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Bill Detail: HB20-1420

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Title Adjust Tax Expenditures For State Education Fund
Status Signed by the President of the Senate (06/19/2020)
Bill Subjects
  • Fiscal Policy & Taxes
House Sponsors M. Gray (D)
E. Sirota (D)
Senate Sponsors D. Moreno (D)
C. Hansen (D)
House Committee Finance
Senate Committee Finance
Date Introduced 06/08/2020
Description

Section 1 of the bill specifies that the act shall be known as the
Tax Fairness Act.
Sections 2 and 3 require taxpayers to add to federal taxable
income:
  • For income tax years ending on and after the enactment of

the March 2020 Coronavirus Aid, Relief, and Economic
Security Act (CARES Act), but before January 1, 2021,
and for income tax years beginning on and after the
enactment of the CARES Act, but before January 1, 2021,
an amount equal to the difference between a taxpayer's net
operating loss deduction as determined under federal law
before the amendments made by section 2303 of the
CARES Act and the taxpayer's net operating loss deduction
as determined under federal law after the amendments
made by section 2303 of the CARES Act;
  • For income tax years ending on and after the enactment of
the CARES Act, but before January 1, 2021, and for
income tax years beginning on and after the enactment of
the CARES Act, but before January 1, 2021, an amount
equal to a taxpayer's excess business loss as determined
under federal law without regard to the amendments made
by section 2304 of the CARES Act, but with regard to the
technical amendment made in that section of the CARES
Act;
  • For income tax years ending on and after the enactment of
the CARES Act, but before January 1, 2021, and for
income tax years beginning on and after the enactment of
the CARES Act, but before January 1, 2021, an amount
equal to the amount in excess of the limitation on business
interest under federal law without regard to the
amendments made by section 2306 of the CARES Act; and
  • For income tax years commencing on or after January 1,
2021, an amount equal to the deduction for qualified
business income for an individual taxpayer who files a
single return and whose adjusted gross income is greater
than $75,000, and for an individual taxpayer who files a
joint return and whose adjusted gross income is greater
than $150,000. This federal deduction may be claimed for
income tax years commencing prior to January 1, 2026.
Section 4 limits the amount of net operating loss that a corporation
may carry forward to $400,000. This section also specifies that a
corporation may add the amount of all net operating losses that a
corporation is prohibited from subtracting, with interest, to the allowable
net operating loss that is carried forward by the corporation.
Section 5 eliminates the state income tax modification for
qualifying net capital gains for income tax years commencing on or after
January 1, 2021.
Sections 6 and 7 repeal the exemption from the state sales and use
taxes for the sales, purchase, storage, use, or consumption of electricity,
coal, gas, fuel oil, steam, coke, or nuclear fuel, for use in processing,
manufacturing, mining, refining, irrigation, construction, telegraph,
telephone, and radio communication, street and railroad transportation
services, and all industrial uses, for filing periods on and after August 1,
2020, except not the state sales and use tax exemption for newsprint and
printer's ink for use by publishers of newspapers and commercial printers.
Section 8 creates a sales and use tax refund, not to exceed $1,000
per filing period, for filing periods on and after August 1, 2020, for all
state sales and use tax paid by the taxpayer on the sale, storage, use, or
consumption of electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel,
for use in processing, manufacturing, mining, refining, irrigation,
construction, telegraph, telephone, and radio communication, and all
industrial uses; except that the $1,000 per filing period limit does not
apply to the sale, storage, use, or consumption of:
  • Diesel fuel purchased for off-road use;
  • Electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel
purchased for agricultural purposes;
  • Coal, gas, fuel oil, steam, coke, or nuclear fuel for use in
generating electricity; and
  • Electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel
for use in street and railroad transportation services.
Sections 9 and 10 prevent the elimination of the sales tax
exemption and the creation of the sales tax refund from affecting county
and municipal sales and use taxes.
Section 11 repeals the statutes that provide an insurance premium
tax rate reduction for insurance companies maintaining a home office or
a regional home office in the state. Section 11 also clarifies that, for
purposes of the insurance premium tax, an annuity plan or an annuity
consideration does not include a deposit-type contract that does not
incorporate mortality or morbidity risks, such as a guaranteed investment
or interest certificate, a supplementary contract without life contingencies,
an annuity certain, a premium fund or other deposit fund, a dividend
accumulation, a coupon accumulation, a lottery payout, or a structured
settlement.
The earned income tax credit is equal to a percentage of the federal
earned income tax credit. Section 12 increases the percentage from 10%
to 20% beginning in 2023. Section 12 also specifies that for income tax
years commencing on or after January 1, 2020, taxpayers filing with an
individual taxpayer identification number are eligible for the earned
income tax credit.
Section 13 specifies that the state treasurer shall transfer the
following amounts from the general fund to the state education fund
created in section 17 (4) of article IX of the state constitution for the
following fiscal years:
  • $150,000,000 for the fiscal year 2021-22;
  • $200,000,000 for the fiscal year 2022-23;
  • $200,000,000 for the fiscal year 2023-24; and
  • $200,000,000 for the fiscal year 2024-25.

Committee Reports
with Amendments
Full Text
Full Text of Bill (pdf) (most recent)
Fiscal Notes Fiscal Notes (06/13/2020) (most recent)  
Additional Bill Documents Bill Documents
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  • Past fiscal notes
  • Committee activity and documents
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