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Preemptive Strike: Keep Missouri Services Exempt


 Sometimes you have to hit first.

Update, 5.11.2016: A petition for a ballot initiative to amend the state constitution to prohibit further taxation of services has been submitted to the Missouri capitol. The state has until August 9 to certify or reject the petition.

Most services in Missouri are exempt from sales and use tax, but that could change. Just last year, legislation seeking to expand sales and use tax to numerous services was introduced (it died). To get in front of any such future legislation, the political action committee Missourians for Fair Taxation is working to pass a constitutional amendment that would prevent Missouri from taxing professional services. They call it “a preemptive strike.”

The Missouri Department of Revenue website lists the following taxable services:

  • Admissions (etc.) to places of amusement, entertainment, recreation, games and athletic events
  • Sales of utilities and domestic utilities
  • Local and long distance telecommunications service
  • Messages of telegraph companies
  • Rooms, meals and drinks
  • Intrastate tickets
  • Labor used to fabricate a product
  • Service labor that is not separately stated on the invoice
  • Mandatory gratuities

That’s a fairly short list. Yet in recent years there has been a growing trend to broaden sales and use tax to services. Last year alone, such measures were discussed in California, Indiana, Maine, Nevada, Ohio, Pennsylvania. Broadening sales tax has occurred in Minnesota, North Carolina. It’s the new frontier.

So it comes as no surprise that there is a movement to prevent the expansion of sales tax in Missouri. The constitutional amendment proposed by Missourians for Fair Taxation would prohibit taxing sales professional services such as advertising, haircuts, manicures, medical care, and rents. “The threat [of taxing services] remains real,” they say. “It is time to stop the threat once and for all with this amendment.”

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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.