Missouri Department of Revenue – Missouri House of Representatives Newsroom

House Votes to Stem Penalties when Tax Credits Meet Caps

Many Missourians are already not a fan of tax filing day, which came this week. As Representative Becky Laubinger (R-Park Hills) explains, some of them have been surprised with additional reasons to be aggravated, in past years.

*Representative Becky Laubinger (Photo: Tim Bommel, Missouri House Communications)*

“How much worse would it be if, after you file your taxes, feeling like you’ve paid it in full, and then you get hit with a penalty and interest? My bill deals with that penalty and interest for tax credits that the tax filer qualified for in every way.”

The issue Laubinger’s bill deals with is that when there are enough claims against a state tax credit for it to reach its annual cap, some claimants, even though they met all qualifications, will get a bill from the Department of Revenue for the amount they claimed, plus interest and penalties. This is in spite of the fact that there is no way for them to know that cap would been reached.

House Bill 828, “would remove the penalties and interest for someone who qualified for a tax credit but the state hit the cap. They would still have to pay their taxes in full within 60 days or they would receive penalties and interest,” Laubinger told her colleagues.

Those bills from the Department of Revenue put some Missourians off claiming tax credits, many of which benefit benevolent organizations such as food banks, children’s crisis centers, domestic violence shelters, and other charities that serve those most at need in their communities.

“It discourages neighbors helping neighbors, it discourages people from giving to their local organizations, and often even gives a bad reputation in the community for those help organizations,” said Laubinger.

Arnold representative Phil Amato (R) for many years was the president of his local food pantry. He has sponsored similar legislation, having experienced firsthand what happens when these bills are sent out.

“Sometimes it takes you two to three years to talk somebody that has the wherewithal to write a check, and you tell them that it’s a 50 percent tax credit, that they’re going to get half their money back, and then they get a letter from the Department of Revenue that some of their donation has been disqualified, and then adding insult to injury is they’re charging them penalty and interest,” Amato explained. “Then the person is really upset because you’ve convinced them, ‘It’ll make you feel good to write this check to the local food pantry and help people that are hungry.’”

Laubinger’s bill enjoys broad bipartisan support, with no votes being cast against it as went through two House committees and was advanced to the Senate, 151-0.

*Representative Del Taylor (Photo: Tim Bommel, Missouri House Communications)*

Representative Del Taylor (D-St. Louis), the top Democrat on the House’s Ways and Means committee, through which the legislation was passed, urged those in his party to support the proposal.

“Fundamentally, if you made charitable donations and that donation’s tax credits were oversubscribed, you don’t necessarily get the full discount on your taxes, and what the lady is doing here is saying, ‘You didn’t get the full discount on your taxes, but you shouldn’t also be subject to penalties and interest.”

Amato said he would like to know whether the state is even making back the money that it spends on collecting these taxes and penalties.

“The Department of Revenue has to figure out they’ve exceeded the cap, then somebody has to sit down and write the letter. I bet you we’d be shocked at how much that letter costs, leaving the Department of Revenue and getting it to its end result, and then if it’s somebody who’s never got one before, then there’s letters going back and forth, then the person’s making a phone call to the Department of Revenue.”

“This thing is an expensive bookkeeping error for the Department of Revenue to do, so we need to get this thing wiped out,” Amato said.

*Representative Kemp Strickler (Photo: Tim Bommel, Missouri House Communications)*

It’s now up to the state’s Senate to consider Laubinger’s proposal, but the House will have another chance to act. The Senate version of her bill is awaiting action in a House committee.

Either way, Representative Kemp Strickler (D-Lee’s Summit) is one of the many who hopes it will reach the desk of Governor Mike Kehoe (R).

“This is such a good bill. We should not be penalizing folks who are doing their best to give to charitable groups and then, because the cap has been hit because people like it so much, we should not be charging interest and penalties on this.”

Other provisions in the bill would add to the income tax deduction for the sale or lease of farmland to beginning farmers a definition of “taxpayer;” and would stipulate that filing day for Missouri taxes must always coincide with the federal tax filing day.

Expired temp tags to phase out as vehicle dealers collect sales tax under new law

Many Missourians will be pleased to know that expired temporary license tags on vehicles could soon become a thing of the past, under one of the bills signed into law earlier this month.

