Amendment SSA1-SB2

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2021 - 2022 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO SENATE BILL 2

January 20, 2021 - Offered by Senator Marklein.

SB2-SSA1,2,16 An Act to repeal 71.01 (6) (c), (d), (e), (f), (g), (h) and (i), 71.05 (1) (ae), 71.05 (6) (b) 17. and 18., 71.05 (6) (b) 20., 36., 37., 39., 40. and 41., 71.22 (4) (c), (d), (e), (f), (g), (h) and (i), 71.22 (4m) (c), (d), (e), (f), (g), (h) and (i), 71.26 (2) (b) 3., 4., 5., 6., 7., 8. and 9., 71.34 (1g) (c), (d), (e), (f), (g), (h) and (i), 71.42 (2) (c), (d), (e), (f), (g), (h) and (i), 77.51 (13gm) (a) 1. and 2., 77.51 (13gm) (d) 1. and 77.51 (13gm) (d) 3. and 4.; to renumber and amend 71.05 (6) (b) 4., 71.76 and 77.51 (13gm) (a) (intro.); to amend 48.561 (3) (a) 3., 48.561 (3) (b), 59.25 (3) (i), 66.0602 (3) (h) 2. a., 66.0602 (6) (a), 66.0602 (6) (b), 66.1105 (6m) (d) 4., 70.46 (4), 70.855 (4) (b), 70.995 (8) (c) 1., 70.995 (8) (d), 70.995 (14) (b), 71.01 (6) (k) 3., 71.01 (6) (L) 1., 71.01 (6) (L) 3., 71.01 (6) (L) 4., 71.05 (1) (am), 71.05 (1) (an), 71.05 (6) (b) 19. c., 71.05 (6) (b) 19. d., 71.07 (5) (a) 15., 71.07 (9m) (h), 71.22 (4) (k) 3., 71.22 (4) (L) 1., 71.22 (4) (L) 3., 71.22 (4) (L) 4., 71.22 (4m) (k) 3., 71.22 (4m) (L) 1., 71.22 (4m) (L) 3., 71.22 (4m) (L) 4., 71.26 (2) (b) 10. d., 71.26 (2) (b) 11. d., 71.26 (2) (b) 12. a., 71.26 (2) (b) 12. d., 71.26 (2) (b) 12. e., 71.28 (6) (h), 71.34 (1g) (k) 3., 71.34 (1g) (L) 1., 71.34 (1g) (L) 3., 71.34 (1g) (L) 4., 71.42 (2) (k) 3., 71.42 (2) (L) 1., 71.42 (2) (L) 3., 71.42 (2) (L) 5., 71.47 (6) (h), 71.55 (10), 71.77 (7) (b), 71.83 (1) (a) 6., 73.0305, 73.09 (4) (c), 73.09 (5), 74.315 (1), 74.315 (2), 74.315 (3), 76.04 (1), 76.07 (1), 76.075, 76.13 (1), 76.13 (3), 76.28 (4) (b), 76.28 (11), 76.39 (4) (d), 76.48 (5), 77.51 (13gm) (b), 77.51 (13gm) (c), 77.51 (13gm) (d) 2., 77.51 (13gm) (d) 5., 77.52 (2m) (b), 77.54 (6) (am) 2., 77.54 (9a) (f), 77.54 (9m), 79.02 (1), 79.02 (2) (b), 79.02 (3) (a), 79.02 (3) (e), 79.035 (6), 79.035 (7) (b), 79.05 (1) (am) and 79.05 (2m); and to create 70.11 (4) (b) 3., 71.01 (6) (j) 3. m., 71.01 (6) (j) 3. n., 71.01 (6) (m), 71.01 (7g), 71.05 (6) (b) 4. a. to c., 71.05 (6) (b) 19. cm., 71.05 (6) (b) 19. dm., 71.05 (6) (b) 54., 71.22 (4) (j) 3. m., 71.22 (4) (j) 3. n., 71.22 (4) (m), 71.22 (4m) (j) 3. m., 71.22 (4m) (j) 3. n., 71.22 (4m) (m), 71.22 (5g), 71.26 (2) (b) 13., 71.26 (2) (b) 14., 71.34 (1g) (j) 3. m., 71.34 (1g) (j) 3. n., 71.34 (1g) (m), 71.34 (1u), 71.42 (2) (j) 3. m., 71.42 (2) (j) 3. n., 71.42 (2) (m), 71.42 (2p), 71.52 (1g), 71.76 (2), 74.315 (1m) and 77.61 (5) (b) 8m. of the statutes; relating to: various changes to the laws administered and enforced by the Department of Revenue.

Analysis by the Legislative Reference Bureau

This bill makes changes to the laws administered and enforced by the Department of Revenue.

shared revenue

Reimbursement amounts

Under current law, the state reduces the shared revenue payments to counties and municipalities for various purposes, including for the collection of penalties and the reimbursement for other amounts. However, current law is not consistent with regard to which components of shared revenue are reduced for these purposes. This bill provides that all such reductions are from the payment of all shared revenue components that the counties and municipalities receive on the fourth Monday in July and the third Monday in November.

Expenditure restraint payments

Under current law, counties and municipalities receive 15 percent of their shared revenue payments on the fourth Monday in July and the remainder on the third Monday in November, except that municipalities receive the entire amount of their payment under the expenditure restraint program on the fourth Monday in July. The bill allows municipalities to receive their entire expenditure restraint payment before the fourth Monday in July, upon certification by DOR.

