Tax policy matters to Missouri employers. Understanding that, Missouri lawmakers continued to build upon work to improve Missouri’s business tax policy by giving final approval to an important tax reform bill on May 16, the last day of the legislative session.
A Senate Conference Committee gave final approval to Senate Bill 662, sending that legislation to Gov. Jay Nixon’s desk for signature. The underlying bill was sponsored by Sen. Will Kraus, a Republican from Lee’s Summit, and was proposed to require the Department of Revenue (DOR) to provide notification to businesses when a change is made in the interpretation of sales tax laws. Sen. Kraus filed the legislation to address complaints from Missouri employers that were being assessed back sales taxes on items that had previously been tax exempt. The Missouri Chamber of Commerce and Industry was a strong supporter of the legislation and participated in a press conference that highlighted one Missouri employer, T.J Rehak, owner of Xtreme Gymnastics, who was a victim of this practice by the DOR. To learn more about Rehak’s story, watch this video from the press conference (https://www.youtube.com/watch?v=3FGBceywUS0).
“We are hearing from small businesses across the state about the DOR’s overreaching audits,” said Dan Mehan, Missouri Chamber president and CEO. “This legislation sends a clear message to DOR that its job is to collect taxes as defined by law, not redefine the law through audits.”
During debate, SB 662 was amended to include a provision that would clarify language in legislation passed in the 2013 session that added a new option for corporate tax filing. Last session’s legislation contained significant tax savings for Missouri employers, however, the Department of Revenue narrowly interpreted the legislation and not all companies the legislation was intended to cover could take advantage of the new law. This provision in SB 662 would clarify corporate apportionment legislation passed last year to ensure all companies can utilize this new statute whether they manufacture products or sell services or intangibles.
In addition, a provision that allows Missouri retailers to advertise the absorption of sales taxes also was amended to SB 662. Retailers use this marketing tool in many states, however it is currently prohibited in Missouri. The Missouri Chamber also supports this provision.