USE TAX

(UPDATED 9/21/2020)

 

 

 SB 153 (2021) was signed by Governor Parson on June 30, 2021.  Key elements of this legislation:

  • A vote of the people is still required before a municipality may enact a local use tax.
  • Out-of-state retailers who do not have a physical presence in the state of Missouri are now required to remit the state and local use tax.
  • The ballot language was amended to remove the consumer reporting threshold.
  • Online retailers must collect state and local use taxes from transaction they facilitate (taking orders, but not filing order) for other retailers (such as Amazon marketplace).
  • The state and local use tax provision becomes effective on January 1, 2023, to give the Missouri Department of Revenue sufficient time to implement requirements in the bill.
  • Cities with a local use tax in effect already in place had to publish a notice of the new law in the first week of November, 2021.  Click here for sample notice.

Statutes
§ 32.087 RSMo. - Local Sales Tax on Vehicle Sales
§ 144.069 RSMo. - Sales Tax on Vehicles imposed based on owner's address
§ 144.600 - 144.761 RSMo. - Use Tax in General
§ 144.757 RSMo. - Local Option Use

Background and Legislative links:
SB 773 (2018) was signed by Governor Parson on July 5, 2018. This bill provides another extension on the collection of the local sales tax on motor vehicles, trailers, boats and outboard motors purchased from out-of-state dealers or from private sellers and then titled in Missouri. Municipalities now have until November of 2022 to receive voter approval for the continuation of the collection of the local sales tax for motor vehicles, trailers, boats and outboard motors purchased from private sellers or out-of-state dealers and then titled in Missouri. HB 2140 passed in 2016 provided the previous extension.

SB 773 (2018) and HB 2140 (2016) provide continued relief from the tax loophole created by the Missouri Supreme Court in the January 31, 2012, Street v. Director of Revenue decision.  This decision provided that the local sales tax should only be collected on vehicles purchased out-of-state if the city had a local use tax.  Prior to this court decision the local sales tax had always been imposed based on the address of the owner in accordance with state statute (144.069 RSMo). SB 773 and HB 2140 extend the deadline under the first legislative fix created by HB 184 (2013). 

Municipalities that have passed a use tax do NOT need separate voter approval to continue to collect the local sales tax from the titling of vehicles purchased from out-of-state.  As of September, 2021, 232 municipalities have passed the use tax. (Alphabetical Order Click Here / By Effective Date  Click Here). 

As of May, 2018,  230 municipalities have received voter approval for the continuation of local sales tax on out-of-state vehicle sales.  A list of those municipalities is linked here (current as of 5/1/2018).  Please let us know if your city has passed the tax and is not listed.

All other municipalities must seek voter approval to continue to impose the local sales tax on purchases of vehicles, trailers, and out-board motors from out-of-state or person-to-person sales by November of 2022 or lose this revenue stream.  Cities have the option of passing either the use tax or just the continuation of the sales tax on out-of-state vehicles sales to plug the "street decision loophole".

Passage of the use tax will not only allow cities to continue to collect the local sales tax on vehicles purchased from out-of-state but will also apply the local sales tax to purchases delivered to residents from out-of-state vendors. 

Please remember when conducting campaigns that RSMO 115.646 limits the use of public dollars to educational efforts.  Public funds cannot be used to advocate (for or against) in regards to a ballot measure.  Additionally, the Missouri Ethics Commission requires that any campaign materials (educational or not) must include "paid for by" information; including the name of the organization, its CEO, title, and mailing address.  The "paid for by" requirement extends to videos, Internet posts and essentially any materials related to ballot measures.   The Missouri School Board Association has prepared a very informative information brochure linked here. Officials are also encouraged to contact the Missouri Ethics Commission with campaign questions.


Sample Ordinances
Use Tax - 2021 Version (word)

Once approved by the voters the city must mail a certified a copy of the certified election results (including the ballot language), a certified copy of the ordinance imposing the tax (should be the same ordinance calling for the ballot issue) and a map of the city to the Missouri department of revenue (this should be done within 10 days of the receipt of the certified election results):
Taxation Division, Local Tax Unit,
P.O. Box 3380, Jefferson City, Missouri 65105-3380

Vehicle Titling Tax (PDF) (It is expected that most cities would pass the Use tax not this ordinance)

Links
DOR's Public Taxable Sales Reports Page
DOR's Find Sales/Use Tax Rate Portal

Use Tax Explanation Videos
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