Missouri Set to Become Last State to Require Remote/Online Sellers to Collect and Remit Sales Tax

The Missouri legislature passed legislation late Friday, May 14 that would impose the requirement to collect and remit sales tax on out-of-state businesses who sell their products into the state. The bill was passed just before the deadline was to pass for the legislature to act. Governor Mike Parson is expected to sign the legislation into law.

Forty-four of the 45 states and the District of Columbia have already adopted in one form or another the so-called “Wayfair” economic presence nexus standard approved by the Supreme Court almost three years ago. The “Wayfair: ruling replaced the requirement of physical presence for a state to compel a business selling their products into that state to collect sales taxes and file returns and remit to the state’s tax authority.

After both Florida and Kansas passed its economic nexus laws in the last few weeks, Missouri was the only state with a general sales tax that hadn’t approved a requirement that out-of-state (remote) sellers collect and remit sales taxes on items sold to the residents and businesses in the state.

Missouri’s Legislation Details

The legislation would require out-of-state sellers with at least $100,000 of annual sales in Missouri to collect state and local taxes beginning in 2023. It also would require online marketplace facilitators to collect Missouri’s taxes on sales made through their sites, beginning in 2023. Unlike many other states, Missouri would not have a minimum “number of sales” threshold for the compliance requirements to apply.

In order to get the bill though the legislature, lawmakers agreed to reduce state income taxes. The individual income tax rate would fall by one-tenth of a percentage point in 2024 and could fall by two additional one-tenth percentage point increments in subsequent years if Missouri’s net general revenues grow by $150M. The bill would also establish a state tax credit for lower income working families modeled after the existing federal earned income tax credit. That tax credit would start in 2023 and could increase in future years if the state’s revenues increase by at least $150M. Finally, the legislation would exempt federal coronavirus relief payments from state income taxes.