HCS HB 2048 -- SALES TAX COLLECTIONS

SPONSOR:  Sutherland

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 10 to 0.

This substitute changes the laws regarding sales tax collections.
In its main provisions, the substitute:

(1)  Requires, beginning January 1, 2012, statements of no tax
due from the Department of Revenue as a prerequisite to the
issuance or renewal of state and local business and occupation
licenses or to the receipt of payments from the State Legal
Expense Fund.  The department director may enter into an
agreement with any state agency responsible for issuing business
and occupation licenses to provide the names and tax
identification numbers of applicants for these licenses.  Tax
delinquencies may result in the suspension of licenses;

(2)  Authorizes the department director to file a certificate of
lien in circuit court to garnish wages and to withhold payments
and assets due to a taxpayer to be paid over to the department to
be applied to the delinquent taxes.  A copy of the order of
garnishment must be mailed to the taxpayer notifying the taxpayer
of the commencement of garnishment and the procedure available
for appeal.  The substitute establishes penalties for failure to
comply with a garnishment order and prohibits an employer from
discharging or refusing to hire an employee as a result of a
garnishment order;

(3)  Allows the department to implement and operate a financial
institution match system to identify and seize financial assets
of delinquent taxpayers.  Financial institutions will be paid a
fee from the delinquent taxpayer's account which cannot exceed
the actual cost of conducting data matches.  The substitute
requires the department to provide notice to the taxpayer and the
financial institution of the match, the lien or garnishment
arising from the match, and the action to be taken and
establishes a penalty for a willful violation by a financial
institution;

(4)  Authorizes the department director to place a lien upon a
taxpayer's workers' compensation benefits, distributive share of
a decedent's estate, or any claims made by a taxpayer in a law
suit.  The substitute requires the mailing of a notice to the
taxpayer within 20 days of filing a certificate of tax lien and
allows the department director to release a lien upon
satisfaction of the tax debt or for an erroneous filing.  The
department director is required to establish and maintain records
for all certificates of tax liens and lien releases;

(5)  Changes the time period for appealing individual income,
corporate income, sales and use, and corporate franchise taxes
and the time period for the imposition of penalties and interest
on outstanding tax liabilities;

(6)  Clarifies that certain purchases made for resale are not to
be considered as retail for sales and use tax purposes when the
subsequent sale is taxed in the state or another state, is for
resale, is excluded from tax, is subject to tax but is exempt, or
is exempt in another state where the subsequent sale occurs; and

(7)  Clarifies that operators of amusement parks and places of
entertainment or recreation, including games or athletic events,
must charge sales taxes on the amount of gross receipts charged
for admission, but any subsequent sale of the admissions or
seating accommodations will not be subject to the taxes and
clarifies that operators of hotels, motels, taverns, restaurants,
drugstores, dining cars, or tourist camps must charge sales taxes
on the amount of gross receipts charged for all rooms, meals, and
drinks furnished at the establishment, but any subsequent sale of
those same rooms, meals, and drinks is exempt from sales and use
taxes.

The substitute contains an emergency clause on the provisions
which clarify sales which are not to be considered as retail for
sales and use tax purposes and when certain operators must charge
sales taxes.

FISCAL NOTE:  Estimated Effect on General Revenue Fund of a cost
of More than $237,022 to an income of More than $100,000 in
FY 2011, a cost of More than $244,590 to an income of More than
$100,000 in FY 2012, and a cost of More than $248,927 to an
income of More than $100,000 in FY 2013.  Estimated Effect on
Other State Funds of a cost of Unknown to an income of More than
$100,000 in FY 2011, FY 2012, and FY 2013.

PROPONENTS:  Supporters say that the bill corrects two decisions
by the Missouri Supreme Court.  The court's decision in the ICC
Management case requires all sellers to exempt entities to
self-accrue and pay sales tax on the purchase of items they sell
to the entities.  This includes sales made to schools, churches,
and state and local governments.  Those additional tax costs will
be passed on to these purchasers increasing costs for taxpayers
that support local governments and increasing costs to churches
and other exempt organizations.  There are situations in which
there should be no sales tax.  Tax exemptions are passed by the
General Assembly to help various citizens of Missouri; and if
Missouri lets this ruling stand unchecked, it will impose a great
burden on suppliers of services to some of our state's largest
industries, utilities, tourism, schools, churches, other non-
profit entities, government, and consumers.  Ticket sales should
be treated separately since you are buying an experience and not
a product.  People who bid to do services in the state will have
to pay the tax while out-of-state vendors will not be required to
pay.  A receptive business takes all parts of travel such at
hotel, bus, escort, and show tickets and sets one price.  The
court cases make it difficult to be compliant with the law.  The
last reseller of the ticket is the one who collects the sales
tax.  Each separate identity will need a sales tax exemption.
Agents and resellers may continue to do business as usual and
ignore the new rules or leave Missouri because of the added
confusion and cost.

Testifying for the bill were Representatives Sutherland and
Munzlinger; Missouri Chamber of Commerce and Industry; Associated
Industries of Missouri; Missouri Retailers Association; Boeing
Company; Keith Lilly, Branson Area Receptive Association;
Association of Missouri Electric Cooperatives; Missouri
Telecommunications Industry Association; Missouri Energy
Development Association; Gail Myer and Ramona Mormann, Missouri
Hotel and Lodging Association; Missouri Restaurant Association;
Associated General Contractors of Missouri; Associated Builders
and Contractors; AT&T Incorporated and Affiliates; John Fedele,
American Society of Media Photographers, St. Louis Chapter;
Robert Taylor, Wireless USA, Incorporated; Chris Cudney, Ameren
Services; Missouri Farm Bureau; Missouri Petroleum Marketers and
Convenience Store Association; Missouri Asphalt Pavement
Association; Missouri Association of Counties; Dan Shaw, Missouri
Grocers Association; Missouri Travel Council; and South Western
Association (Farm Equipment Dealers).

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:12 pm