Substitute Senate Bill No. 443 with File No. 576 proposes changes to tax regulations concerning interest on tax underpayments and the carry-over period for business operating losses. The bill stipulates that no interest will accrue on underpayments of tax due to amended returns filed in response to IRS Notice 2021-20, which pertains to the federal employee retention credit program. If a taxpayer has already paid interest on such underpayment, they are entitled to a refund of that amount without additional interest. This provision aims to alleviate the financial burden on taxpayers who complied with the IRS's updated guidance.

Additionally, the bill extends the carry-over period for net operating losses (NOLs) from 20 to 30 years for losses incurred in income years beginning on or after January 1, 2025. This extension allows businesses more time to offset future taxable income with past losses, potentially reducing their tax liabilities over a longer period. The bill also includes limitations on the amount of operating loss that can be deducted in subsequent years and provides an option for certain combined groups to relinquish a portion of their unused operating losses in exchange for fewer restrictions on the remaining carry-over. The bill's provisions regarding NOLs take effect upon passage, while the underpayment interest exemption becomes effective on July 1, 2025. The bill is expected to result in a revenue loss for the General Fund, estimated at $2.8 million in FY 46 and $4.7 million in FY 47 and annually thereafter due to the NOL provision.

Statutes affected:
Raised Bill: 12-237, 12-422, 12-730