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Minutes for HB2239 - Committee on Taxation
Short Title
Extending the Kansas corporate income tax net operating loss carryforward.
Minutes Content for Wed, Feb 17, 2021
Chairperson Smith opened the hearing for HB2239.
Mr. Siebers provided an overview on HB2239 stating the bill would extend the corporate net operating loss carryforward from losses incurred in tax year 2018 and thereafter. (Attachment 9)
Kathleen Smith, Department of Revenue stated HB2239 would have no immediate fiscal impact on state income receipts. The bill would reduce State General Fund revenues by approximately $1,860,000 in tax year 2029 or 2030. Extending the net operating loss carried forward period to 20 years would have no fiscal effect until tax year 2029 or FY2030.
Proponents:
Larry Weians testified on behalf of T-Mobile for HB2239 noting the Kansas law provides for a 10-year Net Operating Loss carryforward, which is relatively short when compared to Federal law and other states. As part of the Federal Tax Reform legislation in 2017, Federal NOL carryforward periods were increased from 20 years to indefinite. The short 10-year NOL carryforward period in Kansas makes the state less attractive from a business environment when compared to other states. Last year, the House Committee on Taxation passed this same language in (2020) HB2490 which passed the full House by a vote of 118-2. Unfortunately, the session was interrupted by the pandemic and the bill was not considered by the Senate. (Attachment 10)
Mr. Weians stood for questions from Committee members.
Mr. Eckles testified as a proponent for HB2239 stating prior to the passage of the Tax Cuts and Jobs Act (TCJA) the federal standard allowed businesses a 20-year carryforward period while Kansas law only allows 10 years. With the passage of TCJA in 2017, the federal standard now allows for an indefinite carryforward period, but at 80% of taxable income rather than the full amount. The Tax Foundation recommends the Legislature pass HB2239 as is or amend the bill by moving from 10 to 20 years carryforward or make it indefinite. (Attachment 11)
Mr. Eckles stood for questions from Committee members.
Jason Watkins, Wichita Regional Chamber of Commerce testified as a proponent for HB2239 noting the Kansas economy has manufacturing and advanced manufacturing. Many of the large employers in and outside of Wichita are encouraged to either expand or relocate to our region and are the types of firms and industries that are very capital intensive in terms of investment. HB2239 would extend the net operating loss carryforward to 20 years retroactive to tax year 2018 and make Kansas more competitive for job creation and capital investments (Attachment 12)
In response to a questions, Mr. Weians stated Colorado, Nebraska and Missouri have a 20-year carryforward and Oklahoma is indefinite.
Written only testimony as proponents to HB2239 were submitted by the following:
Dan Murray, National Federation of Independent Business (Attachment 13)
Randy Stookey, Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, Renew Kansas Biofuels Association (Attachment 14)
Chairperson Smith closed the hearing on HB2239.