*Representative Michael O’Donnell (Photo: Tim Bommel, Missouri House Communications)*

Those tags have, for some, been a source of anger and fodder for jokes. Entire social media accounts have been dedicated to posting pictures of vehicles with tags that expired months or even years ago, and some openly ridicule law enforcement for not acting against drivers with outdated tags. For others the issue has been a source of anxiety as they felt the scrutiny of peers and law enforcement while driving with them.

“It’s embarrassing,” said Representative Michael O’Donnell (R-St. Louis) of the system now in place in Missouri – the system that would be changed as part of Senate Bill 398. “This [change] is long overdue … we’re only one of like three or four states that’s still doing it this way.”

The “way” to which O’Donnell refers is the collection of sales taxes on vehicle purchases by the Department of Revenue, after the sale.

“We had this weird situation in Missouri where people would go buy a car and unlike anything else you buy you don’t pay the sales tax when you buy it,” explained Representative Peter Merideth (D-St. Louis). “People get the best car they think they can afford. Next thing they know they go to get their plates for it, they find out they owe $4,000 or $5,000, or even $1,000 or $500 if they got a cheap, used car, it’s a lot of money at once in order to get their plates, and they go, ‘Well I can’t afford that.’”

O’Donnell was the House handler of the proposal that became part of SB 398 that will require auto dealers to collect sales tax at the time of a vehicle purchase.

“When [Missourians] go in to buy the car, the dealer’s going to bring it up. ‘The sales tax on a vehicle is this. Do you want to write a check for that or do you want to roll it into the financing?,’” said O’Donnell.

While having dealers begin collecting taxes at the time of purchase sounds like a simple change, Merideth said it took several years for infrastructural changes that will allow it.

“We’ve been saying for a long time that that’s the solution,” said Merideth, “and then the Department of Revenue would tell us, ‘We don’t have a technical system that can do that.’ What they told us is their computer systems that they were using were designed in the ‘80s when we barely had computers and hadn’t been updated.”

*Representative Peter Merideth (Photo: Tim Bommel, Missouri House Communications*)

A series of legislative and budgetary changes – some of which, notes Merideth, did not have the bipartisan support that this portion of SB 398 had – have allowed for this bill to advance and O’Donnell describes it as the last step in a long process. The new law becomes effective August 28but it allows several months for changes to Department of Revenue systems. O’Donnell said it could be 12 to 24 months before those buying vehicles experience the new system.

Many legislators in recent years have said that this issue was among those about which they most often heard complaints from constituents, but they often learned that increasing enforcement against those with expired tags was only going to hurt those who were already financially struggling and would not end the problem.

Merideth told House Communications, “This temp tag issue is the thing I have heard maybe second most from constituents about, second only to gun violence, of anything in my district. It shocked me how upset people are about it, but I get it. It feels like we have a situation where all these people are running around that aren’t paying their fair share of the taxes that the rest of us are paying.”

“I’ve heard a lot of people say, ‘Well don’t buy the car if you can’t pay the taxes,’” said O’Donnell, but he, like Merideth and others, quickly learned that it wasn’t always that simple. He said a series of reports by a television reporter illustrated the depth of the problem. She talked to a number of Missourians who had expired temporary tags.

“A lot of people had hardship problems,” O’Donnell learned. “That was a lot of money to come up with, and she would ask the question, ‘If you were able to roll it into your financing and just pay $30 extra each month would that have been more doable,’ and people were like, ‘Oh my gosh, that would’ve been so much easier and so much less stressful.’”

O’Donnell also learned how anxious many of those drivers were because of their expired tags. “It wasn’t like it’s no big deal, nobody cares. They were always nervous that they were going to get pulled over and get questioned about it … [this legislation] will reduce that stress of thinking that the eyes of the world are upon you because you’ve got this temp tag.”

The end result was a much-needed change that lawmakers on both sides of the political aisle will be glad to talk about to their constituents.

Said Merideth, “I’m tired of seeing the expired temp tags and I’m tired of, honestly, hearing from so many people about the expired temp tags. It’s a frustrating problem and honestly I’m glad we’re finally going to collecting the revenue that we need to have and we’re going to do it in a way that people are going to know what they’re getting into when they buy their car.”

