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Missouri Becomes Last State To Create Online Sales Tax, But No One Will Collect Money Until 2023

 State Sen. J. Eggleston (R-Maysville)(left), Gov. Mike Parson (center) and State Rep. Andrew Koenig (R-Manchester) at the bill signing of legislation that allows Missouri to start collecting sales taxes on online sales, although it won't start until 2023.
State Sen. J. Eggleston (R-Maysville)(left), Gov. Mike Parson (center) and State Rep. Andrew Koenig (R-Manchester) at the bill signing of legislation that allows Missouri to start collecting sales taxes on online sales, although it won't start until 2023.

The Department of Revenue’s computer system is outdated and will require time to start the implementation. When it does start collecting, the tax will put Missouri retailers on a level playing field with other states.

JEFFERSON CITY — Missouri will be the last state in the nation to start collecting sales tax on online purchases. The state won’t see the revenue roll in until January 2023.

Gov. Mike Parson signed the bill into law last week, but it will be 18 months before the Department of Revenue will start collecting the online taxes. That’s due to an outdated computer and software system that will require extra time to ramp up new procedures.

“It’s frustrating,” said David Overfelt, president of the Missouri Retailers Association. “Their system is so antiquated that they cannot just instantly flip the switch and start making out-of-state, remote retailers not within our borders start collecting.”

The measure will put Missouri on a level playing field with other states that are collecting sales taxes for goods purchased online. For years, online shoppers could avoid the sales tax and get a lower price by taking their business away from brick-and-mortar stores and going online.

“When it goes into effect, it will help all Missouri retailers, not just those with a storefront,” Overfelt said. “If you have an internet business and you’re selling nationwide, you have to collect now throughout the nation, but your competitors don’t have to collect in Missouri.”

The legality of charging such taxes was upheld by the U.S. Supreme Court in the case South Dakota v. Wayfair in 2018. Since then, states have been moving to pass laws to collect the tax. Missouri was the last state to do so.

“This was a top priority of ours, and we felt that there was a path forward through the year to make it happen,” Parson said during the bill signing last week. “Early on in the session, you wonder if it’s going to get across the finish line, but we had a tremendously good year.”

Previous attempts to pass the online sales tax failed because some lawmakers didn’t want to pass the tax unless it was accompanied by tax cuts. The law was successful this year in part because it was tacked onto a bill that lowered the state’s top income tax rate.

Follow Jonathan on Twitter: @JonathanAhl

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