Missouri retailers kept $129 million in sales and use tax in fiscal year 2020 just for paying their sales taxes on time, by taking advantage of the most generous discount of its kind in the nation. State Auditor Nicole Galloway highlighted the corporate handout in an audit released today on the collection of sales and use tax by the Missouri Department of Revenue (DOR). The finding is contained in similar audits from her office for the past several years.
"I again urge legislators to take a hard look at limiting this corporate giveaway, which gives the biggest benefits to the wealthiest retailers just for turning over sales tax paid by consumers," Auditor Galloway said. "Ordinary citizens don't get a discount for paying taxes on time. The lack of a cap on this handout to big business means millions of dollars lost that could be used to fix streets, pay law enforcement, and improve the lives of Missourians. It's just common sense."
The audit found the 2% discount given to retailers for timely paying the sales and use tax they owe is the most generous such discount in the country. In fiscal year 2020, approximately $129 million in sales and use tax was paid by taxpayers, but then retained by businesses due to the discount.
Unlike most of the other 26 states that offer a discount for timely payment, Missouri has no cap on the discount it gives. The audit said if Missouri had applied a cap of $1,000 per month (the highest cap used by any contiguous state) for fiscal year 2020, it would have only impacted businesses with monthly sales of approximately $611,000 or more, and resulted in approximately $76 million in additional state and local sales tax revenue.
The audit noted that Missouri updated its laws in 2021 to allow for the collection of sales tax from out-of-state sellers for online purchases - one of the last states to do so. Previous audits from Auditor Galloway had recommended the General Assembly close the loophole, which put retailers with a physical presence in Missouri at a disadvantage from their online competitors not in the state.
The complete audit, which gave a rating of "good," can be found here.