MDN.ORG:
Missouri Digital News
MDN.ORG
Mo. Digital News
Missouri Digital News
MDN.ORG:
Mo. Digital News
MDN.ORG:
Missouri Digital News
MDN.ORG:
Missouri Digital News
MDN.ORG
Mo. Digital News
Missouri Digital News
MDN.ORG:
Mo. Digital News
MDN.ORG:
Missouri Digital News
JEFFERSON CITY - A bonus for making payments on time. That is what Missouri businesses receive under current law, but a proposal in the Senate would get rid of the incentive -- and increase state revenue by $18.4 million a year.
Currently, Missouri employers receive a 0.5 to 2 percent discount for filing and paying their employees' state income tax withholdings by the deadline.
The discount was created in 1973 on the reasoning that businesses should be compensated for staff time spent to figure out their employees' withholdings, according to the governor's fiscal year 2005 budget. Eliminating the discount is one of the governor's proposals to increase state revenue.
Increased computer use now allows employers to make quick calculations and payments, which makes the law's original intent obsolete, according to the governor's budget proposal. Missouri is the only state to still have such an incentive.
Sen. John Russell, R-Lebanon, introduced the bill to eliminate the discount.
"Many, if not most, of the employers of the state do not realize that this is in the law," Russell said.
If a business's total tax withheld in a year is $5,000 or less, the discount is 2 percent. Businesses withholding $5,000 to $10,000 a year receive a 1-percent discount. Businesses withholding over $10,000 a year receive a 0.5 percent discount.
Russell said the benefits to each business are small. If a business withholds $20,000 a year, its discount of 0.5 percent amounts to $100, he said.
Employees are currently credited for the amount of income withheld before the employer's discount is figured, so dropping the discount would not affect employee tax withholdings.
If the bill passes in its current form, it would go into effect Sept. 1. After printing and postage costs for new forms, the Revenue Department projects this would add $12.3 million in revenue to the state for the remaining nine months of fiscal year 2005 and $18.4 for the subsequent full fiscal year.
Currently, employers who file withholding taxes late are subject to a 5 to 20 percent penalty, said Jessica Robinson, Revenue Department spokeswoman. Businesses that file on time but pay late are charged a 5 percent penalty plus any interest that has accrued on the amount. The measure would not affect these penalties.
The Senate committee hearing the bill added a two-year sunset provision before voting it out of committee. The bill now heads to the Senate floor.