COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:5844H.01I Bill No.:HB 2796 Subject:Business and Commerce; Taxation and Revenue - General; Taxation and Revenue
- Property; Emergencies
Type:Original Date:March 1, 2024Bill Summary:This proposal establishes the "Protecting Missouri's Small Businesses Act”,
which changes the law regarding businesses closed because of a shutdown
order.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on General
Revenue $0$0$0
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on Other State
Funds $0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 5844H.01I
Bill No. HB 2796
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2025FY 2026FY 2027Total 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 2025FY 2026FY 2027Local Government$0 or (Unknown)$0 or (Unknown)$0 or (Unknown) L.R. No. 5844H.01I
Bill No. HB 2796
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FISCAL ANALYSIS
ASSUMPTION
Section 44.251 “Protecting Missouri’s Small Businesses Act”
Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
would require a reduction of fees, personal property tax, and real property tax in political
subdivisions with shutdown orders. Qualifying shut down orders must be caused by reasons
outside of a business’ control.
Beginning January 1, 2025, any political subdivision with a shutdown order that lasts for at least
21 consecutive days, or 45 cumulative days must:
longer.
was closed due to the shutdown order.
This proposal would not:
subdivision.
For shutdown orders that end before June 1
st
, the county assessor must reduce the property tax
liability for all real and personal property located within the boundaries of the shutdown order.
The reduction shall be based on the number of days a business was closed due to the shutdown
order. Affected taxpayers must then pay the reduced tax amount by December 31
st
.
For shutdown orders that end on or after June 1
st
, the taxpayer must pay the full property tax
liability by December 31
st
. The county assessor must then provide information on how such
taxpayer may apply for a refund. The taxpayer must apply for a tax refund by January 15
th
. The
county assessor must then calculate the allowable refund amount by February 15
th
and pay all
refund claims by March 15
th
.
B&P notes that Section 44.251.4(2) requires business owners that rent or lease their real property
distribute the property tax savings to all renters and lessors.
B&P further notes that it is unclear whether this proposal would impact state property tax levies,
if there were a statewide shutdown order. B&P also notes that the Blind Pension Trust Fund
levies a $0.03 per $100 assessed value property tax on all real and personal property located
within Missouri. L.R. No. 5844H.01I
Bill No. HB 2796
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March 1, 2024
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B&P is unaware of any restrictive public health orders currently in effect. Therefore, this
proposal may have an unknown impact on state and local revenues in the future.
B&P notes the following concerns with the proposed language:
o
were a statewide shutdown order. Section 44.251.2(2) includes orders by the state
within the definition of “shutdown order”.
Therefore, B&P assumes that if there were a statewide shutdown order, state revenues would be
impacted through the reduction in license fees as well as reductions in real and personal business
property.
o
license fees for six months for any shutdown order that lasts less than 180 days.
If a business is closed due to a shutdown order for 22 consecutive days, the
political subdivision must still waive the fees for the full 180 days.
B&P further notes that the last sentence Section 44.251.4(1)(a) allows business license fees to be
prorated, but the language provides no information as to how they may be prorated. B&P
assumes that the license fees may be prorated for the remaining six months (or less depending on
the length of the closure) of the year. B&P further assumes that the license fees may not be
prorated to account for only the days a business was actually closed (if less than six months).
st
o
if a taxpayer paid the reduced tax after December 31. It is unclear whether the
taxpayer would be assessed interest and penalties on the reduced tax liability or
on the full tax liability.
o
liable for the full tax amount (amount before reduction) if they pay the tax
liability after December 31st.
st
o
after December 31st. Whether a late payment would disqualify such taxpayer
from receiving a refund, or whether interest and penalties would be assessed on
the full tax liability or the remaining tax liability accounting for the refund
amount.
o
to review and calculate the eligible refund amount for all refund claims within
that county. B&P notes that as of 2019, the median number of businesses per
county was 385 and there were 25 counties with over 1,000 businesses. L.R. No. 5844H.01I
Bill No. HB 2796
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Officials from the Department of Revenue (DOR) note beginning January 1, 2025, should a
local political subdivision institute a business shutdown order that lasts at least 21 consecutive
days or 45 days cumulative, the political subdivision will be required to do the following:
Waive all business fees owed to the political subdivision during the shutdown period.
