JEFFERSON CITY – A new law signed today will finally end a troubling practice in Missouri where the state’s tax collectors were changing the sales tax rules without telling anyone.
In recent years, the Missouri Department of Revenue has begun requiring additional businesses, such as dance and gymnastics studios, to collect sales tax for their services. The problem is the department didn’t inform the impacted businesses about the changes. Then, the department penalized businesses for not following the rules they didn’t tell anyone about.
With today’s signing of Senate Bill 18, a bill sought by the Missouri Chamber of Commerce and Industry, the Department of Revenue will have to notify businesses when they change sales tax rules.
“Over the last two years, we’ve heard a number of firsthand accounts from businesses that were contemplating shutting down after they were targeted for violations of new sales tax policies that were never publicized,” said Daniel P. Mehan, president and CEO of the Missouri Chamber of Commerce and Industry. “With this new law, we are seeking transparency from the Missouri Department of Revenue. When the state educates businesses about tax law changes, we are going to see far fewer of these troubling instances where companies are forced to close due to unintentional violations.”
Along with Senate Bill 18, the governor also signed House Bills 517 & 754, a tax reform package that encourages faster income tax returns, creates a new sales tax exemption for aircraft sold outside the state and stops the revenue department from targeting restaurants when their employees falsely report their tipped income.
In addition, the new law makes it legal in Missouri for businesses to advertise that they are absorbing the sales tax in an advertised price. The Missouri Chamber had been advocating for this change, as absorbing the sales tax is already a widespread practice, putting many businesses at risk.
“This law simply protects Missouri businesses from being targeted over the harmless practice of offering to pick up the sales tax tab,” said Mehan.
Senate Bill 18 was sponsored by Sen. Will Kraus, a Republican from Lee’s Summit. The House Bills 517 and 754 package was sponsored by Rep. Galen Higdon, a Republican from St. Joseph.
