House passes bill exempting guaranteed partner payments from gross receipts and use tax

The House voted 66-4 to pass House Bill 12-45, which excludes guaranteed payments made to partners from the definition of gross receipts and exempts those guaranteed payments from state use tax.

Representative Massey, sponsor of the bill, said the change fixes a tax-law "glitch" that treated guaranteed partner payments — payments to a partner for managerial duties or similar services — as subject to sales or use tax in some situations, notably when a partnership could not treat the partner as a W-2 employee under federal rules.

Massey said the Department of Revenue had not provided a fiscal estimate and he did not expect the provision would generate large revenue sums. He cited common situations such as family farms or ranches structured as partnerships where one partner performs managerial tasks and receives guaranteed payments; under current practice Revenue had in some cases assessed tax on such payments, which sponsors argued was incorrect.

After brief floor remarks from the sponsor and some members recognizing visitors in the gallery, the House took the final passage vote. The clerk reported ayes 66, nays 4; the bill was declared passed.

The bill revises the tax code's treatment of guaranteed payments; the transcript does not record a fiscal note or appropriation tied to the measure. The change applies to partnerships and specified guaranteed payments and does not change payroll classification rules at the federal level.