Use Tax Proposition Targets Online Retailers

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By Mike Scott

The confusion surrounding the use tax issue on the April 5 Clark County Municipal Election ballot has been cleared up.

On the April 5, 2022 ballot, Clark County voters will answer the question: 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.

The issue got confusing, even to Clark County officials.

In an interview with Emily McAfee for the February 23 issue of The Media, Presiding Commissioner Buddy Kattelmann said, “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.”

Eastern District Commissioner Henry Dienst pointed out in that same interview that “a lot of people go to Quincy, Fort Madison, or wherever, so those items could amount to quite a bit of money”

Kattelmann also stated that the 2016 ballot had been declared invalid.

That’s all not quite correct. Here’s a bit of background.

In 2015, a use tax ballot narrowly failed when put to voters.

In 2016, a different ballot, worded in a manner that required voters to vote “No” on discontinuing a sales tax, failed, effectively leaving the sales tax in place.

“The ballot in 2016 did satisfy the requirements of HB184 to allow Clark County to continue the collection of sales tax on motor vehicles purchased out of state,” said a Missouri Department of Revenue (DOR) representative in a Friday telephone interview with The Media. “It did not establish a use tax.”

So, DOR has been collecting, and according to DOR, Clark County has been receiving, sales tax revenue on the purchase of all motor vehicles, boats, motors and trailers, whether purchased in-state or out-of-state.

Following a Sunshine Law request by The Media, DOR reported that for 2019, Clark County received $230,998.20 in motor vehicle taxes. For 2020, the county received $233,974.29, and the total jumped to $283,663.79 for 2021.

According to Clark County Treasurer Roberta McAfee, in 2019, Clark County received $1,306,294.63 in total sales tax revenue from all sources. Each of four funds, General Revenue, Half-cent Road and Bridge, Jail Operations and Courthouse, receives a voter-approved one-half of one percent sales tax. The total sales tax is two percent. In 2019, each fund received over $326,500.

In 2020, the total sales tax was $1,395,470.46, and each fund received a little more than $348,850. In 2021, the Clark County’s total sales tax revenue soared to $1,646,306.84, with each fund receiving over $411,500.

The Clark County Commissioners are asking voters to approve the use tax proposition, which would allow Clark County to receive use tax revenue from large, online retailers, such as Amazon and Wayfair, which sell and deliver more than $100,000 in goods to Missouri consumers.

Missouri was the final state to adopt the so-called Wayfair legislation, following a 2018 Supreme Court decision which allowed states to collect sales and use taxes from businesses not physically located in the state. Local municipalities that want to collect the tax need to pass a voter-approved use tax proposition.

How much new revenue could Clark County receive if the use tax is approved in April?

DOR had no way to estimate local sales by out-of-state online retailers. While that total may be unknown, we see plenty of Amazon packages coming into Clark County, so the new revenue could be significant.

The 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.