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| SPONSOR: | Wilson | DATE TYPED: | 02/06/00 | HB | |||
| SHORT TITLE: | Gross Receipts Deduction for Software Services | SB | 146/aSWMC | ||||
| ANALYST: | Eaton | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY00 | FY01* | |||
| $ (11,070.0) | Recurring | General Fund | ||
| $ (6,610.0) | Recurring | Local Governments | ||
(Parenthesis ( ) Indicate Revenue Decreases)
* A Taxation and Revenue Department (TRD) report on the amendment had not been received prior to the time of the writing of this report. The estimated impact is based upon the original analysis received from TRD.
SOURCES OF INFORMATION
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of SWMC Amendment
The amendment excludes business services and computer business services from the allowable deduction definitions presumably leaving only computing services (SIC # 7370) as eligible for the deduction.
Synopsis of Bill
This bill proposes a gross receipts tax deduction for software and business services under certain restrictions. Business services are defined to include "services used in the normal course of business", such as accounting, word processing, data entry, research and consulting. Software services are defined to mean development, integration and support of computer software used for business purposes. The final restriction is the services "originate from a place of business located outside the boundaries of incorporated municipalities of more than 40,000 population according to the most recent decennial census."
Effective date of this bill is May 17, 2000 -90 days after adjournment.
FISCAL IMPLICATIONS
SWMC Amendment
This bill, as amended, has an estimated negative impact of the general fund of $11 million (recurring) and $6.6 million (recurring) on local government revenues.
ADMINISTRATIVE IMPLICATIONS
TRD has concerns about definitions and enforcement. TRD estimates that the large scope of the taxpayers eligible will require 5 FTE at a cost of $250.0 to select and audit returns.
SWMC Amendment
The SWMC amendment would presumably alleviate TRD's concerns described above.
TECHNICAL ISSUES
The non-geographic nature of electronic communications will make the deduction difficult to audit.
JE/njw