business, pro-jobs legislation.

During the perfection process, an amendment was added to the bill by Rep. Sutherland that requires health insurance to be offered to employees and more than half of the premiums to be paid by the employer before receiving any benefits under the bill. The Institute will work with the sponsor to resolve potential constitutional problems that could arise from the specific language used to encourage health insurance coverage in the bill. As written, the bill would provide two different tax rates for similar taxpayers, based solely on whether or not the employer provides health insurance. While similar to the threshold approach in the senate version of the bill, the different rates for similarly situated taxpayers may raise constitutional issues.

The Institute thanks the sponsor for his efforts to remove the double taxation caused by the Missouri Corporation Franchise Tax. To see the vote on this bill, click on "Key Votes" on the left side of the screen.

Taxpayers Research Institute Supports Gibbons' Franchise Tax Elimination Plan

2007-03-11T01:04:00.000-06:00

The Taxpayers Research Institute of Missouri supported SB 590, sponsored by Senate President Pro Tem Michael Gibbons (R-15, Kirkwood, pictured at right), a bill that would phase-out the Missouri Corporation Franchise Tax over a period of 4 years. The bill was heard by the Senate Ways and Means Committee on Monday. The franchise tax is, in the words of the late Sen. Harry Wiggins, former chairman of the Committee, “...a tax businesses pay for the privilege of paying more taxes.”

“We believe any usefulness of the tax has certainly expired and urge the committee to consider the economic benefits of eliminating the tax,” said Ray McCarty, Executive Director of the Institute. “The method of lowering the rate gradually also benefits all payers of the franchise tax, including larger taxpayers that pay the vast majority of the franchise tax.” For many taxpayers with fewer assets, the tax may be eliminated entirely if they provide health insurance and pay at least 50% of the premiums for their full-time employees. “We believe this provides an incentive to provide insurance and a funding source to help smaller businesses provide insurance that may not be able to afford insurance coverage now,” said McCarty. “We urge the committee to support this legislation.”

Taxpayers Research Institute's Priority Legislation to Reinstate the Federal Income Tax Deduction Receives Hearing

2007-03-06T14:22:00.000-06:00

(March 6, 2007) The Taxpayers Research Institute of Missouri is pleased that HB 621, a bill to reinstate the federal income tax deduction, sponsored by Rep. T. Scott Muschany (R-87, St. Louis, pictured at left) received a hearing in the House Special Committee on Tax Reform today.

Speaking for the bill, Ray McCarty, Executive Director of the Institute, said, "This bill represents priority legislation of the Taxpayers Research Institute of Missouri. The bill would reinstate the federal income tax deduction that was reduced by SB 380 in 1993 for individual and corporation income taxpayers."

McCarty testified, "The current law imposes a state tax on federal tax dollars and represents a tax on a tax. It is unfair to apply state income taxes to federal income tax dollars and this bill would remedy this bad tax policy." McCarty also pointed out to the committee that SB 380 represented the last time a governor and legislature were able to raise taxes significantly without a vote of the people. Following passage of SB 380, the governor and legislature endorsed a change in the Hancock Amendment that prevents future governors and legislatures from raising taxes without approval.

The Taxpayers Research Institute of Missouri also drafted language to eliminate any impact to the Outstanding Schools Trust Fund as a result of this bill and has furnished the language to the sponsor. The new language would allow the federal income tax deduction to be reinstated without affecting school funding through the Outstanding Schools Trust Fund.

The only opponent of the legislation was the Missouri NEA, the lobbyist for which testified that tax cuts do not stimulate the economy and a tax increase may actually be more beneficial.

Associated Industries of Missouri and Taxpayers Research Institute of Missouri Continue Two-Year Fight for Manufacturing Sales Tax Exemption

2007-03-02T11:15:00.000-06:00

(March 1, 2007) Associated Industries of Missouri (AIM) and the Taxpayers Research Institute of Missouri (TRIM) are pleased to announce House Bill 131, sponsored by Rep. Shannon Cooper (R-120, Clinton) cleared the House Rules Committee on February 28 and is now awaiting debate by the full Missouri House of Representatives. The bill would provide a sales tax exemption for all utilities, chemicals, machinery, equipment, and materials used or consumed in manufacturing, research and development of products in Missouri.

