Use Tax Back On The Clark County Ballot
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By Emily McAfee and Mike Scott
Six years after voting to continue the collection of sales tax on out-of-state purchases of motor vehicles, boats, motors and trailers, Clark County voters are being asked to do it once again.
It all stems from a 2012 Missouri Supreme Court decision which ruled that sales tax could not be collected on purchases of motor vehicles, boats, motors and trailers, but that localities that had a voter-approved use tax could continue to collect the tax.
Following that court decision, in 2013, Missouri Governor Jay Nixon signed legislation eliminating the use tax on motor vehicles, boats, motors and trailers. That law required localities to that had not previous approved a use tax to hold a vote before November of 2016 to decide whether to continue to collect the tax. Localities that did not pass the use tax measure by that time were required to stop collecting that tax in 2017.
In 2015, Clark County voters narrowly defeated the measure, 388-367.
In the April 5, 2016 election, voters in Clark County had to vote “No” to the proposed ballot measure, since it asked if Clark County should discontinue the tax collection. Voters overwhelmingly voted “No”, 503-315, to discontinuing the tax collection.
That ballot language was later ruled to be incorrect, and the election declared invalid.
Fast-forward six years, and the use tax is back on the ballot, this time with the added implications of the Wayfair legislation, signed June 30, 2021, by Governor Mike Parson.
In a press release at the time, Parson said, “Passing Wayfair legislation has been a top priority of my administration, and we are happy to be signing this critical legislation into law today. This law will help even the playing field between Missouri small businesses and large out-of-state retailers. With more than 570,000 small businesses in the state of Missouri, it is time that we establish a 21st century tax code that benefits our Main Street businesses rather than companies that don’t invest in our communities or employ our citizens.”
In 2018, the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. allowed states to adopt rules to collect sales and use taxes from business not physically located in their state but who sell and deliver products into the state.
SB 153 & 97 allowed Missouri and local jurisdictions to collect a use tax from online retailers who sell and deliver more than $100,000 in tangible goods to consumers in the state annually.
Collection and remittance obligations will begin on January 1, 2023. Sales and uses taxes cannot be retroactive and will be collected by the Missouri Department of Revenue. Following 49 other states and Washington D.C., Missouri will be the final state to implement an economic nexus law since the Supreme Court’s decision in 2018.
Currently, Missouri businesses lose sales because out-of-state, online retailers are not subject to the same state sales tax laws that local businesses are. The current system also burdens Missouri businesses because they are required to remit sales and use taxes to other states, but out-of-state businesses selling to Missourians do not.
The proposal on the April 5, 2022 ballot will read: Shall the County of Clark impose a local use tax on out of state purchases at the same rate as the total local sales tax rate, current 2%, provided that if the local sales tax is reduced or raised by voter approval, the local use tax rate shall also be reduced or raised by the same action? The purpose of the proposal is to eliminate the current sales tax advantage that Non Missouri vendors have over Missouri vendors. A use tax return shall not be required to be filed by persons whose purchase from out of state vendors do not in total exceed two thousand dollars in any calendar year.
To avoid any ballot language issues, an attorney wrote the proposal for the county.
According to Clark County Presiding Commissioner, Buddy Kattelmann, “A use tax is a tax that you pay when you buy something off of the internet or go to another state and buy a vehicle. In other words, you do not pay it directly inside this county.”
“If you do not have a use tax, the county does not get their share of that tax. You have to have a use tax to get that portion back,” stated Commissioner Kattelmann.
Eastern District Commissioner, Henry Dienst added, “Since the pandemic has kind of crippled the whole country, more people buy online purchases and most of that is going to be from out of state, so it’s just revenue that is lost.”
The use tax rate is 2%.
“All that we can collect is for the four entities. We get a half cent on each one,” Kattelmann said.
The revenue from the use tax goes towards the four entities which include, General Revenue, Jail Operations, Half Cent Road and Bridge and the Courthouse.
Questions remain about the tax, however. Despite the 2016 ballot being declared invalid, the local sales tax continues to be collected on the out-of-state purchase of motor vehicles, boats, motors and trailers, but is not making its way back to Clark County.
“For example, we don’t have a lot of car dealerships in our county and a lot of people go to Quincy, Fort Madison, or wherever, so those items could amount to quite a bit of money,” Dienst said.
As an example, we’ll use the 2020 purchase of a Honda Odyssey minivan that we use at The Media, which we purchased from an Iowa dealer. The purchase price was $6990. We received a $3400 credit because our previous van had been totaled in an accident, so we paid sales tax on the net price of $3590. The state sales tax of 4.225 percent came to $151.68, and the local tax paid was $125.65, which equals 3.5 percent, which is made up of the 2.0 percent from the county, 0.5 percent for the Clark County Ambulance District, and 1.0 percent for the City of Kahoka.
A $20,000 vehicle purchased out-of-state would generate $400 in local use tax.
We have reached out to the Missouri Department of Revenue for more information about the total tax collections of out-of-state motor vehicle, boat, motor and trailer purchases titled in Clark County, as well as asking if Clark County will receive any of the revenue collected since 2017. We have also asked for information on how to estimate the “Wayfair” tax revenue.
As of press time, we have not received answers from the DOR. We will update this story as more information becomes available.
Absentee balloting begins February 22 and municipal election day is April 5. If you have any questions about the upcoming ballot you can call the Clark County Courthouse at 660-727- 3283.