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Next Steps: ‘Wayfair’ internet sales tax

As elected officials vacate Jefferson City and return to their families and jobs, The Missouri Times is bringing you updates on big initiatives that didn’t quite make it through before May 17. The “Next Steps” series will showcase progress made on certain legislative issues and offer a look ahead to what could come.

JEFFERSON CITY, Mo. — Before lawmakers can put a plan to establish a statewide internet sales tax in their carts next session, they’re going to need to come to a consensus on quite a few things first. 

The U.S. Supreme Court last year handed down a decision allowing states to collect sales taxes from e-commerce companies that do not have a physical presence in that state. Several states enacted online sales taxes after that ruling, but the Missouri legislature was unable to do so in the past session — despite multiple efforts in both chambers.

Proponents of the tax said it would eradicate an “unfair advantage” online marketplaces have over brick-and-mortar stores in Missouri. 

“Government shouldn’t be picking winners and losers as far as how retailers are treated. Time and again, you hear local retailers talk about how they’re a showroom for a lot of online platforms — people come and touch and feel and try on and ask questions and then go home to potentially save a few bucks on the tax side of things,” Traci Gleason with the Missouri Budget Project told The Missouri Times. “In order to treat our mom and pop and Missouri retailers fairly, it’s going to remain an issue until it’s addressed by the legislature.” 

More than 30 states nationwide collect internet sales tax, according to data from the National Conference of State Legislatures.

Taking inventory

A bevy of bills aiming to establish a tax on certain internet purchases was introduced in both the House and Senate this year — but none quite made it across the finish line. 

Republican Rep. J. Eggleston was one such lawmaker who proposed legislation that would establish a sales tax on certain internet purchases while also reducing the top income tax rate. His HB 548 ultimately stalled in the House. 

In the Senate, Republicans Sandy Crawford and Andrew Koenig put forth a pair of bills establishing a use tax for online purchases; Koenig’s SB 46 would have cut income taxes — something he was adamant about. 

The Missouri Department of Revenue (DOR) classifies a sales tax as imposable on retail sales of tangible property and certain services. On the other hand, a use tax is defined by the DOR as imposed directly on the storage, use, or consumption of the property in the state. It is not applicable if the item is purchased at a Missouri retailer and otherwise subjected to the state’s sales tax. 

Buyer’s remorse

From what sort of tax (use or sales) to implement to how the revenue would be used to the hiring of an outside collection agency, there were several roadblocks preventing a successful sale of legislation in 2019 — despite seeming widespread support for establishing some sort of tax. 

“We have a lot of different ideas of how it should be brought up,” Eggleston told The Missouri Times. “Whether it should be a sales or use tax, whether Missourians should pay more so the government gets more or be offset with a decrease from other taxes, should the money that’s coming in be earmarked for a specific purpose or should it go into the general revenue … or should we have a third-party collection agency that we pay do the collections or should we do that inhouse with the Department of Revenue like we do with other taxes.” 

“All of these issues or differences between the various bills we had, all of that will have to get hashed out before we can come to an agreement on anything,” he said. 

Eggleston said he believes “it’s possible” for lawmakers to come to an agreement, but “maybe the lesser of all evils is we do nothing and leave it as it is.” As for him, he’s not quite sure if he will sponsor similar legislation to his HB 548 next year.