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Wayfair tax proposal heads to governor’s desk

  

JEFFERSON CITY, Mo. — A three-year push to enact a sales tax for online purchases came to fruition during the last day of the 2021 legislative session.

SBs 153 and 97 from Sen. Andrew Koenig would allow the state to impose a sales tax on online purchases made through vendors with a physical presence in the state, a practice adopted by most other states. Commonly known as a Wayfair tax, it would take effect in 2023 under the bill.

“Missouri has one of the worst things you could have in a tax code by incentivizing Missourians to purchase from out-of-state businesses,” Koenig told The Missouri Times. “As one of the last states in the nation to have Wayfair legislation, it was essential for us to finally pass SB 153 to level the playing field for Missouri businesses while also delivering a $380 million income tax cut to working Missourians.”

House handler Rep. J. Eggleston, who sponsored his own version of the bill in the lower chamber, said the final version was the result of extensive cooperation between the House and Senate. The bill bounced from chamber to chamber and in and out of conference over the course of the final week, and finally passed the House 145-6 Friday afternoon. 

“Everyone who had an interest in this got something that they really liked, a whole lot more than what they might not have,” he said. “We didn’t agree on everything to start with, but after sitting down for good-faith negotiations knowing that we wanted something positive for our state and citizens, we were able to blend those two together.”

The latest version includes various taxation provisions, from the elimination of income tax on COVID-19 stimulus funds to the creation of an Urban Agricultural Zone Fund. The bill would also gradually decrease video service provider fees to settle at 2.5 percent of gross receipts in 2027, modify the use tax economic nexus, and enact a Voluntary Firefighter Cancer Benefits Trust, among other changes. 

Missouri will be the last state to enact the fee if the bill were signed into law. Gov. Mike Parson identified Wayfair as a priority in his 2021 State of the State address, hoping the “House and Senate will consider legislation to address the unfair advantage online retailers have over small businesses in Missouri.”

Internet tax laws have passed in many states over the past couple of years following 2018’s South Dakota v. Wayfair, Inc., in which the U.S. Supreme Court said states could collect taxes on remote sales. Previously, states could only collect tax on transactions with businesses maintaining a physical presence in the state. Since the verdict, many states have passed their own legislation establishing an economic nexus, or a taxable threshold on online sales.