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AIM testifies at House tax hearing on tips, refunds, spending limits, and withholding paperwork redu

AIM president Ray McCarty testified at Tuesday’s regular hearing of the House Ways and Means Committee this week on several issues of importance to businesses across Missouri.

The Committee first voted on several bills that had previously been heard by the Committee:

HB 299 (Hoskins) Requires DOR to put notices of changes in sales tax interpretations on website, amended and approved by a vote of 10-1;

HB 132 (Brattin) Motor fuel tax exemption for fuel sold to marinas, amended and approved by a vote of 10-0;

HB 410 (Kelley) Adds graphing calculators to the list of exempt items during a sales tax holiday, approved by a vote of 11-0; and,

HB 440 (Koenig) Allows retailers to advertise sales tax will be absorbed, approved by a vote of 11-0.

All approved bills were advanced to the Select Committee on Finance and Taxation.

Public hearings were then held on several bills.

The first, HB 268, sponsored by Rep. Rocky Miller (R-124), allows a taxpayer to claim a credit or refund of tax overpayment when the Department of Revenue audits the taxpayer, even if the statute of limitations has expired.  AIM president McCarty testified that taxpayers should always be able to receive refunds of money that has been incorrectly paid to the government and also stated there was additional language that he would provide to the committee to help in other situations in which the DOR was denying refunds to taxpayers that had overpaid taxes to the state.  The committee also heard support from a private citizen and the MSCPA. There was no opposition to the bill.

The committee then heard testimony on HJR 34, a joint resolution by Rep. Eric Burlison (R-133) that would place a limit on appropriations. Revenues in excess of appropriations would be used to bolster state savings accounts to be used in times of revenue shortfall. After sufficient reserves are established, excess revenues would be used to lower income tax rates under the plan. The entire bill must be approved by voters at a statewide election.  AIM was the only statewide business group to testify in support of the bill, noting that it makes sense for the state to limit spending in good times and save money for bad times so they don’t have to cut programs or raise taxes in economic hard times.  Americans for Prosperity also testified in support.  In opposition were the Civic Council of Greater Kansas City, Missouri Coalition of Mental Health Centers, the Missouri Budget Project, and the Missouri NEA.

Next, the committee heard two bills regarding tips at restaurants.

The first was HB 754, sponsored by Rep. Ron Hicks (R-107), that would limit the amount of withholding tax on cash tips that must be reported by an employer to the amount of cash tips that is reported to the employer by the employee.  Witnesses from several restaurants testified they had been audited and heard of other restaurants that had been audited by the DOR and the auditors had attempted to assess them withholding tax that were not based on facts – just estimates extrapolated from credit card tip data. The Missouri Restaurant Association, AIM, NFIB, hotel association, MSCPA and several restaurant owners testified in favor of the bill. There was no testimony in opposition.  The DOR was questioned by the Committee for informational purposes.

HB 517, sponsored by Rep. Galen Higdon (R-11), would exempt from sales tax mandatory gratuities that are charged at restaurants. Virtually the same witnesses testified in favor of this bill also and there was no testimony in opposition.

The Committee also heard HB 502, sponsored by Rep. Mike Kelley (R-127), that would raise filing threshold for withholding tax allowing many more small businesses to file on an annual basis rather than quarterly. The bill was supported by AIM, NFIB and others.

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