People who travel outside Missouri to buy a car, boat, trailer or other item that has to be licensed in Missouri will get a small break thanks to a Missouri Supreme Court ruling last month.
On the other hand, what might be a small break for consumers is turning into a sizable headache for officials in Jasper County and Carthage.
In March, the Missouri Supreme Court ruled that the state Department of Revenue could no longer collect local and county sales taxes on vehicles purchased outside Missouri and licensed for use in Missouri.
On Tuesday, Western District Jasper County Commissioner Darieus Adams said the Department of Revenue said, based on 2011 tax collections, the ruling will cost Jasper County $354,534 per year.
“You can imagine that’s a pretty big deal,” Adams said on Tuesday. “In some of the bigger counties, St. Louis County and Jackson County, the cost is in the millions.”
Carthage City Administrator Tom Short told the city council last week the ruling will cost the city $63,000 per year.
Short said the ruling is a small, but significant, blow to city revenues.
Adams said the ruling came in a lawsuit filed three years ago by a Springfield attorney who was mad about paying a $194 sales tax bill to license in Missouri a boat he bought for $12,000 in Louisiana.
The attorney battled the Missouri Department of Revenue all the way to the Supreme Court, which ruled on March 20 in the attorney’s favor.
The Department of Revenue said the ruling applies to cities and counties that charge sales taxes, but not to entities that charge use taxes.
Sales taxes are charged on the purchase of something bought in another state while use taxes are charged on the use or consumption of something bought in another state.
Adams said the court let the state sales tax stand because it was uniform across the state.
“The state is held harmless and they’ll still get their money, but the rationale for us was that our sales tax may be this amount, the city may charge this amount, the county next door is that amount,” Adams said. “That wasn’t fair so they struck all that down, so even as of now we’re not collecting sales tax on automobiles. Barry County, their agent there, the first day, she could actually say they lost $500. She knew what came across that they didn’t collect.”
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Adams and Short said state lawmakers have introduced a bill to fix the problem, but its late in the 2012 General Assembly and its rare that a bill introduced this late gets passed by both chambers and is signed by the governor.
The bill is House Bill 2100.