O’Donnell said four or five years from now there might still be some stragglers out there, but most expired tags should disappear over the next couple of years.

Production note: due to a technical issue, the audio from Rep. Merideth was not of good quality. Those who wish to access it may contact House Communications.

House bills would help Missourians with vehicle taxation, stem temp tag ‘abuse’

The House passed two bills this week that will help Missourians regarding the taxes they pay on vehicles. One would address a years-old issue regarding temporary license tags. The other would stem the hiking of property taxes on vehicles that are getting older with increasing mileage.

House Bill 415 could at last cut off the displaying by drivers of expired temporary tags – something that has been an issue in Missouri for years. It would require dealerships to collect sales tax at the time of a vehicle purchase, either as a lump sum or by rolling the tax into the financed amount. House Bill 713 would lay out how vehicles’ assessed valuations would be determined, replacing a system that has allowed property tax increases in the last two years.

St. Louis Republican Michael O’Donnell carries HB 415, which he says is the latest step in addressing the temporary tag issue. Under previous action by the General Assembly a new computer system is coming to the Department of Revenue that will allow the collection of sales tax by dealers. This bill would allow for its use beginning in January.

“There is no other thing that you purchase where you have to go someplace else to pay the sales tax. You buy a pen, you pay the sales tax at that point. [If this bill becomes law] you’re going to buy your car and you’re going to pay the sales tax when you buy it,” said O’Donnell.

He said the bill could also make car and truck purchases easier for Missourians by addressing what can now be a significant up-front cost.

“[It would] allow for the sales tax, if you’re interested, if you’re financing, to roll the sales tax into the financing if you would like that. For a lot of folks that becomes a more reasonable proposition because writing a check for $2,000 to pay the sales tax is a lot more difficult than adding $30 to your payments every month.”

Bipartisan backing gave the bill a 155-1 vote on its way to the Senate. Democrats including Peter Merideth (St. Louis) said it would be a fix that is “important,” and “overdue.”

“I actually hear more from constituents about this than many other things, strangely – about the expired tags, and frequently have to have the conversation with them that the main problem in Missouri is that we aren’t requiring dealers to collect the sales tax at the time of sale,” said Merideth. “So folks, either intentionally or not intentionally find themselves not getting their taxes paid and their licenses ready.”

O’Donnell said the passage of this legislation could eliminate “90%” of “temp tag abuse” in Missouri, and noted that 47 other states already allow dealers to collect tax at the time of the sale.

*Representative Roger Reedy (Photo: Tim Bommel, Missouri House Communications)*

The sponsor of HB 713, Rodger Reedy (R-Windsor) explained that each year Missouri assessors use the October edition of the National Automobile Dealers’ Association (NADA) Used Car Guide to determine the values of the vehicles on which Missourians pay property taxes. HB 713 would replace that with a system that begins with the original suggested retail price (MSRP) of each vehicle from when it was new, and apply a depreciation schedule for each year of its age up to 15 years. After that its value would be assessed at one-tenth of one percent.

Reedy said the old system’s flaws were made obvious in the wake of the COVID pandemic.

“In 2021 and ’22, due to used care values going up, our constituents and citizens had higher tax assessments and therefore paid higher taxes,” said Reedy. “When those values went up, there’s no provision for rollbacks on personal property, and when that happened our taxpayers just got a taxing increase and I’ve talked to several members [who have said] that that’s been a really big issue as they’ve talked to their constituents.”

He called the bill a, “taxpayer protection act. If there’s nothing else we can do, we can protect our taxpayers from unjustly having to pay more taxes on a vehicle that’s a year older that has more mileage. I just don’t think it’s right to do that to our taxpayers.”

That measure advanced to the Senate on the strength of a 150-0 vote.

VIDEO: New license plate supporting Negro Leagues Baseball Museum soon available

A museum telling an important story in the nation’s sports and cultural histories is featured on a new license plate that will soon be available to Missourians.

The Negro Leagues Baseball Museum in Kansas City began in a one-room office in 1990 and today is in a 10,000 square-foot home among the Museums at 18^th & Vine in Kansas City. It is the only museum dedicated to the Negro Leagues, which originated in Kansas City in 1920 and offered people of color a chance to play professional baseball at a time when they were barred from playing in the major and minor leagues due to racism.

