A bill being considered in the House of Representatives will prohibit Missouri’s Department of Revenue (DOR) from requiring businesses to pay state sales tax on lost, stolen or damaged products.
Rep. Dan Shaul, R-Imperial, testified House Bill 1905 was needed to clarify how the DOR can charge sales and use taxes during a Feb. 9 hearing of the House Ways and Means Committee. The bill states the definition of “retail sale” or “sale at retail” shouldn’t be construed to include the purchase of products by a retailer and intended for resale, but can’t be sold because of theft or because the product is damaged.
“There is a retailer in south-central Missouri that had a freezer go out and the products were damaged and disposed of,” Shaul explained. “In a sales tax audit at a later date, they had to pay the sales tax on the damaged food. But the food was never sold because it was never safe for consumption. The DOR required them to pay sales tax.”
Shaul said the same principle should apply to stolen merchandise.
“Someone comes into a retailer and walks out with a TV and doesn’t pay for it,” Shaul said. “Should the retailer have to pay sales tax on theft? I think not.”
Shaul said the issue of the frozen-food business was resolved, but he hopes clarifying the law will eliminate future conflicts. Without naming Wayne Wallingford, a former Republican lawmaker who was appointed director of the DOR in December, Shaul was hopeful new organizational leadership would create or enhance better policies.
“We have some good minds that have come to the DOR, but I would say at some point that would not be the case,” Shaul testified. “We’d like to clarify this in state law. It’s that simple.”
Zachary Wyatt, the DOR’s legislative director, testified he agreed with Shaul’s assessment for the need to clarify the law.
“It’s a new day at the DOR and I can tell you we do have a new director and I work very well with him,” Wyatt said. “I do think it would be nice to see some things codified in the law. Because, as you all know, the average time for a director at the DOR is probably two years. So things can change every two years. If it’s in the law, it actually helps us as a department.”
No one testified against the legislation, and the fiscal note showed no impact on revenue. The Missouri Grocers Association, Missouri Retailers Association, the Missouri Tire Industry Association, the Missouri Society of Certified Public Accountants and Associated Industries of Missouri support the bill.
“I’m sorry that a commonsense provision like this is needed to be put into law, but apparently it does and it just makes eminent sense that no sales tax should be owed or paid on products that aren’t in fact sold,” said Ron Leone, executive director of the Missouri Petroleum & Convenience Association. “We’re grateful to the sponsor for doing this for us to clear up any future problems.”
This article was originally posted on Bill would stop Missouri retailers from paying sales tax on stolen, damaged products