06/30/2022 - Jefferson City, Mo.
A report issued today by State Auditor Nicole Galloway is again highlighting a sales tax discount that primarily benefits the state's largest retailers by rewarding them for paying their sales and use taxes on time. In Fiscal Year 2021, Missouri retailers used this discount -- the most generous in the nation -- to keep more than $141 million that could otherwise have gone to services for Missourians at the state and local level.
Auditor Galloway has highlighted the corporate giveaway in her audits of the Missouri Department of Revenue (DOR) sales and use tax for several years. As she has done before, she is urging legislators to evaluate the necessity of a timely sales tax discount or consider implementing a cap on the amount.
"Missouri's discount 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 percent 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 2021, businesses using the discount retained approximately $141 million in sales and use tax that was paid by consumers.
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 2021, it would have only impacted businesses with monthly taxable sales of approximately $606,000 or more, and resulted in approximately $82.6 million in additional state and local sales tax revenue.
The audit also found that the DOR is not required to report, and does not routinely report, the amount of timely discounts retained by businesses to the General Assembly, local governments impacted, or the general public. The audit recommends that state legislators consider changes to current state laws to require the DOR annually report the reduction of state revenue related to the timely discount to the General Assembly, applicable political subdivisions, and the general public.
The complete audit of the DOR sales and use tax can be found here.