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Audit highlights how Missouri has most generous giveaway of sales tax in nation

  

Report on Department of Revenue collection of sales and use tax again recommends legislators limit handout

JEFFERSON CITY, Mo. — State Auditor Nicole Galloway today released an audit that highlights how Missouri gives the most generous discount in the nation to businesses just for paying their sales taxes on time. The finding was in a report on the collection of sales and use tax by the Missouri Department of Revenue (DOR) for fiscal year 2019.

“This is the kind of government nonsense that Missourians can’t stand,” Auditor Galloway said. “No one gets credit for paying his or her taxes on time. So why should big retailers get this handout? As Missouri’s independent watchdog, I’m again urging legislators to look at limiting this giveaway of tax dollars.”

The audit found the 2% discount given to retailers for paying the sales and use tax they owe on time is the most generous such discount in the country. Unlike most of the other 26 states that offer a discount for timely payment, Missouri has no cap on the discount it gives. The audit said if the state applied a cap of $2,500 per month, it would only impact businesses with monthly sales of approximately $1.6 million and more. In fiscal year 2019, approximately $121 million in sales and use tax was paid by taxpayers, but then retained by businesses due to the discount.

The report also discussed how Missouri is one of only two states with statewide sales taxes that has not updated its laws to allow for the collection of tax from out-of-state sellers for online purchases. A U.S. Supreme Court decision in 2018 allowed states to charge taxes on purchases, even if the seller did not have a physical presence in the state. While bi-partisan legislation was proposed in the Missouri General Assembly during the 2020 session to update state law, it failed to pass.

The complete audit can be found here.