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F I S C A L I M P A C T R E P O R T

SPONSOR Foley

DATE TYPED 2/03/05

HB 30

SHORT TITLE Change Gross Receipts Tax Due Date

SB

ANALYST Taylor

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

(15.0)

Recurring

General Fund

(10.0)

Recurring

Local Governments

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department

SUMMARY

Synopsis of Bill

House Bill 30 changes the payment due date for gross receipts and compensating taxes from the

25

th

day of month following the month in which the taxable event occurred to the last day of the

following month.

The bill does not carry an effective date, and is thus assumed to become effective 90 days after

the end of the session.

FISCAL IMPLICATIONS

TRD estimates that changing the due date will reduce general fund revenues by $15 thousand

and local government revenues by $10 thousand in FY06. They report that the estimated reve-

nue loss is based up foregone interest earnings on 5 days of gross receipts tax deposits, assuming

a 2 percent interest rate.

Note: an earlier version of this FIR showed no fiscal impact. It overlooked the interest question.

House Bill 30 -- Page 2

ADMINISTRATIVE IMPLICATIONS

TRD reported the following administrative impact: Forms, instructions and publications must be

revised. Systems’ coding, changing of date configurations and troubleshooting must be per-

formed. Taxpayers will have to be educated on the new due date. These changes can be imple-

mented with existing resources.

TECHNICAL ISSUES

TRD submitted this technical issue: Since the Department collects several other taxes – including

withholding tax, compensating tax and others -- at the same time and with the same forms as the

gross receipts tax, the bill should change the effective dates for all of these taxes. Otherwise, the

Department would have to completely revise its processing systems at a considerable one-time

cost.

OTHER SUBSTANTIVE ISSUES

TRD raised this concern: Changing the due date for payment of gross receipts may affect the

timeliness and the quality of the distribution to local governments. If the Department continues

to distribute revenue to local governments at the current schedule (around the 11th of the month),

then the Department has less time to process returns and correct errors. This may result in a

lower distribution, which will then be adjusted in the following month’s distribution. If the De-

partment continues to take fifteen days, on average, to clear returns for distribution, then local

governments will receive their distributions about 5 days later each month.

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