COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0689H.01I Bill No.:HB 520 Subject:Transportation; Motor Fuel; Taxation and Revenue - General Type:Original Date:February 14, 2023Bill Summary:This proposal allows purchasers of motor fuel to donate fuel purchase
receipts to tax exempt organizations for refund claim purposes.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2024FY 2025FY 2026
General Revenue*
($53,404)
($57,667) to
($59,469)
($65,553) to
($75,735)
Total Estimated Net
Effect on General
Revenue
($53,404)
($57,667) to
($59,469)
($65,553) to
($75,735)
*Based on donation history of persons applying for drivers licenses or registering their vehicles
with the Department of Revenue, Oversight will assume 10% of fuel tax refund claims will be
donated – which will result in an income tax deduction (for donations of non-highway refund
claims). Actual donations could differ substantially.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on Other State
Funds
$0 $0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 0689H.01I
Bill No. HB 520
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February 14, 2023
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on FTE 000
☐ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Local Government$0$0$0 L.R. No. 0689H.01I
Bill No. HB 520
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FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue (DOR) assume the following regarding this
proposal:
Section 142.815
Currently, taxpayers who purchase motor fuel for non-highway use (farms, boats) are allowed to
claim a refund of the motor fuel tax they pay. The taxpayer submits their receipts to the
Department showing the gallons purchased with a refund request form. Once processed, the
Department sends the taxpayer a refund of their motor fuel tax paid.
Starting October 1, 2023, this provision will allow the non-highway use taxpayer to provide their
receipts to a federally qualified exempt entity (charity) who would claim the refund on the
taxpayer’s behalf. This is established as a way of donating money for the taxpayer to the charity.
This provision then allows the taxpayer to receive a subtraction against their Missouri adjusted
gross income of the amount donated. This subtraction is only allowed if the taxpayer does not
claim the refund amount as a charitable contribution on their federal income tax form.
In FY 2022 the Department processed $9,146,015 in non-highway refund claims. The motor
fuel rate at the time started at $0.17 per gallon and then increased to $0.19 per gallon. DOR
estimates that refund claims were made for 49,071,081 gallons.
SB 262 adopted in 2021, established an increasing motor fuel tax rate of $0.025 per year until the
rate increases $0.12 per gallon for a total of $0.295 per gallon. Accounting for the SB 262
increases, DOR estimates the total non-highway use refund claims could total $14,468,143 by
tax year 2026. The estimated amount of non-highway related motor fuel tax refunds through the
implementation of SB 262 is: L.R. No. 0689H.01I
Bill No. HB 520
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February 14, 2023
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Estimated Refunds by YearFiscal
YearNon-Highway Use Refunds
2023 $10,788,751 2024 $12,013,963 2025 $13,242,931 2026 $14,468,143 2027 $14,468,143
The Department is unable to determine how many of these taxpayers will choose to donate their
receipts to a charity and then claim the deduction. For fiscal note purposes, the department will
show the loss up to the total amount estimated to be refunded. The department notes that
deductions do not reduce revenues on a dollar for dollar basis, but rather in proportion to the top
tax rate applied. Therefore, the department will show the estimated impact throughout the
implementation of SB 262 with the individual income tax rate reductions scheduled under SB 3
(2022).
Estimated Revenue Loss by Fiscal YearTax Year (Fiscal Year)
Tax
Rate
2023
(FY24)
2024
(FY25)
2025
(FY26)
2026
(FY27)
2027 (FY
28)
4.95%($534,043)($594,691)($655,525)($716,173)($716,173)4.80% ($576,670)($635,661)($694,471)($694,471)4.70% ($622,418)($680,003)($680,003)4.60% ($665,535)($665,535)4.50% ($651,066)
This is a new subtraction that would need to be added to the MO-A form. This would require
computer programming changes, form changes and website changes. These changes are
estimated to cost $7,193. Additionally, this could result in additional errors and correspondence
generated. Should the number of errors and correspondent justify the additional FTE, the
Department will seek the additional FTE through the appropriation process. L.R. No. 0689H.01I
Bill No. HB 520
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February 14, 2023
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•1 FTE Associate Customer Service Representative ($31,200) for every 14,700 errors created
•1 FTE Associate Customer Service Representative for every 5,700 pieces of correspondence
generated
Oversight assumes DOR is provided with core funding to handle a certain amount of activity
each year. Oversight assumes DOR could absorb the costs related to this proposal. If multiple
bills pass which require additional staffing and duties at substantial costs, DOR could request
funding through the appropriation process.
Section 142.822 - Increased Motor Fuel Tax Refund
DOR notes section 142.822 will allow a taxpayer who purchases motor fuel for use on the
highway to donate their increased motor fuel tax receipts to a charity. However, they are not
granted a deduction for doing so. Since the fiscal note for SB 262 assumed all eligible taxpayers
would receive a refund of the increased motor fuel rate, and this proposal just changes who
claims the refund, this is not expected to result in any additional fiscal impact from who claims
the refund.
However, a person who donates to a charity has the ability to claim a deduction on their federal
and state tax returns. If this proposal encourages more people to claim the federal charity
deduction that could lower their federal adjusted gross income that is reported on their Missouri
tax return. That in turn could lower the amount of taxes the state receives. It is unknown how
many people would do this. This could result in a $0 to Unknown loss.
Officials from the Office of Administration - Budget and Planning (B&P) assume the
following regarding this proposal:
Sections 142.815 and 142.824 – Non-Highway Use Motor Fuel Tax Exemption and Refund
Sections 142.815 and 142.824 would allow taxpayers to donate their motor fuel tax refund, for
non-highway use, to a non-profit entity beginning October 2023. B&P notes that the information
requirements are not changed under this proposal, only who would receive the refund.