“Two years of hard work have brought us to this point, and we are hopeful the Missouri House and Missouri Senate will pass this top priority of the AIM Tax Committee,” said Ray McCarty, executive director of the Taxpayers Research Institute of Missouri and author of the legislation. “This legislation has the potential to help Missouri attract and retain manufacturing jobs in Missouri by eliminating a significant burden placed on our manufacturers through the taxation of manufacturing inputs – a burden already eliminated in other states that are fiercely competing for manufacturing jobs. We sincerely appreciate the hard work of the sponsor, Rep. Shannon Cooper, and his relentless efforts to help the manufacturing industry in Missouri,” said McCarty.

Under current Missouri law, electricity used in manufacturing is exempted from sales tax only if electrical costs exceed 10% of the cost of production or if the manufacturer uses raw materials with more than 25% recycled content. Manufacturers using gas must pay the full sales tax in Missouri. Most chemicals and other materials that are used in the manufacturing process but not included in the final product are also taxed in Missouri. Other states, including Kansas, exempt all such utilities, chemicals and materials.

The Taxpayers Research Institute of Missouri began the fight to exempt utilities used in manufacturing in November 2005 with a similar bill also sponsored by Rep. Cooper. Since then, AIM and TRIM have been working with legislators, state officials, leadership in the House and Senate and the governor’s office regarding the exemption and its potential benefit to the state. At the AIM Tax Conference in October, Taxpayers Research Institute listed this exemption as its top priority for the 2007 legislative session. In November 2006, the Missouri Supreme Court ruled some equipment used in research and development was subject to sales tax – equipment that manufacturers had long held to be exempt because it was used in the manufacturing process. The AIM Tax Committee voted to add research and development to the proposal and has since worked to obtain the support of other statewide business groups and state and local economic developers in the effort.

“If we all focus our collective efforts on this problem and work together, we will finally be able to eliminate the sales tax on all manufacturing inputs and help our Missouri manufacturers compete in the global economy,” said Gary Marble, president of Associated Industries of Missouri. “We urge lawmakers to make this the year we make Missouri manufacturing jobs a priority and pass this long-overdue exemption.”

Please write or call your legislators today and let them know you support HB 131 eliminating taxes on manufacturing inputs. To find your senator or representative, get your 9-digit ZIP code here and then click here. See our testimony on this bill posted below for information you may use in your email to your senator or representative. You may also contact Ray McCarty at rmccarty@aimo.com for more information.

Testimony on House Bill 131 - Manufacturing Sales Tax Exemptions

2007-03-02T11:02:00.000-06:00

Provided by Ray McCarty, Executive Director, Taxpayers Research Institute of Missouri to the Missouri House Special Committee on Tax Reform

House Bill 131 accomplishes what other states have accomplished: finally returning sales tax law to its originally intended purpose of taxing only final retail sales to customers by eliminating taxes on manufacturing and processing inputs such as utilities, chemicals, and materials.

The utility portion of this exemption will cost approximately $8.25 million. The purchase of electricity is already exempted from sales tax for manufacturing operations whose electricity costs are more than 10% of total production costs and for manufacturers that use more than 25% recycled materials as raw materials. However, if gas, coal or another type of energy is used rather than electricity, no exemption is allowed. Gas was exempt if used in steelmaking from 1985 until that exemption was phased out in 2003. Missouri may be losing manufacturing jobs to other states, like Kansas, that allow manufacturers to purchase nearly all utilities exempt from sales tax. Total sales taxes from utility receipts total approximately $55 million in Missouri. More than 85% of utility usage is already exempt or is not used in manufacturing or processing that would be exempted by this proposal. If it is assumed that the remaining 15% would be exempted by this proposal, this portion of the proposal would initially cost the state $8.25 million. This is estimated to be the largest cost in the proposal.

Chemicals and other materials that are used in manufacturing or processing are exempt under current law if they are used in certain processes (like firebrick, gases and slagging materials used in steelmaking) or if they become an ingredient or component of a finished product. Some processes require chemicals and other materials that are not present in the finished product. Such chemicals and materials are taxable in Missouri under current law. Missouri is one of only 15 states to tax chemicals that are consumed in the manufacturing process and NONE of our bordering states tax such chemicals, placing Missouri at an immediate competitive disadvantage.

