Daily Legislative Update

Friday, April 3, 2009
82nd Day of the 87th General Assembly

SPECIAL EDITION

*  *  *  PLEASE MAKE LEGISLATIVE CONTACTS THIS WEEKEND  *  *  *

INCOME TAX NET LOSS CARRY FORWARD

HB 1911 by Rep. Keith Ingram and Senator Larry Teague is on Monday’s Senate Revenue and Taxation Committee agenda. We have an uphill battle to get this passed and need your help in encouraging members of the state senate to support this bill.

HB 1911 would extend the income tax net operating loss (NOL) carry forward period from five years to 15 years. It would apply only to losses incurred on or after January 1, 2009 and would not impact state revenue until fiscal year 2016.

The federal government and 25 states allow 20 years for businesses to offset net operating losses against future income while eight states allow 15 years, one state allows 12 years and five states allow businesses10 years. DFA estimates that over 75 percent of Arkansas NOL’s expire due to Arkansas ’s extremely short carryover period. This means Arkansas ’s income tax laws are extremely non-competitive with most other states.

Some additional talking points:

·         When the New Jersey extended its NOL carry forward period from 7 to 20 years in 2009, its Governor announced this would: “creat[e] a more level playing field that is expected to encourage companies to invest in New Jersey .  The longer period aims to help New Jersey ’s economy by making state law more consistent with the rest of the country, thus making the Garden State more competitive as a location for new business relocations and expansions.”  Same reasoning applies in Arkansas .

·         More than 20 years ago, Arkansas adopted a 15-year NOL carryover for some manufacturers and a 10-year NOL carryover for others. But the NOL carryover for other businesses has remained the same.

·         Unreasonably short NOL carryover period puts businesses in Arkansas at a major disadvantage by imposing many millions of taxes not imposed by any other state in the region.

·         We are facing a major economic downturn of a magnitude most of us have not seen in our lifetimes.  Impossible to determine how long this recession will last.

·         Arkansas companies that are able to survive should not be taxed on “phantom” profits that only exist because Arkansas prevents them from offsetting losses incurred in earlier years.

·         This is a job and economic development issue in Arkansas .

Please contact your state senator and especially senators on the Senate Revenue and Taxation Committee and urge them to vote FOR HB 1911.

Members of the Senate Revenue and Tax Committee are: Paul Miller—Chair, Bobby Glover—Vice chair, Denny Altes, John Paul Capps, Steve Faris, Terry Smith, Larry Teague and Sharon Trusty.

HEALTH CARE MANDATE

SB 913 by Sen. Mary Anne Salmon would require health benefit plans to provide coverage for the diagnosis and treatment of autism spectrum disorders and prohibits insurers from terminating or refusing coverage solely because a person is diagnosed with an autism disorder. It failed this morning on voice vote in the House Insurance and Commerce Committee. However, it only fell two votes short and could come up again next week.

SB 913 will raise health insurance rates for the companies that are not self-insured approximately 2.1 percent. Generally the smaller businesses and non profit organizations will be the ones most impacted by this legislation.

PLEASE CONTACT MEMBERS OF THE HOUSE INSURANCE AND COMMERCE COMMITTEE AND URGE THEM TO VOTE NO ON SB 913.

Members of the House Insurance and Commerce Committee are: Eddie Hawkins—Chair, Fred Allen—Vice chair, Bill Abernathy, Mark Martin , Allen Maxwell, Bruce Maloch, Eddie Cooper, Rick Green, Willie R. Hardy, Wilhelmina Lewellen, David Rainey, John Paul Wells, David Dunn, Frank Glidewell, Johnny Hoyt, Jon Woods, Buddy Lovell, Barry Hyde, Charolette Wagner and Keith Ingram.

CONTACT INFORMATION

State Senators: 501-682-2902
State Representatives: 501-682-6211

State Chamber/AIA Staff

Randy Zook, President/CEO:
rzook@arkansasstatechamber.com

Kenny Hall, Executive Vice President:
khall@arkansasstatechamber.com  

Angela DeLille, Director of Governmental Affairs:
adelille@arkansasstatec hamber.com

State Chamber/AIA phone: (501) 372-2222