SALT tax fix, hotel utilities sales tax exemption, Mo Works fix and R&D credit to Gov. Parson
May 12, 2022 - Several business priorities were passed today by the Missouri General Assembly.
One bill, HB 2400 (Houx/Hoskins), received a final vote and will be sent to Governor Parson including the following provisions:
Suspension of the Missouri Works program when a statewide state of emergency exists for more than 16 months (benefits would be suspended but participant would not lose the opportunity to participate in the program);
State and Local Tax (SALT) Parity Act allowing partners and shareholders in flow-through entities to take full advantage of federal tax deductions and allowing credit for taxes paid in other states;
Research and Development Tax Credit providing a $10 million tax credit to support companies that increase research and development expenditures in Missouri, with extra benefit for those conducting research with Missouri universities and encouraging minority owned and women owned business participation;
Language clarifying the purchase of utilities and other items by hotel/motel operators that are used by customers are exempt from sales and use taxes; and,
Tax credit accountability provisions.
"We have worked for 18 years to restore a research and development credit in Missouri," said Ray McCarty, president/CEO of Associated Industries of Missouri, in testimony before a House committee earlier this week. "The tax credit was removed as part of a revision of tax credit programs in 2004 and because a federal credit was unreliable. Now, the federal government has created a permanent research and development tax credit to encourage research and development in the United States and we need a state level credit to encourage that activity here in Missouri."
Many Associated Industries of Missouri members have had issues with the Missouri Works program, especially during the pandemic. Due to stay-at-home orders and other business interruptions, as well as the resulting decline in the economy resulting from the pandemic, participants' plans for job creation and investment were stalled. Without action, some of the participants would have been denied benefits they would likely have received without the impact of the pandemic. We are pleased to see this language allowing the Department of Economic Development to use common sense to provide relief for these participants.
The hotel/motel utilities sales tax exemption clarification was necessary due to a strained interpretation of a recent Missouri Supreme Court case by the Missouri Department of Revenue (DOR). The case involved hotel furniture but was applied by the DOR to prevent exemption of utilities as well. The language will make the intent of the legislature abundantly clear.
The State and Local Tax (SALT) Parity Act is standard language adopted in other states that helps allow partners and shareholders in flow-through entities to enjoy the full benefit of deductions for state taxes paid on their federal returns. The provisions of the bill also allow credit on Missouri returns for taxes paid to other states by partners and shareholders in such entities. AIM lobbyist Chuck Pierce worked closely with the Missouri Department of Revenue to develop the proper language.
"We are so proud of our lobbyists, particularly Chuck Pierce and Trent Watson, who worked really hard on various provisions that were included in this bill," said McCarty. "And we have other successes to talk about in future articles. Success in this often acrimonious session is nothing short of amazing and we thank them for their hard work, without which we would have nothing to celebrate," he said.
The 2022 Legislative Session ends tomorrow at 6:00 p.m.