Finally, the Missouri Supreme Court recently drew an imaginary line of distinction between research and development and manufacturing. Machinery and equipment that was used directly in the research and development phase of manufacturing was held to not be included in Missouri’s sales tax exemption for manufacturing machinery and equipment. The Taxpayers Research Institute of Missouri asks the committee to consider adding this machinery and equipment to the list of exempt items in this bill to correct this interpretation error by the Court. By adding this machinery and equipment to the bill, you will help make Missouri’s manufacturing environment inviting to manufacturers and processors that are looking for the best place to produce their goods with the lowest possible overhead. Because this case was just decided in November 2006, fiscal impact of the exemption would be negligible because manufacturers had not been paying the tax prior to the decision, and many may not be paying it now as they may not yet be aware of the decision.

The current sales tax law leaves much to the imagination of tax auditors and allows decisions such as these to be rendered by the courts. By passing a complete exemption for manufacturing inputs, you will be achieving an often mentioned goal of simplifying the tax code and eliminating guesswork on the part of the taxpayer and the tax collectors. You will also be returning Missouri’s tax code to its originally intended purpose: to tax only final sales to consumers.

The dividends that will be paid in new, family supporting manufacturing jobs have the potential to greatly outweigh the small cost of this exemption in a short period of time as manufacturers seek out the best place to locate their next plant or processing line.

The Taxpayers Research Institute of Missouri asks for your support in passing this important legislation.

COST 50-State Study of Tax Burden

2007-02-27T23:21:00.000-06:00

Be sure to click the "Resources" tab at left and download the COST 50 state study of tax burden entitled, "Total State and Local Business Taxes - 50 State Estimates for Fiscal Year 2006" by Robert Cline, Tom Neubig and Andrew Phillips, Ernst & Young LLP. This year's report shows businesses bear 41.3% of the total state and local tax burden in Missouri. COST releases the report on an annual basis.

TRIM Releases Study on Impact of Missouri Quality Jobs Act

2007-02-22T16:24:00.000-06:00

The Taxpayers Research Institute of Missouri released a study today showing the impact of the Missouri Quality Jobs Act. The program has produced 12,500 jobs in 104 projects with an average annual wage of $46,856. Click on "Reports" at the left and then click on the cover of the report to view the full report.

House Ways & Means Passes Franchise Tax Cut!

2007-02-15T17:16:00.000-06:00

The House Ways and Means Committee today passed a committee substitute for House Bill 458 which would gradually eliminate Missouri's Corporation Franchise Tax, taking a key step in the continued improvement of the state's business climate. Taxpayers Research Institute of Missouri and Associated Industries of Missouri testified in favor of this pro-business legislation.

Missouri's franchise tax is a business tax based on a corporation’s assets in or apportioned to Missouri. Small businesses with less than $1 million in outstanding stock or assets do not pay the tax. The franchise tax is not related to the profitability of a corporation, only the value of outstanding stock or assets. A company with limited income or no income must still pay the franchise tax simply for the privilege of doing business in Missouri.

The substitute language in HB 458 would reduce the franchise tax over three years, beginning next year:

2008 – The threshold would be raised from $1 million to $15 million
2009 – Rate would be cut in half
2010 – The franchise tax would be eliminated

AIM and TRIM have fought for this approach to eliminating the franchise tax for the last two legislative sessions.

“Eliminating the franchise tax is important to the business community of this state,” said Ray McCarty, executive director of Taxpayers Research Institute of Missouri. “I commend the bill’s sponsor, Rep. Mike Sutherland, and the House Ways and Means Committee for acting quickly on this legislation.”

Having been approved by the committee, HB 458 will be sent to the House floor for debate.

Taxpayers Research Institute of Missouri Supports Elimination of the Corporation Franchise Tax

2007-02-11T16:38:00.000-06:00

(February 8, 2007) The Taxpayers Research Institute of Missouri testified in support of HB 458 sponsored by House Ways and Means Committee Chairman Rep. Mike Sutherland (R-99, Warrenton, shown at left) this week.