License plates bearing the Museum’s logo will soon be available. It will cost $15 more than a regular license plate registration, and applicants can opt to donate $10 to the museum. This is the result of legislation carried by Representative Mark Sharp (D-Kansas City).

Sharp said the legacy of the Negro Leagues goes far beyond sports, having just as much to do with United States’ history and culture, and it meant a lot to him personally.

“Without seeing black athletes and black players I’m not sure that I would’ve had the confidence in myself to do some of these things. To see other folks and to know the story of what these gentlemen – and a lot of women – that get lost in the Negro Leagues’ history, what they had to go through really sets the standard for moving forward,” said Sharp. “Without those players and what they’ve done I’m not sure a lot of young athletes would have the confidence to go out there and do what they do.”

“The license plate will, one, create a bigger awareness of the Negro Leagues Baseball Museum. A lot of folks in Kansas City are aware of it but I’m not sure everyone across the state is aware of it, of this gem of a museum that we have here in our state,” said Sharp. “Also, it will provide another funding mechanism for the museum. For museums like this we also have to have enough ways and means to get funding to them to make sure they can stay up to date with current trends and make sure that the museum is in good condition.”

Sharp carried Senate Bill 189 which included language that he also sponsored in House Bill 100, to create the plate. The proposal received broad, bipartisan support in both chambers.

“We are just absolutely thrilled with this level of recognition and the opportunity to generation additional support,” said Museum President Bob Kendrick. “I gotta tip my cap to all of the legislators who made this possible and what a tremendous nod that is to the Negro Leagues Baseball Museum.”

SB 189 took effect August 28. When the new plates are available Missourians will be able to get them through local license offices.

Effort lead by family of MODOT worker killed by driver results in new license revocation law

The family of a highway worker killed at a job site hopes a law signed this month will keep others from facing the same tragedy.

Lyndon Ebker was killed in an April, 2016 crash while he was working in a MODOT work zone near New Haven. The driver who hit him was allowed to continue driving for more than two and a half years, and Ebker’s family and MODOT workers said that was wrong.

The driver who struck and killed Lyndon Ebker in a work zone near New Haven more than three years ago had impaired vision, but was allowed to keep driving until this past November when his license was revoked for life. Ebker’s family and the Department of Transportation said that driver put others in danger and he should’ve been forced off the roads more quickly.

House Bill 499 would require the Department of Revenue’s Director to revoke a driver’s license if a law enforcement officer reports that the driver’s negligence contributed to a worker or emergency responder being hit in a work or emergency zone.

Ebker’s daughter, Nicole Herbel, pushed for the legislation, which was signed into law this month by Governor Mike Parson (R).

“I just want people to think about it when they’re seeing the cones or the orange flags, even the trucks, I want this law to make them stop and think, ‘That gentleman was hit and killed because somebody didn’t slow down,’ or even just to remember that they’re humans that are standing there,” said Herbel. “Awareness really is the biggest thing for us.”

The accident that killed Ebker happened in Representative Aaron Grieshemer’s (R-Washington) district, and he sponsored HB 499. He said he was concerned with how long the man who killed Ebker was allowed to keep driving while his case moved through the courts.

“I have heard stories from some MODOT employees that worked with Mr. Ebker that feared for their lives because knowing that this gentleman was out there driving still,” said Griesheimer. “I’d heard another report that he had almost hit somebody else in the City of Hermann, so it was definitely a safety factor involved in this.”

The legislation was a top priority for the Department of Transportation this year, so much so that MODOT Director Patrick McKenna testified for it in a House committee. He told lawmakers it was needed to help protect the agency’s workers.

“We try to keep our roads primarily open while we’re working on them. It’s a considerable challenge, but we have to do it safely so we can honestly look at our employees and say the way that we’re structured will guarantee you the ability to go home every single day after shift to your family and friends, every time throughout your entire career,” McKenna told House Communications. “We have a memorial here just about 100 yards from where I’m sitting right now with the names of not only Lyndon Ebker, but 133 other MODOT employees that through our history have lost their lives providing public service on behalf of Missouri.”

