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  • Writer's pictureAIM Team

Senate hearing focuses on taxpayer rights and clarifying tax laws for tax collectors and the Supreme

Associated Industries of Missouri president Ray McCarty was the first witness to testify at the first hearing of the Senate Ways and Means Committee for the 2015 legislative session on Thursday.

The first bill before the Committee was SB 15, filed by Senator Bob Dixon.  The bill is an attempt to address many concerns expressed by taxpayers during hearings held across the state last summer by the Senate Interim Committee on Tax Administration Practices.  McCarty testified the bill would give taxpayers a chance to resolve issues through an Office of Taxpayer Advocate. The Office, unlike the current Ombudsman, would be able to help with taxpayer-specific issues. He told the Committee AIM and the Taxpayers Research Institute of Missouri (TRIM) also support adding the right to fair and consistent application of the tax laws to the Taxpayers’ Bill of Rights.  He offered support for the Study Commission on Tax Policy that is created in the bill to help improve Missouri’s tax system.  McCarty also said it “makes good sense for the DOR to enact a rule if they change their interpretation of items that are subject to sales or use tax based on their own decision or a decision of the AHC or a court,” but noted that the Department of Revenue may dodge that provision by claiming it is not changing its position.

The next bill was SB 18, sponsored by the Chairman of the Committee, Senator Will Kraus.  The bill would require the Department of Revenue to notify taxpayers of changes in their interpretation of the tax law that cause additional items or services to be subject to sales tax.  Unlike a bill that was passed last year that would have allowed such notice to be made on a website, this bill requires notification by mail or e-mail.  McCarty testified in support of the legislation.

SB 19, also sponsored by Senator Kraus, clarifies that the additional apportionment formula choice that was added to the law two years ago applies to all regular corporations, not just those that generate income from the sale of tangible personal property.  McCarty pointed out to the Committee that the DOR had issued a regulation stating the choice was available to all corporations but then sent letters to companies that tried to use the new choice denying their election because they did not derive 100% of their income from the sale of tangible personal property.  Of course, the statute does not contain this arbitrary distinction.  The bill would clarify that the bill applies to companies generating income from all types of income, both tangible and intangible goods and services.  AIM and TRIM fully support this bill.

Last on the agenda, but certainly not least, was SB 20, also filed by Senator Kraus.  This bill clarifies for the DOR and the Supreme Court that the manufacturing exemption lobbied for and obtained by Associated Industries in 2007 should also apply to commercial laundry operations.  In a poorly written decision, the Missouri Supreme Court acknowledged the new statute existed, then virtually ignored its provisions, finding that laundries did not qualify under an older statute.  McCarty took issue with the derogatory nature of the Court’s opinion that included the phrase, “Wash, rinse, repeat,” noting that one would expect such a decision from a third grader – not from the Missouri Supreme Court.  Don’t believe us? See the footnote at the bottom of page 1 of the decision here.  McCarty noted there was no reason for the laundry operation to be denied the existing exemption under current law, but lent the support of Associated Industries of Missouri to the clarifying bill.  AIM was the only statewide business group in support of this bill, but it is a very important issue that must be resolved.  The Supreme Court should not continue to ignore the legislature’s intent when they passed the 2007 law.

We will keep you posted as these bills progress through the 2015 legislative session.

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