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SPONSOR: |
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DATE TYPED: |
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HB |
470/aHTRC |
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SHORT TITLE: |
Nontaxable Transaction Certificate Deduction |
SB |
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ANALYST: |
Hayes |
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REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
$0.1 |
|
Recurring |
|
|
|
|
|
|
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to HB 339
Responses
Received From
Taxation
and Revenue Department (TRD)
SUMMARY
Synopsis
of HTRC Amendments
Originally, HB 470 had an effective date of
Synopsis
of Original Bill
House Bill 470 amends
Section
In addition, HB 470 adds
paragraph B to Section
The effective date of
the provisions of this bill is
Significant Issues
1. An NTTC
is a promise from the buyer to the seller that the goods purchased will be
incorporated as a component part of a manufactured product. In other words, a seller can accept an NTTC
from a buyer as proof that a sale qualifies for a gross receipts tax deduction.
In this manner, the NTTC serves to protect
the seller when the validity of the deduction depends on what the buyer intends
to do with the property purchased. If it
is determined later that the buyer inappropriately used an NTTC, TRD would
assess the buyer, not the seller who took the deduction in good faith. However, if the NTTC were eliminated
pursuant to HB470, the seller would have to identify other evidentiary means to
substantiate any deductions taken.
Without an NTTC on file, the burden and the level of documentation or
means of verification required by the seller would greatly increase.
2. Without an NTTC, the means for verifying and
enforcing statutory deductions will not only burden the seller, but also the
Taxation and Revenue Department. If the
NTTC is eliminated pursuant to this legislation, then auditors may need to
establish more time-consuming methods of determining the validity of taxpayer
deductions taken under Section
3. TRD
has been improving the NTTC system and streamlining the process of issuance
while minimizing compliance and enforcement burdens to the agency. Such improvements include implementing an
electronic issuance process, on-line applications and approvals, and consolidation
of the number and types of NTTCs issued.
While the end goal is improved compliance, the improvements made to
the NTTC process were a result of concerns and input from both the Legislature
and private industry.
FISCAL IMPLICATIONS
Improper deductions
could occur without the NTTC system, reducing potential revenue to the
state.
RELATIONSHIP
HB 339 provides for
the transition to a new series of Nontaxable Transaction Certificates.
CMH/prr:njw