Representative Aaron Griesheimer (photo; Tim Bommel, Missouri House Communications)

McKenna thanked all those involved in getting HB 499 through the legislative process and into law, including Rep. Griesheimer, Governor Parson, the Ebker family, the bill’s Senate sponsor, Senate President Pro Tem Dave Schatz, and Justin Alferman, Parson’s legislative director who also filed the legislation when he was a state representative.

Herbel said though her family suffered a tremendous loss, they didn’t back HB 499 out of seeking revenge. She said they were doing what her father would’ve done.

“If he saw someone doing something that was going to hurt themselves or hurt other people he did not hesitate to speak up, and that’s why this law is so fitting because if he had lived through this accident he would’ve done something to keep people safe. He would not have just taken the injury and went on. He would’ve turned around and fought for something to change.”

If a driver’s license is revoked under the new law, the license holder can seek its reinstatement by taking and passing the written and driving portions of the driver’s test, or petitioning for a hearing before a court local to the work zone where the accident occurred.

HB 499’s language is also included in Senate Bill 89, which has also been signed by the governor. Both bills effect August 28.

Another provision in HB 499 increases the fees licenses offices can charge for state services, such as issuing driver’s licenses and license plates.

Earlier stories:

House proposes tougher license revocation laws for those who hit workers, emergency responders

Family of MODOT worker killed in work zone asks lawmakers to toughen license revocation law

Fees at license offices will increase keeping offices open, under House bill signed into law

What Missourians are charged at the state’s 174 licenses offices will be increasing for the first time in 20 years, under legislation signed into law this week by Governor Mike Parson (R).

Representative Jeff Knight (photo; Tim Bommel, Missouri House Communications)

The language, found in House Bill 499, would increase the fees those offices can charge for services like licensing vehicles, issuing driver’s licenses, and transferring vehicle titles. Those fees are the only source of income private entities get for running those offices, and they haven’t been increased in 20 years.

Lawmakers learned that those offices’ expenses have continued to climb as the state provided less and less of the material they needed in order to operate, such as office supplies.

“Used to [be], the state would send their paper and their computers and all, but these license offices are paying for everything now on a $2.50 or $3.50 fee,” said Representative Jeff Knight (R-Lebanon), who proposed the fee hikes. “I think my easiest argument was in 1999 you could buy a fully-loaded pickup for $23,000. Now you go to a lot and that same pickup costs $80,000.”

Knight said these offices’ margins will only become narrower as the state’s minimum wage is about to increase and as the issuance of Real ID ramps up this year. He learned that because of these factors, many of the entities who run those offices were planning not to bid to have them for another term.

He believes it’s important to keep those offices open, particularly in rural areas and for the benefit of older Missourians, who are less likely to conduct business online.

“If you live in a rural area, do you want your grandfather or your grandmother to have to drive another 30, 45 minutes or even an hour? An average of $3 increase would not cover the gas it would take to drive to the next open license office, if these start closing down,” said Knight.

Lawmakers had discussed building into the bill automatic fee increases tied to inflation and other economic factors, but the language that has become law includes no such mechanism. Knight said as more Missourians switch to doing their licensing business online, the need for fee offices could diminish in the coming years, so that provision was not explored.

“No one really knows what the life expectancy of these license offices are going to be, but the more and more of it that goes to online … ten years from now there could be a discussion of whether we need these license offices,” said Knight. “We had a bill this year dealing with kiosks and digital driver’s licenses, so with the wave of the future the way it is I think this will take care of them until some of those things get put in place.”

The legislation would go into effect August 28. Knight said the operators he’s talked to said they would go ahead and re-bid to keep running their offices as long as the language became law, and that if it was in effect by then it would be soon enough for them.

Knight said the issue was more personal for him because the offices in Greene and Christian Counties are run by the non-for-profit Breast Cancer Foundation of the Ozarks.

“I’ve had a couple of tragic instances with cancer in my family, so I kind of took it on as kind of a personal note … that organization was fantastic to my family whenever I had sisters going through this,” said Knight.

HB 499 also requires the revocation of the license of a driver who’s negligence contributed to his or her vehicle striking a highway worker in a work zone.

House members told some license offices could soon close; proposal would increase their fees

People that run some of the state’s license bureaus say those will close if the fees for the services they provide aren’t increased. That could create hardships for Missourians, especially in rural areas.