Section 142.815 would grant taxpayers a deduction for any refund claims they donated to
charity. B&P notes that such taxpayer would only be allowed to claim the deduction in this
section if they did not take the charitable deduction on their itemized federal and state income tax
returns.
In FY22, total non-highway use refund claims were $9,146,015. B&P notes that these refunds
were granted both before and after the motor fuel tax increased from $0.17 to $0.195 per gallon.
Using the distribution of gallons sold between the two tax rate periods, B&P estimates that
refund claims were made for 49,071,081 gallons. L.R. No. 0689H.01I
Bill No. HB 520
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February 14, 2023
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B&P notes that under SB 262 (2021), the motor fuel tax is scheduled to increase by $0.025 per
year, for five years, until the total motor fuel tax is $0.295. Accounting for the increases
scheduled to occur under SB 262 (2021), B&P estimates that total non-highway use refund
claims could total $14,468,143 by fiscal year 2026. Table 1 shows the estimated amount of non-
highway related motor fuel tax refunds through the implementation of SB 262 (2021).
Table 1: Estimated
Refunds by YearFiscal
Year
Non-
Highway
Use Refunds
2023$10,788,751 2024$12,013,963 2025$13,242,931 2026$14,468,143 2027$14,468,143
B&P is unable to determine how many non-highway use refund claims may be donated to a non-
profit entity. Therefore, B&P will reflect the loss as “up to” the total amount claimed. B&P
notes that deductions do not reduce revenues on a dollar for dollar basis, but rather in proportion
to the top tax rate applied. Therefore, B&P will show the estimated impacts throughout the
implementation of the tax rate reductions from SB 3 (2022).
Therefore, B&P estimates that this proposal could reduce TSR and GR by up to $534,043 in FY
2024 (tax year 2023, top tax rate 4.95%). Once SB 3 (2022) and SB 262 (2021) fully implement
this proposal could reduce TSR and GR by up to $651,066 annually. Table 2 shows the
estimated impact by top tax rate and year. L.R. No. 0689H.01I
Bill No. HB 520
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February 14, 2023
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Table 2: Estimated Revenue Loss by Fiscal YearTax Year (Fiscal Year)
Tax
Rate
2023
(FY24)
2024
(FY25)
2025
(FY26)
2026
(FY27)
2027 (FY
28)
4.95%($534,043)($594,691)($655,525)($716,173)($716,173)4.80%($576,670)($635,661)($694,471)($694,471)4.70%($622,418)($680,003)($680,003)4.60%($665,535)($665,535)4.50%($651,066)
Section 142.822 – Increased Motor Fuel Tax Refund
Section 142.822 would allow taxpayers to donate their motor fuel tax refund, for non-highway
use, to a non-profit entity beginning October 2023. B&P notes that the information requirements
are not changed under this proposal, only who would receive the refund. B&P further notes that
taxpayers are not granted an additional income tax deduction for any refunds donated. However,
individuals could claim the donated refunds on their itemized federal and state income tax
returns, under the existing charitable contribution itemized deduction. In addition, it is unknown
if the ability to donate the fuel tax refund would encourage more refund claims than what would
have otherwise occurred.
Therefore, B&P estimates that this provision could have an unknown negative impact on TSR
and GR through potential charitable itemized deductions. This provision could also reduce the
State Road Fund, as well as local fuel tax funds, through increased motor fuel tax refund claims.
For calculations of HB 2654 (2022), Oversight inquired of DOR as to what percentage of the
population donates funds when renewing their license or registering their vehicle. DOR stated,
approximately 10% make these donations; therefore, Oversight will reflect 10% of the estimates
provided by DOR and B&P. Oversight assumes there will not be a significant increase in motor
fuel tax refund claims as a result of this proposal.
Officials from the Missouri Department of Transportation defer to the DOR for the potential
fiscal impact of this proposal. L.R. No. 0689H.01I
Bill No. HB 520
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February 14, 2023
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Officials from the Missouri Highway PatrolOffice of Administration and Missouri
Department of Conservation each assume the proposal will have no fiscal impact on their
respective organizations. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect a zero impact in the fiscal note for these agencies.
Rule Promulgation
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor.
FISCAL IMPACT – State
Government
FY 2024
(9 Mo.)
FY 2025FY 2026GENERAL REVENUE FUNDLoss – tax deduction for donating
non-highway use motor fuel tax
refunds($53,404)
($57,667) to
($59,469)
($65,553) to
($75,735)
ESTIMATED NET EFFECT
ON THE GENERAL
REVENUE FUND
($53,404)
($57,667) to
($59,469)
($65,553) to
($75,735)
FISCAL IMPACT – Local
Government
FY 2024
(9 Mo.)
FY 2025FY 2026$0$0$0 L.R. No. 0689H.01I
Bill No. HB 520
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February 14, 2023
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FISCAL IMPACT – Small Business
Small non-profit organizations could be impacted as a result of this proposal.
FISCAL DESCRIPTION
Beginning October 1, 2023, this bill authorizes a taxpayer to donate the motor fuel tax refund to
a tax-exempt nonprofit entity by providing the entity with all required documentation and a
signed statement indicating that the nonprofit is entitled to the taxpayer's refund. The nonprofit
entity must submit the documentation and statement, along with proof of its tax-exempt status, to
the Director of Revenue. The taxpayer is then entitled to subtract from the taxpayer's Missouri
adjusted gross income the amount of the refund donated to the nonprofit.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Revenue
Office of Administration - Budget and Planning
Missouri Department of Transportation
Missouri Highway Patrol
Office of the Secretary of State
Joint Committee on Administrative Rules
Office of Administration
Julie MorffRoss StropeDirectorAssistant DirectorFebruary 14, 2023February 14, 2023