The bill would raise the threshold of assets required for filing the franchise tax over several years with rate reductions in future years and would completely eliminate the tax in 2012. While supporting the bill, the Institute indicated its support for the complete elimination of the franchise tax and recommended the committee consider phasing out the rates of franchise tax beginning in the first year to provide tax relief to all franchise taxpayers. Raising the thresholds would eliminate the tax for many smaller corporations, but the bulk of the tax is paid by larger corporations that would see no tax relief until 2010 under the original plan contained in the bill.

The committee also heard HB 129, sponsored by Rep. Shannon Cooper (R-120, Clinton, pictured at right) that would fix a problem that was created when the state decoupled from federal bonus depreciation and federal net operating loss carryforward provisions several years ago. The fix was drafted by Associated Industries of Missouri Tax Committee members Ed Hoffstetter and Jim Tighe of PriceWaterhouse and Ed Downey of Bryan Cave. Ray McCarty, Executive Director of the Institute, and Ed Hoffstetter testified that this is a great example of the complexity and unintended consequences that can result when the state "decouples" from the federal tax code.

HB 248, sponsored by Rep. Neal St. Onge (R-88, Ellisville, pictured at left) that would allow contractors doing business with MoDOT to use project exemption certificates and eliminate sales tax on purchases made in fulfilling the contracts was also heard by the committee. The Institute's Ray McCarty testified that the current situation places Missouri suppliers at a competitive disadvantage with suppliers in other states and actually encourages even Missouri contractors to use out-of-state suppliers for highway projects with our own state highway department. Requiring the payment of sales tax on such purchases also results in a diversion of money from the Highway Fund to General Revenue as the highway projects are paid for with highway funds. Joe DeLong, DeLong's Inc., a steel fabricator of highway bridges, testified that the current law causes the already tight profit margin to completely disappear for a Missouri contractor while it encourages MoDOT to use steel fabricated outside Missouri. He testified the 1-2% difference between Missouri sales and use tax rates can make the difference between winning and losing such contracts.

Besides the Taxpayers Research Institute of Missouri and Mr. Delong, representatives from the following were among those in support of the bill: Missouri Transportation Development Council, MoDOT, Associated General Contractors of Missouri, Associated General Contractors of St. Louis, and the Heavy Construction Contractors of Kansas City.

For more information on these or other tax bills, please contact Ray McCarty at rmccarty@aimo.com.

House Tax Reform Committee Passes Manufacturing Inputs Sales Tax Exemption

2007-02-07T00:02:00.000-06:00

(February 6, 2007) The Missouri House Special Committee on Tax Reform, chaired by Rep. Bryan Stevenson (R-128, pictured at right), today passed Taxpayers Research Institute of Missouri legislation that will bring true reform to the tax treatment of manufacturers, recyclers and research and development facilities in Missouri. Passage of the bill is one of the highest priorities of the Institute for the 2007 legislative session.

The bill is sponsored by sponsored by Rep. Shannon Cooper (R-120, pictured below). Ray McCarty, executive director of the Institute testified, "This bill accomplishes what other states have accomplished: finally returning sales tax law to its originally intended purpose of taxing only final retail sales to customers by eliminating taxes on manufacturing and processing inputs such as utilities, chemicals, and materials." McCarty also drafted an amendment that was also adopted by the committee that includes machinery and equipment used in manufacturing, recycling, and research and development.

The utility portion of this exemption will cost approximately $8.25 million. Purchases of electricity by manufacturing operations whose electricity costs are more than 10% of total production costs and by manufacturers that use more than 25% recycled materials as raw materials are already exempted from sales tax under current Missouri law. However, if gas, coal or another type of energy is used rather than electricity, no exemption is allowed. Gas was exempt if used in steelmaking from 1985 until that exemption was phased out in 2003.

Missouri may be losing manufacturing jobs to other states, like Kansas, that allow manufacturers to purchase nearly all utilities exempt from sales tax. Total sales taxes from utility receipts total approximately $55 million in Missouri. More than 85% of utility usage is already exempt or is not used in manufacturing or processing that would be exempted by this proposal. If it is assumed that the remaining 15% would be exempted by this proposal, this portion of the proposal would initially cost the state $8.25 million. This is estimated to be the largest cost in the proposal.