Those 174 offices are operated by private entities through contracts with the state and employ roughly 1,700 Missourians. The fees those offices charge for services like licensing vehicles, issuing licenses, and transferring vehicle titles, have not been increased since 1999.

Operators said with the state’s minimum wage about to increase; the surge in expenses they will incur as Real IDs roll out this year; and steady increases in the expenses those offices must cover for themselves, many of them don’t plan to bid to continue operating.

Lebanon Republican Jeff Knight has filed House Bill 584, which would increase the fees those offices can charge for services. Those fees are the offices’ only source of revenue for the state services they provide.

Supporters of his bill presented the House Committee on General Laws with a list of 46 items they say the Department used to supply that license offices now must pay for – things ranging from pens and pamphlets that offices must now print themselves to fax machines and $5000 video surveillance equipment.

“In just one instance, a Gladstone office uses 10 cases of paper per week at $30 per case. The state requires that they use a specific Lexmark laser printer with the cost of $1,000 a month in toner,” said Knight.

Crystal Webster is the Director of the Breast Cancer Foundation of the Ozarks. The Foundation took up operating several license offices in southwest Missouri as a way to supplement its mission of offering services to those with financial needs while fighting breast cancer. Their contract is up this year and she said they don’t plan to rebid.

“Without something done immediately, as in this year, Breast Cancer Foundation of the Ozarks cannot afford to rebid [the Nixa] license office. We just can’t afford it,” said Webster. “We got in this to subsidize our mission, right? And so now we would be subsidizing the constituents of Missouri as they come into tag and renew their vehicles and do their driver’s license transactions.”

Backers of HB 584 told the committee if rural offices close, that will create long trips for many Missourians who will have to drive to the next closest office to conduct their business. Knight said many older Missourians will make those long drives because they can’t or won’t conduct their business online.

Tom Raffety and his wife operate the license office in Charleston.

“When I used to live in Charleston the round trip from my house to the office was 2.2 miles. When this office closes the round trip from my house to the other office will be 34 miles,” said Raffety.

Virginia Moore with the Brookfield license office said residents in her community would have to drive 25 miles to get to another office if hers closes.

“I f we are not able to get this House bill passed, we will not rebid. Our bid is due in October and we’re done, and I don’t know that anybody would be able to provide that service in Brookfield,” said Moore.

Knight’s proposal, House Bill 584, would increase the fee on vehicle licenses from $3.50 to $6.00 and on biennial renewals from $7 to $12; would increase the fee on a title transfer from $2.50 to $6; on operators’ licenses from $2.50 to $6; and on notices of lien processing from $2.50 to $6.

Knight said he’s proposing significant hikes in fees because it’s been so long since they’ve been increased.

“To put it in perspective in 1999 a loaded-up Dodge pickup cost $23,000. The same vehicle today? Over $60,000,” said Knight.

Lawmakers discussed with Knight the possibility of adding to his bill a cost of living increase for those fees, so that they would periodically be adjusted automatically and future legislatures wouldn’t be faced with the same issue years from now.

The proposal has been approved by one House committee and awaits a hearing in a second.

House committee: Missourians not properly warned about possible smaller refunds, greater taxes owed

House members investigating the Department of Revenue say it hasn’t prepared Missourians for owing more income tax debt or getting smaller tax refunds this year, and that many Missourians could suffer because of it.

Missouri Department of Revenue Director Joel Walters testifies to the House Special Committee on Government Oversight (photo; Tim Bommel, Missouri House Communications)

An error in Missouri tax code that dates back at least to 2004 was only recently discovered. Its end result is that while changes in federal tax code will cause Missourians’ overall tax debt to decrease, they could see a greater remaining income tax bill or a smaller refund than they anticipated.

Members of the House Special Committee on Government Oversight looked back over the Department of Revenue’s efforts to alert Missourians about how the tax code has changed and what it could mean for them. House Minority Leader Crystal Quade (D-Springfield) said those efforts were off message.

“I’m not seeing anywhere in here saying, ‘Hey, you might not get as much money back as you thought,’” said Quade. “We’ve had enough conversations to understand how we got here and where we’re at, but ultimately a lot of the legislators’ concerns lies with the people who are expecting to get money back, who have budgeted their lives around this money coming back and they may not get it.”

