The Missouri General Assembly had a busy legislative session passing several pieces of tax legislation.  The legislation session was highlighted by clashes with Governor Jay Nixon on several bills. In fact, three Missouri tax bills were vetoed by Governor Nixon only to have those vetoes overridden by the General Assembly. 

Effective Oct. 14, 2016, H.B. 2030 provides an income tax deduction for 50 percent of the net capital gain from the sale or exchange of employer securities of a Missouri corporation to a qualified Missouri employee stock ownership plan (ESOP), provided the ESOP owns at least 30 percent of all outstanding employer securities issued by the Missouri corporation upon completion of the transaction. The deduction will be applicable to tax years beginning on or after January 1, 2017, and will automatically sunset on December 31, 2022. However, the General Assembly may reauthorize a delay of the automatic sunset for an additional six years. 

The General Assembly also overrode Governor Nixon’s veto of S.B. 641, which allows farmers who receive federal compensation for losses due to natural disasters or emergencies to deduct such payments when computing their Missouri gross income. S.B. 641 is effective Oct. 14, 2016, but deductions can be taken retroactively for all tax years beginning on or after Jan. 1, 2014.

Finally, the Governor’s veto was overridden on S.B. 1025, which institutes a sales tax exemption for “instructional classes.” Instructional classes include classes, lessons, or instructions intended for teaching. Examples of such classes may include instruction at dance studios, martial arts studios, and gymnastics centers.

Some other notable tax bills enacted during the legislative session include:

• S.B. 794: Creates a sales and use tax exemption for all sales, rentals, parts and repairs of durable medical equipment and for parts of other health care related equipment.
• S.B. 823: Provides a sales/use tax exemption for charges related to the provision of internet access.
• S.B. 861: Provides tax incentives for companies that create transportation industry jobs and auto manufacturing plant redevelopment. Additionally, S.B. 861 creates an income tax deduction equal to 50 percent of expenses associated with relocating a business unit from outside Missouri to within the state.
• H.B. 1435: Modified provisions for requesting sales tax refunds.
• H.B. 1582: Effective Jan. 1, 2018, employers with 250 or more employees must file their Forms W-2 electronically by January 31 unless they have been granted a waiver for the federal requirement to file electronically by the IRS. The bill also allows employers to file withholding tax returns annually if the aggregate amount withheld is less than $100 in each of the four preceding quarters, assuming monthly or quarterly returns are not otherwise required.

If you have any questions regarding tax law changes in Missouri or other states, please contact your CBIZ MHM tax advisor or the CBIZ National State and Local Tax Office personnel who authored this article:Sarfraz Bacchus at sbacchus@cbiz.com or James Helms at jhelms@cbiz.com.

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