Missouri's tax collection agency soon will need to notify affected businesses when there are changes in sales tax policy once a bill signed Monday by Democratic Gov. Jay Nixon takes effect.
Bill sponsor and Lee's Summit Republican Sen. Will Kraus, who is running for secretary of state in 2016, said the measure will end what he called notification by audit.
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Kraus said business owners have complained that the Department of Revenue or courts sometimes change policy on items for which sales tax should be charged. Some owners, Kraus said, are not aware of changes in tax collection until they are audited and could owe a substantial amount of money in back taxes.
"Based on conversations I've had with citizens and business owners throughout the state, the Department of Revenue is not being fair or consistent in enforcing tax laws," Kraus said in a statement. He said the bill is needed to hold the department accountable.
The proposal is backed by the Missouri Chamber of Commerce and Industry, which has cited similar concerns from businesses. President and CEO Dan Mehan said some have contemplated closing because of violations to new sales tax policies.
The bill signed by Nixon will require the agency to contact all business owners who could be affected by a change in sales tax law interpretation made by the department's director, the state's administrative tribunal or a judge.
If businesses are not informed about changes in sales tax collections, they won't be responsible for unpaid taxes.
The Department of Revenue had raised concerns about anticipated costs associated with a similar measure passed by the General Assembly last year.
Nixon vetoed that bill. The Department of Revenue had estimated it could cost the state more than $100 million in lost revenue in any given fiscal year, including about $71 million in general revenue. Lawmakers have disputed that.
Legislative researchers estimated this year's proposal will cost a net of less than $425,394 in general revenue this fiscal year.
Department of Revenue spokeswoman Michelle Gleba said in an email that the only costs associated with the measure now will be for postage to notify businesses and the salary for an additional full-time employee.
Lawmakers tweaked the proposal to require notification only if a "reasonable person" would not have expected changes in sales tax based on prior laws or regulations. The measure also allows the agency to inform businesses via mail, email or a secure electronic communication.
A spokesman for Nixon did not immediately return a call seeking comment Monday. In a statement, Nixon called the proposal "fiscally responsible" and "business friendly." He said it will "ensure affected businesses are given adequate notice when tax laws change."
The measure will take effect Aug. 28.
The tax notification bill is SB 18.