Two Missouri Senators are promoting similar plans to tax online retailers who make sales in the state.
Sen. Andrew Koenig, R-St. Louis County, and Sen. Bill Eigel, R-St. Charles County, have introduced bills that would establish a sales tax economic nexus, which would require online retailers to pay a Missouri sales tax on purchases delivered to the state.
The U.S. Supreme Court’s ruling last June in South Dakota v. Wayfair stated that even if a business doesn’t have a psychical presence in a state, it can be required to pay sales tax after surpassing the state’s economic threshold.
Currently, Missouri consumers are legally required to file a use tax return if they spend more than $2,000 on out-of-state purchases within a calendar year. It’s unclear how many Missourians are surpassing this threshold, but Eigel and Koenig’s bills would shift that use tax from the consumer to large companies that surpass either $100,000 in sales or 200 separate transactions in a calendar year.
“Both bills accomplish the same objective through different means,” Eigel said during a Jan. 29 hearing of the Senate Ways and Means Committee.
Eigel is the sponsor of SB 50, which proposes a single tax rate of 6.5 percent to be collected from internet sellers outside of the state.
Koenig’s SB 46 is similar, but it proposes that Missouri join the Streamlined Sales and Tax Use Agreement, a voluntary program aimed at simplifying state sales tax law to ease the burden on sellers. Under the agreement, Missouri would be required to use single, standardized definitions of products and services and adopt a simplified rate structure for both state and local taxes.
Both SB 46 and SB 50 would use the revenue from online-sales tax to trigger a cut to the income tax rate. In December, Gov. Mike Parson estimated that such taxes could generate $100 to $150 million in additional revenue for the state. Proponents of both bills believed that an economic nexus law would level the playing field between Missouri retailers and large online retailers.
Although David Overfelt of the Missouri Retailers Association testified in favor of both SB 46 and SB 50, he expressed concern over Eigel’s proposed single tax rate of 6.5 percent and stated that the rate wasn’t high enough to match the sales tax imposed on consumers in the state’s higher-tax districts.
“There’s no reason to give benefit to giant market retailers,” Overfelt said during the committee hearing.
Overfelt said that SB 50 would need to find a better tax rate that was more in line with Missouri’s reality.
Currently, the lowest sales tax rate in the state is 4.73 percent and the highest is 11.68 percent. The average is 7.68 percent.