COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3184-01
Bill No.: SB 830
Subject: Taxation and Revenue - Sales and Use Tax
Type: Original
Date: March 25, 2004
FISCAL SUMMARY
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| General Revenue | Unknown | $2,538,556 to Unknown | $5,077,112 to Unknown |
| Total Estimated
Net Effect on General Revenue Fund |
UNKNOWN | $2,538,556 to UNKNOWN | $5,077,112 to UNKNOWN |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Various State Funds | Unknown | Unknown | Unknown |
| Transportation Dev. Sales Tax Trust Fund | Unknown | Unknown | Unknown |
| Aviation Trust Fund | $0 | ($2,538,556) | ($5,077,112) |
| Total Estimated
Net Effect on Other State Funds |
UNKNOWN | ($2,538,556) to UNKNOWN | ($2,526,965) to UNKNOWN |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 7 pages.
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Local Government | UNKNOWN | UNKNOWN | UNKNOWN |
ASSUMPTION
Officials of the Office of Administration, Budget and Planning (BAP) assume this bill would bring Missouri sales and use tax laws into compliance with the streamlined sales and use tax agreement. BAP defers to the Department of Revenue to estimate any explicit fiscal impact. This proposal would not affect BAP.
Officials from the Office of State Treasurer (STO) assume this bill implements the provisions of the streamlined sales and use tax agreements.
This legislation creates the Transportation Development District Sales Tax Trust Fund (Section 238.235.5)
- in the treasury
- not state money
- Director of Revenue to keep records
- The Director of Revenue may authorize the Treasurer to make refunds.
This bill also allows the DOR to accept sales tax returns electronically, and to accept sales tax collections from out-of-state businesses.
No impact to STO.
ASSUMPTION (continued)
Officials of the Department of Transportation (MoDOT) note that this proposal would move up the sunset on the transfer of jet fuel sales tax from 2008 to 2005. MoDOT's aviation section and its grant program for airport capital improvement and maintenance are funded by the State Aviation Trust Fund. The sales tax on jet fuel produce approximately ninety percent (90%) of Fund revenues. Department of Transportation officials assume that either the "shortfall" (estimated, based on FY 2004 collections, at $15,231,336 over the three years) would be made up from the General Revenue Fund or the general aviation airports will not be maintained or upgraded to meet the air transportation needs of Missouri.
As for the state's transit program and the Missouri Elderly and Handicapped Transportation Assistance Program (MEHTAP) - MoDOT assumes that there exists a potential of stabilizing these programs depending on how additional collected taxes deposited to the state's General Revenue Fund are appropriated. However, this potential positive impact on the transit and MEHTAP programs is not incorporated in the fiscal impact calculation as reflected on the Summary of Fiscal Impact page of this response.
Officials of the Department of Revenue (DOR) state this legislation would implement the provisions of the streamlined sales and use tax agreement. Officials assume it would impact the Division of Taxation as follows:
1.) Section 67.671.8, would change the collection of Ozark Lake-area tourism taxes to require the Department of Revenue to collect the tax and would eliminate the "County Advertising and Tourism Sales Tax Fund".
2.) Eliminate certain exemptions that were found within the definition of "Sale at Retail" under the current 144.010.1(10), which would be the new 144.010.1(16).
3.) Add a new term, "sales price", to the definitions in the new 144.010.1(15).
4.) Change the definition of "food" under Section 144.014.
5.) Eliminate the $2,000 threshold for filing a consumer's use tax return, causing all taxpayers to become liable to pay consumer's use tax if a sales or use tax was not paid at the time of purchase, under Section 144.655.5.
DOR assumes this legislation requires that retail sales that are delivered be taxed at the rate in effect for the delivery location, rather than the store's location. There will be an increase in general revenues by expanding the tax base.
