Missouri is set to end its sales tax status as a relic of a bygone era

Despite the hardships businesses have endured due to COVID-19, online retailers have demonstrably performed better than brick-and-mortar stores in recent years due to easier accessibility for customers and lower overheads. Missouri officials took note of this discrepancy and opted for a bipartisan vote to join the rest of the states in taxing online sales.

After Florida passed its new economic tie legislature, Missouri was the last of the states to have no out-of-state online sales regulations. On May 14, 2021, the Missouri Legislature voted to forward an online sales tax bill to Governor Mike Parson for signature. These efforts seek to restructure the state tax code with the goal of increasing state and local revenue, effective Jan. 1, 2023. The bill imposes a sales tax on taxable transactions purchased by residents of Missouri through remote sellers and market facilitators who bring in at least $100,000 in annual revenue.

Critics of the proposal argue that the state income tax cut, which is being introduced alongside the Wayfair tax bill, will offset the attempt to raise local incomes in Missouri. Overall, this bill has a strong chance of passing because the governor of Missouri has been a strong advocate for this type of legislature for the past few years. Businesses should start preparing for this change by assessing how their prices will adjust and how consumer preferences are set to change.

Advice for the taxpayer

Sales tax laws are constantly changing and becoming more complex. Allyn recommends that the taxpayer conduct a thorough analysis of the locations outside of their home state to which sales are made and keep abreast of changes to each location’s tax code. Allyn encourages the taxpayer to maintain full tax compliance, as failure to make these changes may result in increased liabilities for the seller, such as penalties and interest for underpaid taxes. Further consequential damages may arise during a taxpayer audit, potentially resulting in a large amount of retroactive sales tax owed.

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To see if Allyn is the right fit for your business, contact 239-489-9900 or [email protected] for a free consultation with our top tax experts in the industry.

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