The 2010 legislative session is winding down, and the potential for a special session exists as lawmakers attempt to resolve their differences in the supplemental budget and a nearly billion-dollar revenue package to finance it.
Over the weekend, the Senate passed SB 6143 with a vote of 25-23. This bill replaces all other finance bills previously shared including HB 2970, HB 2971, HB 2972, HB 3176, HB 3191, SB 6873, SB 6874 and SB 6875. SB 6143 contains many of the onerous provisions found in these other bills including changes to an economic nexus standard, establishing tax avoidance authority and piercing the corporate shield. The Senate modified the economic nexus provisions to include a $250,000 threshold for out of state businesses instead of $500,000 and changed the four-year window of ongoing nexus to only two years. The Senate package also includes a sales and use tax increase, it funds the working family tax credit and applies a temporary .25% business and occupation surcharge on services (including appraisers). This expires in 2013 while permanently increasing the small business tax credit.
The House acted on SB 6143 Monday afternoon and into the late hours of the night and ultimately passed SB 6143 with a vote of 52-45. The House version contains many similar provisions as the Senate bill. The House does not adopt the sales tax increase, working family tax credit or the Senate language on economic nexus. Instead, they repeal additional incentives such as custom software, the non-resident sales tax exemption, and impose taxes on cosmetic surgery. The House also imposes a .5% business and occupation tax increase to certain service classifications (not including appraisers, as I understand it). While the House did not adopt the Senate changes to the economic nexus provision, they did vote to delay the date from April to July and provided clarification that the changes only apply to state B&O collection.
SB 6143 now goes back to the Senate for concurrence where they are expected conference with the House to resolve their differences. This will be a challenge for them to accomplish this goal before adjournment on Thursday, March 11. Many differences remain between the House and Senate especially on the imposition of a sales tax increase. Your phone calls to the House, Senate and Governor are critical to tell lawmakers to protect employers and help economic recovery. Call the legislative hotline at 1-800-562-6000, and/or your Senator and Representatives.