Legislation to reverse court ruling that added sales tax to delivery fees continues to advance
A Missouri Supreme Court decision raised taxes on many Missouri employers without many people taking notice. Prior to 2015, sales tax had never been assessed on delivery fees. But a 2015 Missouri Supreme Court ruling, Alberici Constructors Inc. v. Director of Revenue, reversed that interpretation by allowing the taxation on the delivery fees of a crane that was used by the construction company on a worksite. This ruling could mean thousands of dollars in additional taxes on employers on services that were never assessed before.
Prior to the court ruling, Missouri allowed separately stated shipping/delivery fees to be exempt from the tax base. However, after the court ruling, the Missouri Department of Revenue sent out notification to corporate taxpayers that if delivery is intended to be part of the sale of a product, the charge would be subject to Missouri sales tax, even when separately stated.
“Missouri courts and the DOR have made a practice of changing the rules on Missouri employers, especially when it means they can raise more taxes,” said Tracy King, Missouri Chamber vice president of governmental affairs. “Employers want consistency in tax policy. When the rules abruptly and arbitrarily change like what happened in this case, it leaves employers wondering what is going to change next.”
The Missouri Chamber took the lead to block this back-door tax increase by working with Sen. Will Kraus to advance Senate Bill 16. The legislation prohibits the Department of Revenue from assessing sales tax on delivery fees. The legislation was passed unanimously by the Missouri Senate. A Missouri House committee approved the bill on April 3. Senate Bill 16 now awaits full debate by the Missouri House. Rep. Kevin Engler is the House handler of the bill.
Inconsistency in tax law was identified as a concern of Missouri employers during the Missouri Chamber/Gallup survey of more than 1,000 CEOs. According to Gallup, nearly one in three Missouri employers are concerned about inconsistent state tax policies.