Under current law, the inflation factor used to compute a municipality's expenditure restraint payment is a percentage equal to the average annual percentage change in the U.S. consumer price index for all urban consumers, U.S. city average, as determined by the U.S. Department of Labor, for the 12 months ending on September 30. The bill modifies the consumer price index provision so that it is for the 12 months ending on August 31.

property

Omitted property

Current law requires a taxation district clerk to annually submit to DOR a listing of the taxes on property omitted from assessment in any of the previous two years that are to be included in the next assessment. However, the clerk reports the omitted taxes only if those taxes exceed $5,000. The bill modifies that $5,000 threshold so that the clerk reports the omitted taxes that are $250 or more for any single description of property. The bill also provides that the clerk may not list an omitted tax that was levied on property within a tax incremental district unless the current value of the district is lower than the tax incremental base.

Objections

Current law requires a person who files an objection to the assessment of the person's manufacturing property to pay a $45 fee. The bill increases the filing fee to $200.

License fees

Current law imposes license fees instead of property taxes on certain public utilities. The fees are based, generally, on the value of a utility's property. Utilities that are subject to the fees include light, heat, and power companies, pipeline companies, and railroad companies. Each such company, other than a railroad company, must file a report with DOR on or before May 1 of each year. DOR determines the value of the company's property on or before September 15. A railroad company must file its report on or before April 15 and its value is determined on or before August 1. The bill changes the filing and determination dates for a railroad company so that those dates are the same as those for other public utilities.

The bill also decreases the interest rate paid on refunds of license fees paid by public utilities from 9 percent to 3 percent.

Board of review

Current law requires that at least one member of the board of review attend DOR training within the two-year period beginning on the date of the board's first meeting. The bill requires all members of the board of review to complete the training each year, except that only one member needs to attend training in-person each year.

Assessor certification

Current law requires a person applying for an assessor certification examination to submit a $20 fee with the application. A person applying for a renewal of an assessor certification pays a $20 recertification fee with the application. The bill allows DOR to determine the amount of the fee for an assessor certification examination on the basis of DOR's estimate of the actual cost to administer and grade the examination, but the fee may not exceed $75. The bill also allows DOR to determine the recertification fee.

Levy limit; joint fire departments

The property tax levy limit under current law does not apply to the amount that a city, village, or town levies to pay for charges assessed by a joint fire department or joint emergency medical services district if the current year increase in such charges is equal to or less than the percentage change in the U.S. consumer price index for all urban consumers, U.S. city average, as determined by the U.S. Department of Labor, for the 12 months ending on September 30 of the year of the levy, plus 2 percent. The bill modifies the consumer price index provision so that it is for the 12 months ending on August 31 of the year of the levy.

Leasing property owned by a church or religious organization

Current law provides a property tax exemption for property owned by educational associations and institutions, benevolent associations, churches, religious associations, and certain nonprofit entities licensed by the Department of Health Services. Leasing such property does not render the property taxable as long as the lessor uses the leasehold income for maintenance or construction debt retirement of the leased property. However, current law allows some leased property to retain its exemption regardless of how the leasehold income is used. For example, leasing a part of property that is owned and operated by a licensed nonprofit entity as residential housing does not render the property taxable, regardless of how the lessor uses the leasehold income.

Under this bill, leasing all or part of any property owned by a church or religious organization to an educational association or institution that is also exempt from taxation does not render the property taxable, regardless of how the lessor uses the leasehold income.

INCOME tax

Disability income subtraction

Current law allows an individual with less than $20,200 of federal adjusted gross income to claim a disability income subtraction on the individual's state tax return, if the individual is under 65 years of age and retired on disability, and, when the individual retired, was permanently and totally disabled. For a married couple filing a joint return, each spouse may claim the credit if they meet the criteria and their combined income is less than $25,400. The bill replaces an obsolete reference to the federal Internal Revenue Code with the language used to determine the claimant's eligibility that existed under the obsolete reference.

Homestead credit

Under current law, an individual who is under the age of 62 and who does not have a disability must have earned income in order to claim the homestead credit. However, current law does not define earned income for purposes of claiming the credit. The bill defines “earned income” for purposes of claiming the homestead credit as wages, salaries, tips, and other employee compensation that may be included in federal adjusted gross income for the taxable year, plus the amount of net earnings from self-employment.

Current law also requires individuals who wish to claim the homestead credit to add certain disqualified losses to homestead income in order to determine eligibility to claim the credit. However, the requirement does not apply to an individual whose primary income is from farming and whose farming operation generates less than $250,000 in the year to which the claim relates. The bill clarifies that an individual's primary income is from farming if the individual's gross income from farming for the year in which the claim relates is greater than 50 percent of the individual's total gross income from all sources for that year.

Final audit determinations

Under current law, a taxpayer who receives a final audit determination from the Internal Revenue Service has 90 days to report to DOR any changes or corrections related to that determination. The bill increases the time for providing that report to 180 days.

Historic rehabilitation credit

The bill modifies the procedure for transferring the historic rehabilitation tax credit so that the person transferring the credit may file a claim for more than one taxable year.

Internal Revenue Code

The bill adopts for state income and franchise tax purposes various provisions of the federal Internal Revenue Code, including provisions modified by the 2021 Consolidated Appropriations Act.

Medical care insurance subtraction

The bill eliminates obsolete provisions related to the medical care insurance subtraction for self-employed persons.

Payments from a retirement plan

Under current law, payments or distributions of $5,000 or less received each year by an individual from a qualified retirement plan is exempt from income tax if the individual is at least 65 years of age and has income of less than $15,000 if single or filing a tax return as head of household or less than $30,000 if married. The bill changes the exemption to a subtraction that the taxpayer can choose not to claim if not claiming the subtraction would result in the taxpayer receiving a greater homestead credit.

Sales tax

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