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Missouri Bill Would Make Online Sales Tax Revenue Neutral

  • Jan 30, 2013 | Gail Cole

 Missouri: Streamlined Sales Tax and Revenue Neutrality?

Most states want the federal government to allow them to collect sales tax from remote sellers. If states aren't receiving sales or use tax on purchases made, say, at Amazon.com, they're missing out on a lot of revenue. Brick-and-mortar businesses want those purchases taxed, too, to level the playing field. 

Supporters of remote sales tax are hoping that federal legislation will be enacted in 2013. Senator Mike Enzi (R-Wyo) has said he will reintroduce the Marketplace Fairness Act again this year. As of yet, he has not said when that will happen.

Meanwhile in Missouri, Representatives Doug Funderburk (R-St. Peters) and Margot McNeil (D-Florissant) are sponsoring a bill in the House Tax Reform Committee that would extend Missouri sales tax to Internet and catalog sales. "The bill would implement the Streamlined Sales Tax agreement, a multistate compact to simplify sales tax law among states to make it easier to collect the tax."

Streamlined Sales and Use Tax Agreement

The Streamlined Sales and Use Tax Agreement seeks to "simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance." Improved sales and use tax administration systems are integral to the plan.

The Streamlined Sales and Use Tax Agreement:

"minimizes costs and administrative burdens on retailers that collect sales tax, particularly retailers operating in multiple states. It encourages 'remote sellers' selling over the Internet and by mail order to collect tax on sales to customers living in the Streamlined states. It levels the playing field so that local 'brick-and-mortar' stores and remote sellers operate under the same rules."

If passed, the bill Representatives Funderburke and McNeil have introduced would start Missouri on the road to becoming a streamlined state. The neighboring states of Arkansas, Kansas, Iowa, Oklahoma and Kentucky are already members.

Rep. Funderburke has said his bill isn't designed to increase state revenue. Instead, it would be "revenue-neutral." The bill would "include provisions preventing it from increasing state funds." One possible way of achieving revenue neutrality would be to lower the state sales tax rate. A vote on the matter is expected in a week or two.

While speaking to the committee, former Kansas secretary of revenue Joan Wagnon  reminded lawmakers that "[o]nly Congress can give authority to collect the tax."  However, Streamlined Sales Tax states are working together to help "the business community and states with implementation of federal legislation granting remote vendor collection authority for sales tax." To date, 1,700 retailers have agreed to abide by its rules.

Under Funderburk's bill, revenue neutrality would not be required for local governments.

Is it worth becoming a member of the Streamlined Sales Tax Agreement if little or no additional revenue is generated by it? Many people think it is. Said former state Representative Mike Sutherland of the Missouri Budget Project, "If you can imagine a situation where a Missourian … is penalized for shopping at a Missouri store and rewarded for going out of the state, that is a crazy situation… ."

Is your business ready for online sales tax?

photo credit: alles-schlumpf via photopin cc

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.