Reduce all real and personal property tax liability by the number of days businesses were closed.
DOR notes that this proposal is in regard to locally paid fees and property tax which are not
handled by DOR. Therefore, this proposal will not fiscally impact DOR.
Officials from the City of Kansas City note the proposed legislation has a negative fiscal impact
of an indeterminate amount.
Officials from the Rolling Hills Consolidated Library note governmental entities who are
funded by property tax would still be expected to provide services during any kind of shutdown
or closing of public businesses, and therefore need that tax funding to continue operations. The
library questions how the library would pay police and fire personnel if taxes were allowed to be
reduced? Many businesses found ways to continue running during COVID shutdowns, including
working from home and curbside services. Everyone was asked to sacrifice and adapt in order to
protect the health and well-being of all community members. It was an extraordinary
circumstance. A dollar value of the impact of this bill is impossible to calculate, but could easily
reach into tens of thousands, maybe hundreds of thousands, of dollars in lost tax revenue.
Officials from the Newton County Health Department,, and the
State Tax Commission, 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.
In response to a similar proposal, HCS HB 1263 (2023), officials from the Department of
Social Services assumed the proposal will have no fiscal impact on their organization.
For purposes of this fiscal note, Oversight assumes this proposal would not impact the Blind
Pension Fund. If this assumption is incorrect, it could substantially alter the impact provided in
this fiscal note.
Oversight will present an impact on this fiscal note as a $0 (no shutdown order in implemented)
to an unknown loss in revenue to local political subdivisions for the reduced property tax
revenues and the waived business license fees.
FISCAL IMPACT – State GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027$0$0$0 L.R. No. 5844H.01I
Bill No. HB 2796
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FISCAL IMPACT – Local GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027LOCAL POLITICAL
SUBDIVISIONS
Potential Revenue Reduction - §44.251
- Reduction in real and personal
property tax revenues in the event of a
shutdown order
$0 or
(Unknown)
$0 or
(Unknown)
$0 or
(Unknown)
Potential Revenue Reduction - §44.251
- Waiving of business license fees in
the event of a shutdown order
$0 or
(Unknown)
$0 or
(Unknown)
$0 or
(Unknown)
ESTIMATED NET EFFECT ON
LOCAL POLITICAL
SUBDIVISIONS
$0 or
(Unknown)
$0 or
(Unknown)
$0 or
(Unknown)
FISCAL IMPACT – Small Business
This proposal could impact small businesses that may be impacted by a shutdown order.
FISCAL DESCRIPTION
This bill establishes the "Protecting Missouri's Small Businesses Act".
The bill requires the State and its political subdivisions to give careful consideration and
appropriate concern for the lasting effects of actions taken during a "shutdown order" as defined
in the bill.
The bill specifies that beginning January 1, 2025, if any political subdivision with jurisdiction
over a business implements a shutdown order and the business closes due only to the shutdown
order for at least 21 consecutive days or at least 45 cumulative days, the following requirements
apply:
(1) Waiving any fee for a business license during the period of the shutdown order or six
months, whichever is longer; and
(2) Reducing the real and personal property tax liability of the business based on the
number of days the business was shut down in a given year, as specified in the bill. L.R. No. 5844H.01I
Bill No. HB 2796
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If a taxpayer rents or leases all or a portion of the taxpayer's affected real property to one or more
renters or lessors, the taxpayer must distribute a pro rata amount of the reduced liability to
renters or lessors who are current on all lease or rental payments. This bill is not to be construed
to affect professional licensure and does not require the State to provide restitution or to replace
lost revenues to a political subdivision.
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
Office of Administration - Budget and Planning
Department of Revenue
Department of Social Services
City of Kansas City
Rolling Hills Consolidated Library
Newton County Health Department
Lincoln County Assessor
State Tax Commission
Julie MorffRoss StropeDirectorAssistant DirectorMarch 1, 2024March 1, 2024