Missouri lawmakers are considering a measure which would prohibit a sales tax on delivery fees.
The issue stems from a 2015 state Supreme Court ruling which allows the state to impose the levy. That decision was followed by a letter from the Department of Revenue in July of 2016 indicating businesses could be subject to the tax.
Ray McCarty of Associated Industries of Missouri says the court overreached in its decision and created confusion for industries.
“All of a sudden the court just said, ‘well here, we’re going throw a monkey wrench into the works’” said McCarty. “So now nobody knows whether they should charge it or not. They just need clarity as to whether it should be charged or not. And since it hasn’t been charged in the past, we would rather not have a tax increase. We need to make it clear there are a lot of companies that are affected by this.”
McCarty represented one of 11 organizations testifying before the Senate Ways and Means Committee, which handles tax issues, Tuesday. All of them favor a ban on delivery sales taxes, including the normally tax friendly Missouri Budget Project.
Many of the groups said the current situation leaves businesses confused over how to move forward with deliveries.
David Overfelt with the Missouri Retailers Association thinks the Department of Revenue created confusion and overstepped its bounds by issuing the letter.
“I’m seeing it in all kinds of industries” said Overfelt. “I’m getting calls. This is an example of, I think, overreach from Revenue.” McCarty says implementing a delivery sales tax would be unprecedented. “Historically sales tax has never collected on delivery charges. Delivery services are a service and are not a taxable service because specifically taxed.”
The proposal the senate committee is considering is sponsored by its chairman, Republican Will Kraus of Lee’s Summit. Like McCarty of the Associated Industries, he also claimed the Supreme Court had overreached in its decision and said it was up to lawmakers to set tax policy.
The court case involved St. Louis construction company Alberici Constructors, which was a party in the delivery of a rented crane that the judges determined to be subject to a sales tax.
Kraus doesn’t have a timetable for when his bill will see a committee vote. He said he’s working with Senate leadership and Governor Eric Greitens office to move the measure forward.
The wide range of business groups testifying before the committee include two restaurant organizations, the Missouri Trucking Association, Missouri Rental Dealers Association, Missouri Limestone Producers, Missouri Concrete Association and the Missouri Chamber of Commerce.