Brief⁽¹⁾

H.B. 3016 would amend the sales tax law to clarify the tax treatment of prepaid telephone calling cards and prepaid authorization numbers with the value measured in minutes or other time units. Under current law, the Department of Revenue has determined administratively that sales tax does not apply at the point of sale of such cards and numbers but does apply when such cards and numbers are used to purchase telephone, telegraph, or telecommunications services. The bill would change that tax treatment to apply sales tax at the point of sale of the cards and numbers and exempt the purchase of services.

An amendment to K.S.A. 79-32,111 would clarify that taxpayers would not have to file amended returns to adjust credits for income taxes paid to other state as a result of the operation of Section 18 of Article 10 of the Missouri Constitution (the "Hancock Amendment"). For tax year 1998, the foreign state tax credit would be reduced to offset the impact of Hancock Amendment refunds on the liability of all prior taxable years. For tax year 1999 and thereafter, the foreign state tax credit would be similarly reduced to offset the impact of any Hancock refunds in the prior year.

Background

The Department of Revenue indicated that the bill could have a minimal negative or minimal positive impact on State General Fund receipts.

The bill was requested for introduction by the Senate Assessment and Taxation Committee.

The Senate Tax Committee amendments were suggested by the Department of Revenue.

The income tax amendment was added by the Senate on Final Action.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.