ASSUMPTION (continued)
Oversight assumes this legislation does not create a new tax. It just makes compliance easier by shifting the burden of sales/use tax collection to companies. Oversight further assumes passing this proposal would not assure any potential increase in taxes collected until all states comply with the simplified sales/use tax agreement and federal legislation requires collection. Oversight will show the revenue impact for the changes in the sales/use tax laws relating to the simplified sales tax agreement as a positive unknown.
| FISCAL IMPACT - State Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
| GENERAL REVENUE FUND | |||
| Income - General Revenue | |||
| Change in sales/use tax laws | Unknown | Unknown | Unknown |
| Electronic filed sales/use taxes | Unknown | Unknown | Unknown |
| Sunset on transfer of Aviation Fuel Tax | $0 | $2,538,556 | $5,077,112 |
| Transp. Dev. District Sales Tax | Unknown | Unknown | Unknown |
| Total Income | Unknown | $2,538,556 to Unknown | $5,077,112 to Unknown |
| Transfer Out - Transp. Dev. District Fund | |||
| Less 1% collection fee | (Unknown) | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDS |
UNKNOWN |
$2,538,556 to
UNKNOWN |
$5,077,112 to
UNKNOWN |
| VARIOUS STATE FUNDS | |||
| Income - Various State Funds | |||
| Change in sales/use tax laws | Unknown | Unknown | Unknown |
| ESTIMATED NET EFFECT ON VARIOUS STATE FUNDS |
UNKNOWN |
UNKNOWN |
UNKNOWN |
| TRANSPORTATION DEVELOPMENT DISTRICT SALES TAX TRUST FUND | |||
| Transfer In - from General Revenue | |||
| Trans. Dev. Dist. sales tax | Unknown | Unknown | Unknown |
| Transfer Out - to Local Districts | |||
| Less 2% for possible refunds/overpymts. | (Unknown) | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON TRANSPORTATION DEVELOPMENT DISTRICT SALES TAX TRUST FUND |
UNKNOWN |
UNKNOWN |
UNKNOWN |
| AVIATION TRUST FUND | |||
| Loss - Aviation Fuel Tax Transfer | $0 | ($2,538,556) | ($5,077,112) |
| ESTIMATED NET EFFECT TO AVIATION TRUST FUND |
$0 |
($2,538,556) |
($5,077,112) |
| FISCAL IMPACT - Local Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
| Income - Cities/Counties | |||
| Change in Sales/Use tax laws | Unknown | Unknown | Unknown |
| Transfer In - Trans. Dev. Districts | |||
| Trans. Dev. Dist. sales tax | Unknown | Unknown | Unknown |
| Loss - Trans. Dev. Districts | |||
| Locally collected Trans. Dev. sales tax | (Unknown) | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON LOCAL FUNDS |
UNKNOWN |
UNKNOWN |
UNKNOWN |
FISCAL IMPACT - Small Business
Small businesses that collect sales/use tax could be affected by this proposal.
DESCRIPTION
This proposal would bring Missouri sales and use tax laws into compliance with the streamlined sales and use tax agreement.
Compliance involves modifying many sections throughout the law, based upon meeting the following criteria:
(1) The sourcing of sales must be changed to be based on receipt. This means that current law is modified, where necessary, to consider the point of sale, and thus the applicable tax rate, to be the point of receipt of the product;
(2) When a city annexes property, the change to the tax rate will take place on the first day of the
second calendar quarter after the Director of Revenue receives notice of the boundary change;
(3) The same provisions as in (2) shall apply to rate changes;
(4) All sales taxes must be administered at the state level if they are not already;
(5) All state and local sales taxes must have the same base. This means that exemptions at the state and local level must be identical;
(6) Certain definitions, including a definitions for "delivery charges", "food" "lease or rental", "purchase price", "sales price", "tangible personal property" and other modified definitions, must
be adopted from the streamlined sales and use tax agreement;
(7) The Department of Revenue can require electronic filing and payment of the sales and use tax;
(8) Registration for out of state sellers is simplified and no bond is required;
(9) No caps or thresholds may exist on the collection of sales or use taxes; and
(10) Out of state sellers must be offered uniform, simplified, electronic filing.
(11) Moves up the sunset on the transfer of jet fuel sales tax from 2008 to 2005.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Office of Administration
Budget and Planning
Department of Revenue
Department of Transportation
State Treasurer
Mickey Wilson, CPA
Director
March 25, 2004