NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

This bill would provide a tax credit to businesses that pay gross receipts on the purchase of services that are required or necessary in the normal course of business. This bill provides for an "easing-in" period over the course of FY2000 (25 percent credit), FY2001 (50 percent credit), and 100 percent credit in FY2002. This bill would protect the distribution and transfer of gross receipts to local governments.

FISCAL IMPLICATIONS

In phone conversations with the Taxation and Revenue Department (TRD) the fiscal impact may range from $5 million to $25 million .

Undoubtedly, the effect of this bill would be economy-wide. From a profit standpoint, businesses would out source more services that otherwise would have been done in-house. The total effects of this change on the general fund and sectors of the economy are not yet clear.

TECHNICAL ISSUES

What constitutes "required or necessary" is not clearly defined and may present auditing problems for the Taxation and Revenue Department.

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