Chemicals and other materials that are used in manufacturing or processing are exempt under current law if they are used in certain processes (like firebrick, gases and slagging materials used in steelmaking) or if they become an ingredient or component of a finished product. Some processes require chemicals and other materials that are not present in the finished product. Such chemicals and materials are taxable in Missouri under current law. Missouri is one of only 15 states to tax chemicals that are consumed in the manufacturing process and none of our bordering states tax such chemicals, placing Missouri at an immediate competitive disadvantage.

Finally, the Missouri Supreme Court recently drew an imaginary line of distinction between research and development and manufacturing. Machinery and equipment that was used directly in the research and development phase of manufacturing was held to not be included in Missouri’s sales tax exemption for manufacturing machinery and equipment. McCarty asked the committee to consider adding this machinery and equipment to the list of exempt items in the bill to correct this interpretation error by the Court. "By adding this machinery and equipment to the bill," said McCarty, "you will help make Missouri’s manufacturing environment inviting to manufacturers and processors that are looking for the best place to produce their goods with the lowest possible overhead." Because this case was just decided in November 2006, fiscal impact of the exemption would be negligible because manufacturers had not been paying the tax prior to the decision, and many may not be paying it now as they may not yet be aware of the decision.

The current sales tax law leaves much to the imagination of tax auditors and allows decisions such as these to be rendered by the courts. By passing a complete exemption for manufacturing inputs, the Missouri legislature has a chance to achieve an often mentioned goal of simplifying the tax code and eliminating guesswork on the part of the taxpayer and the tax collectors. This bill will also return Missouri’s tax code to its originally intended purpose: to tax only final sales to consumers.

"The dividends that will be paid in new, family supporting manufacturing jobs have the potential to greatly outweigh the small cost of this exemption in a short period of time as manufacturers seek out the best place to locate their next plant or processing line," McCarty testified.

The legislation will now be referred to the House Rules Committee and will then be eligible for debate by the Missouri House of Representatives. For more information on the bill, please contact Ray McCarty at rmccarty@aimo.com.

Governor Matt Blunt's Tax Reform Plan 2007

2007-01-29T01:00:00.000-06:00

Governor Matt Blunt delivered the State of the State speech Wednesday night. The speech was carried live and by delayed broadcast by a number of stations across Missouri. If you missed the speech, you may view the video or read the text.

Regarding economic development, the Governor announced support for increasing the Missouri Quality Jobs program cap from $12 million to $24 million and an additional $4 million in increased cap for the Missouri Agricultural and Small Business Development Authority Tax Credits. He also lent his support to Speaker Rod Jetton's plan to eliminate state income taxes on social security, recommended raising the filing threshold for corporation franchise taxes from $1 million to $15 million only if the employer offered employees health insurance and paid at least 50% of the premiums, and recommended making amounts paid for long term disability insurance fully deductible.

Governor Blunt also announced measures designed to raise about $30 million in tax revenue by overturning recent sales tax decisions by the courts that taxpayers have won in recent years, including the Southwestern Bell court case that allowed telecommunications to be treated like other manufacturers for sales tax purposes and the DST case that allowed full sales tax exemption for items purchased and used at least partially for an exempt purpose. Governor Blunt also recommended a change in the treatment of rentals for sales tax purposes, but details of that proposal were not readily available.

Regarding tax reform and economic development, here is an outline of the plan:

$132.7 million tax relief (detailed below)

Minus $30 million tax increase resulting from:

overturning the Southwestern Bell decision,
allowing prorating of sales tax exemptions, and
one other change regarding leases that is not fully explained in the budget summary

Equals $102.7 million net tax reduction.

The tax relief is further detailed as follows:

$100 million to exempt social security benefits from income tax
$ 12 million to increase the cap of the Missouri Quality Jobs program
$ 4 million to increase the cap on Missouri Agricultural and Small Business Development Authority Tax Credits
$ 2.7 million to increase the long-term care insurance deduction from 50% to 100%
$14 million to increase the Corporation Franchise Tax filing threshold from $1 million to $15 million if the employer provides health insurance to employees and pays at least 50% of the premiums as provided in the Quality Jobs program.