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Bill addressing IBM/MasterCard case is perfected in Missouri House, then returned to committee

Rep. Rocky Miller


House Bill 1802, sponsored by Rep. Rocky Miller (R-124, Lake Ozark), addresses the Supreme Court decision from last year that drew into question a sales/use tax exemption used for decades by the telecommunications industry and other businesses producing data products.

The bill specifically defines “telecommunications” as manufacturing, a finding supported by the Missouri Supreme Court in the Southwestern Bell cases in 2002 and 2005. During the “perfection” process, an amendment was added to also clarify other Missouri Supreme Court decisions were also still good law, including the Bridge Data and DST cases.  The language specifically abrogates the Missouri Supreme Court’s decision in the IBM/MasterCard case from 2016 and affirms the other line of cases that support a broader definition of what constitutes “manufacturing” for the purposes of the sales and use tax exemptions allowing manufacturing inputs to be purchased exempt from tax.

“Associated Industries of Missouri has been working on this issue for the last two legislative sessions and we are very pleased with the language passed by the House last night,” said Ray McCarty, president and CEO of Associated Industries of Missouri. “The Missouri Supreme Court’s decision in the IBM/MasterCard case was a departure from decades of settled law from the Missouri Supreme Court itself. The resulting confusion requires this type of remedy because the 2016 decision drew into question sales tax exemptions taxpayers had relied on, and the Missouri Supreme Court had affirmed, in previous cases. We thank the Missouri Department of Revenue for working with us over the last couple of years to not enforce the errant decision and we look forward to full passage of the bill and potentially drafting some clarifying regulations that reaffirm the earlier cases,” said McCarty.

UPDATE: HB 1802 was returned to the House Committee on General Laws on Thursday, following a fiscal note resulting from the addition of two case citations to the bill that were apparently not accepted by the Department of Revenue. The bill will require further amendment in Committee and will likely be taken up again after the spring break.

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