For the latest news and updates on Missouri state and local tax
September 5, 2023
Missouri Important Legislative Taxation Changes
Authored by: Breea Boylan, MSA, CPA and Bonnie Susmano, JD, MBA
Effective August 28, 2023, the Missouri Department of Revenue issued guidance on recently enacted legislative changes. The summary includes legislation on various business and personal income tax deductions, tax credits, sales tax provisions, and tire and battery fee provisions. Pursuant to the guidance issued, social security and public pension benefits are 100% exempt from Missouri state income tax effective January 1, 2024.
For more details on the Department’s Guidance on recent legislative changes, please refer to the Department’s Important Taxation Changes from 2023 Legislative Session here.
If you have questions about how these state legislative tax modifications affect your business, please reach out to a member of the Withum SALT Team.
December 16, 2022
Out-of-State Sellers Required to Collect Sales Tax on Drop Shipments
Authored by: Zhoudi Tang, MST, CPA and Jessie Racioppi
On November 2, 2022, the Missouri Department of Revenue issued Letter Ruling 8214 determining that an out-of-state seller was required to collect sales and use tax on drop shipments into the state.In requesting the letter ruling, the seller indicated that all its Missouri sales were made via drop shipment, it did not have physical presence in Missouri, and its sales in the state were less than $100,000. The Missouri Department of Revenue determined that this seller was still obligated to collect Missouri sales tax on all its sales into the state. The ruling explains that under Missouri law, when a seller makes sales in Missouri via drop shipment, the seller takes title to the goods where the 3rd party stores the goods. In turn, the buyer does not take title to the goods until the goods are delivered to the buyer in Missouri.As such, the seller owns the goods until delivery to the Missouri customer, and thus has nexus in the state.
Missouri is the last state to enact Wayfair nexus, and it remains to be seen how the Department’s Letter Ruling in the current case interacts with the Show-Me State’s recently enacted economic nexus statute.If you have questions about whether your business is obligated to collect and remit state sales tax, please reach out to a member of the Withum SALT Team.
October 28, 2022
Changes Are Ahead in the Missouri 2022 Corporate Income Tax Year
Authored by: Brandon Spinella and Zhoudi Tang, CPA, MST
Missouri announced several changes to the MO Corporate Income Tax Return for 2022. The upcoming changes include the following:
- April 18, 2023, is the due date for the calendar year 2022 MO Corporate Income Tax Return.
- October 16, 2023, is the extended due date for the 2022 MO Corporate Income Tax Return.
- Pass-through entities (S-Corps and partnerships) can annually elect to pay the pass-through entity tax starting with tax years ending on or after December 31, 2022.
- A member of a corporation will be allowed a tax credit on their MO Corporate Income Tax Return for their shares of the taxes paid if an S-Corp or partnership elects to file a tax return and pay tax at the entity level.
- This tax credit (non refundable) can be carried forward to succeeding tax years until the full credit has been redeemed.
- Members must complete form M-TC and report the credits claimed on their MO Corporate Income Tax Return to claim this credit.
July 8, 2022
Missouri Provides Pass-Through Entity Election
The Governor signed H.B 2400 on June 30, 2022, which provides certain provisions regarding Missouri’s newly elective pass-through entity (“PTE”) tax often referred to as a SALT Workaround. This election will apply for tax years beginning on or after January 1, 2023, which allows qualifying pass-through entities to make an election to pay an entity-level tax.
H.B. 2400 provides the following information regarding the entity tax:
- The tax shall be equal to the sum of each member’s income and loss items, as described in federal law, reduced by a deduction allowed for qualified business income, as described in federal law, and modified by current provisions of state law related to the taxation of pass-through entities, with which will be multiplied by the highest rate of tax in effect for the state personal income tax.
- Partnerships and S Corporations may elect to pay the tax imposed under this act by submitting a form to be provided by the Department of Revenue. A separate election shall be made for each year and shall be signed either by each member of the electing entity, or by any officer, manager, or member of the electing entity who is authorized to make such election.
- Each corporation that is subject to the state corporate income tax shall be allowed a tax credit if such corporation is a member of an affected business entity that elects to pay the tax.
October 8, 2021
Missouri Department of Revenue Individual Income Tax Year Changes
The Missouri Department of Revenue announces the 2021 Individual Income tax year changes, which are effective for the tax year beginning January 1, 2021. The due dates for the individual income tax return are April 18, 2022 for non-extended returns, and October 17, 2022 for extended returns. The Missouri individual income tax brackets and tax rates have been updated due to inflation, while the standard deduction has been updated to equal the federal standard deduction for the 2021 tax year. The updates to the Missouri individual income tax returns for the 2021 tax year continue; 100% of any retirement benefits received by a taxpayer as a result of service in the Armed Forces may be excluded from the federal adjusted gross income, contributions to a long-term dignity savings account may be deducted, not to exceed the adjusted gross income and is limited to $4,000 per taxpayer, effective September 1, 2021 the Home Energy Audit Expense deduction will no longer be available, and the Missouri National Guard Foundation trust fund is terminated.
