Governor Nixon this week signed SB 18 requiring the DOR to notify taxpayers of changes in taxability of items or services and SS SCS HCS HB 517 & 754, a bill that makes several changes to income and sales tax laws.
SB 18, sponsored by Senator Will Kraus, seeks to resolve an ongoing problem caused by the DOR holding taxpayers liable for changes in interpretation of the sales and use tax laws. During recent hearings held across the state by a special Senate committee tasked with exploring the problem, taxpayer after taxpayer reported tax bills they received after an audit on transactions that had historically been exempt from sales and use taxes. In some cases, the taxpayers had asked the DOR whether the transactions were subject to tax and were told they were not taxable, only to find out during an audit the DOR had changed their position and the business was now liable for back taxes that were never collected from customers, plus penalty and interest.
SB 18 was passed by the legislature to correct this problem by requiring a notice to be sent to each affected taxpayer when the DOR changes their interpretations of the sales and use tax law. The law also provides protection to taxpayers that are not notified of the change in interpretation, but the protection is very limited. Click here for the bill page (please note the “Truly Agreed and Finally Passed” version of the bill will be the new law.
Governor Nixon will also sign SS SCS HCS HB 517 & 754. The bill contains numerous issues relating to income and sales and use taxation, including adding graphing calculators to the list of exempt items during a sales tax holiday, a shortened the length of time the DOR must process refunds for individual income tax to 45 days, a requirement that moneys received by the DOR be deposited within two business days, limiting the withholding tax on tip income to the amount reported by the employee to the employer, exempting mandatory gratuities charged by restaurants from sales taxes, allowing retailers to advertise “tax included” as long as the amount of sales tax appears on the receipt, and a provision exempting aircraft purchased by non-residents from sales and use tax in certain situations (including a provision allowing a window of time for a purchaser to have modifications to the plane performed in Missouri without a tax consequence).
These two bills were supported by Associated Industries of Missouri and we are pleased Governor Nixon signed these bills.