The question of how best to apply Missouri taxes to sales made by internet sellers to Missouri customers is top of mind for tax leaders in the Missouri General Assembly this year.
Sen. Andrew Koenig, Chairman of the Senate Ways and Means Committee has a lot of experience dealing with tax legislation, having also served as Chairman of the House Ways and Means Committee during his service in the Missouri House.
Sen. Koenig’s internet tax bill, SB 46 was merged with Sen. Bill Eigel’s SB 50 and the combined bill is on the calendar for discussion soon in the Missouri Senate. SB 46 in its present form would make changes necessary for Missouri to conform with the Streamlined Sales and Use Tax Agreement, an effort by 26 states to make their tax laws more uniform.
Sen. Sandy Crawford, Chairwoman of the Senate Local Government and Elections Committee and no stranger to financial matters, has also filed an internet tax bill. Her bill, SB 189, was heard this week in her committee. That bill approaches the subject differently and uses a use tax approach, rather than a sales tax approach as in other bills.
Associated Industries of Missouri supports both bills, as well as others, that are seeking to level the playing field between internet sellers that have no locations in Missouri and our retailers that are important members of our local communities, hiring our fellow Missourians, paying a host of taxes to support our schools, police, fire and other government offices. Currently, internet retailers are unfairly competing with these hometown businesses because they do not have to charge the same taxes as the local businesses, creating an impression in the minds of customers that goods are less expensive if purchased through the internet. Although taxes are still due, few people actually file the returns and pay the tax directly to the Missouri Department of Revenue as is currently required if they buy more than $2,000 in goods on which no tax was collected from internet sellers or other remote sellers (mail order, TV, etc.).
This week, the House Subcommittee on Internet Taxation, chaired by Assistant Majority Floor Leader Rep. J. Eggleston, held a hearing to discuss the history of recent developments in internet taxation and some of the solutions proposed to address the issue. Director of Revenue Joel Walters appeared before the subcommittee and emphasized the Department of Revenue would like to assist legislators in finding accurate information and developing solutions, but would stop short of endorsing any one proposal.
Rep. Eggleston recounted the recent U.S. Supreme Court decision in the Wayfair v. South Dakota case in which the U.S. Supreme Court overturned decades of rulings that prevented states from requiring remote sellers to collect their taxes, primarily because of the burden it would create on those retailers and the lack of connection such retailers had with such states. In his testimony before the subcommittee, Director Walters said the U.S. Supreme Court mentioned several criteria in their decision, including the fact that South Dakota have made it very easy for remote sellers to collect the tax, meaning there was no longer an undue burden on interstate commerce.
Associated Industries of Missouri (AIM) and the AIM Tax Committee is involved in all of these discussions.
“Our goal is to find a solution to the problem that does not dramatically change the tax laws for our instate retailers but allows the state to correct this unfair advantage currently held by internet retailers over our Main Street businesses,” said Ray McCarty, president and CEO of Associated Industries of Missouri.
Further action is expected regarding this issue very soon. Watch your inbox for more as these bills, and other ideas, advance through the legislative process.