August 13, 2021
Missouri Issues Sales Tax Reporting Guidance for Marketplace Sales Before Wayfair Rules Become Effective
Although Missouri enacted Wayfair rules requiring remote sellers and marketplace facilitators to collect sales tax, the law is not effective until January 1, 2023. The tax authority recently issued sales tax guidance instructing taxpayers on reporting marketplace facilitator sales and the remittance of tax prior to January 1, 2023. Specifically, the guidance provides that sellers must report all of their sales and remit all of the related sales or use tax due, including sales made through a marketplace. The collection of sales tax may be contractually delegated to a marketplace facilitator, but remittance of sales tax may not be.
This guidance will not be effective as of January 1, 2023.
July 8, 2021
Missouri Enacts Wayfair Legislation
Effective January 1, 2023, Missouri has officially enacted economic laws for sales and use tax. Vendors lacking physical presence will have economic nexus in the state of Missouri if its gross sales from the current year or prior year exceed $100,000. Marketplace facilitators are also subject to the $100,000 economic nexus standard.
May 21, 2021
Missouri Legislators Approve Wayfair Bill That Would Be Effective 1/1/2023
Missouri will likely be the last state imposing a sales tax to enact Wayfair legislation. It is one step closer to doing so after legislators approved S.B. 153/97, which the governor is expected to sign.
S.B. 153/97 requires remote sellers and marketplace facilitators with annual gross sales exceeding $100,000 to Missouri buyers to collect and remit Missouri state and local sales taxes beginning January 1, 2023. The Missouri Senate previously approved H.B. 554, which had an anticipated start date of January 1, 2022.
March 23, 2021
Missouri Update on Extension of Filing Deadline
The Missouri Department of Revenue is extending the state individual tax filing and payment deadline for the 2020 tax year from April 15, 2021, to May 17, 2021. This decision mirrors the announcement by the U.S. Treasury Department and the Internal Revenue Service that individual taxpayers would receive automatic extensions to file and pay federal income tax for the 2020 tax year. This relief applies to individual taxpayers, including those who pay self-employment tax. It does not apply, however, to estimated tax payments that are due on April 15, 2021. Penalties and interest will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individuals who file their returns and pay their balances by May 17, 2021, will automatically avoid interest and penalties on the tax paid by May 17th. Customers still may ask for an extension of time to file their individual income taxes. With that extension, the return will not be due until October 15, 2021. However, any payments still must be made by May 17, 2021. (News Release, Office of Missouri Governor Michael L. Parson, 03/19/2021; https://governor.mo.gov/press-releases/archive/governor-parson-announces-individual-tax-filing-and-payment-deadline-0.)
March 17, 2021
Missouri Rules on a Taxpayer’s Lease of Aircraft Within the State for Use Tax Purposes
Two aircraft were purchased by a taxpayer outside the state, and then brought into Missouri. The taxpayer concurrently leased each aircraft on a non-exclusive basis to (i) its parent company, and (ii) an unrelated third-party. The taxpayer asserted each lease was a “sale” for purposes of Missouri’s use tax resale exemption. If each agreement was a “sale,” the taxpayer was entitled to elect to pay sales tax on the lease payments; but if the leases were not a “sale” under Missouri’s use tax law, the taxpayer would instead owe use tax on the purchase price of each aircraft. The Court ruled that the lease with the parent company was not a sale because with respect to this arrangement, the taxpayer itself retained general control and priority use of both aircrafts; the parent entity had no priority to use either aircraft, and could only operate the aircraft if it had not already been leased to a third party. However, the lease with the third-party was affirmed to be a sale because the taxpayer was required to deliver the aircraft to the third-party’s base of operation at the Spirit of St. Louis Airport, where the aircraft was required to be hangered in the third-party’s custody throughout the lease. Further, the taxpayer could not override the third-party’s scheduled use of the aircraft, and the third-party had operational control of the aircraft during chartered flights (i.e. it was solely responsible for its maintenance). Thus, the taxpayer was entitled to a resale exemption with respect to this lease to the third-party.
March 12, 2021
Missouri Senate Approves Sales Tax on Remote Sellers and Marketplace Facilitators
The Missouri Senate has approved H.B. 554 requiring use tax on sales be collected and remitted to the state by remote retailers and marketplace facilitators, starting January 1, 2022, when they meet the following criteria in the prior 12-months:
(1) Cumulative gross receipts of at least $100,000 from the sale of tangible personal property for storage, use, or consumption to purchasers for storage, use, or consumption in the state; and
(2) Does not have a physical presence within Missouri and the associated sales occurred without the use of Internet
Marketplace facilitators meeting the economic nexus threshold must register to collect and remit use tax on sales made into the state through either its marketplace or on behalf of a marketplace seller. Also, marketplace facilitators must provide purchasers with a statement or invoice showing that the use tax was collected and remitted on their behalf.
Missouri is one of the last states to enact a tax obligation for out-of-state sellers since the Supreme Court’s ruling in Wayfair, which held that physical presence was no longer necessary for taxing a remote retailer.
If your Company’s 2021 sales into Missouri are projected to be over $100,000, prepare to register to collect use tax on sales in 2022. Please call a member of Withum’s State and Local Tax team with any questions or assistance.
April 1, 2020
Individual and Corporate Deadline
The individual income and corporate tax return filing and payment deadline has been extended to July 15, 2020.
More on Taxes and the Coronavirus Pandemic.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