“Are you going to do anything to make sure that people know that what they’re expecting to receive may not be the case? ‘Cause your tweets aren’t,” Quade added.

Chairman Robert Ross (R-Yukon) said his committee’s chief goal is to make sure Missourians aren’t faced with a similar situation again, and that means the Department must do a better job of communicating.

“The Department was proud to send out press releases to talk about the bicentennial license plate that we switched over to … they spread the news whether it be on social media, whether it be in press releases, you read about that in the paper, there were different TV interviews; there was a lot of notoriety about a new license plate, however now that this mistake has occurred the Department of Revenue does not want to ‘fess up,” said Ross. “Let the taxpayer know that an error occurred and what they should be expecting as we get closer to April.”

Lawmakers have been asking the Department for examples of how taxpayers might be affected. Director Joel Walters said his Department has declined to offer examples because the many variables in filing means any two people filing the same way, with the same annual income, could see wildly different impacts.

Representative Robert Ross chairs the House Special Committee on Government Oversight (photo; Tim Bommel, Missouri House Communications)

Legislators told Walters they still want examples so they have a better idea what some Missourians might face. Quade said the impact the changes will have on one Capitol employee are alarming.

“A staffer who makes about $30-thousand a year – single mom of three. In last tax cycle she received $128 back from the state and $7,240 in federal. This year she owes $304 to the state and [will get back $4,275 from the federal government], so that’s a $3,500 swing, and that’s for someone who works here,” said Quade.

Quade noted that it is illegal for a state worker to owe the state income tax. She said that is just one way the situation could impact individual Missourians that they must be informed about.

Walters told the committee he agrees that communication should be improved. He also stressed that he believes it is a minority of Missouri taxpayers who will experience a significant change in their tax returns, “but those are important people and people that we stand ready to work with.”

“We’ve created a dedicated phone line to help individuals with this. We consistently work with taxpayers who need more time to pay their taxes or are struggling to pay their taxes, and we’ve put a page right up front on our website where immediately you go there, you can say if you need assistance – here’s where you can go to get assistance,” said Walters.

Ross said the committee will also be exploring what options are available to taxpayers who might be facing increased tax debt, “Maybe deferred payment plans … what actually the Department has the authority right now, without statutory changes occurring, but then what other options may possibly need to be addressed through statute.”

One legislator raised the question of some kind of tax debt forgiveness on the grounds that the Department made a mistake, but Ross said for such an idea to move forward seems unlikely.

The committee will meet again next week when, Ross said, it will ask more questions of Walters and review the examples that legislators have requested, which he urged the Department to at last prepare.

State Representative’s review finds $36-million of potential savings in Department of Revenue

A state House representative says his review of the Department of Revenue uncovered ways the state could save up to $36-million dollars.

Representative David Gregory (photo; Tim Bommel, Missouri House Communications)

St. Louis Republican David Gregory presented to the House Budget Committee what he called a, “Fiscal Opportunity Audit” of the Department. He explained that he spent 160 hours over several months studying the department, meeting with its staff, and comparing it to counterparts in other states. He said he found a number of ways the state could save money or generate revenue.

At least one of his findings has come up in other reviews of Missouri tax policy including Governor Eric Greitens’ (R) tax cut plan, and that concerns the state’s business sales tax discount. Missouri businesses that remit to the state in a timely manner the sales tax they collect get a 2-percent discount. Gregory said of neighboring states three have no such discount and four cap how much money businesses can retain. Missouri’s discount is the second highest among all states.

“Let’s say we wanted to implement an arbitrary cap. We still wanted to be the most business-friendly, we wanted to be the most generous in our area, we can implement a cap of $3000 a month. That would save $52.7-million a year in state taxes,” said Gregory.

Gregory said he also found that capping the state’s withholding tax discount – a discount that among the states is unique to Missouri – the state could save up to $13-million a year.

As for revenue generation, Gregory said for the Department to hire three more people to investigate notices of auto sales could generate more than $3-million a year. Hiring two more people to investigate the paying of sales taxes on vehicle purchases might result in $700,000 a year more revenue.

Gregory also looked at what the Department is spending on supplies and that led him to Missouri Vocational Enterprises. People incarcerated in state prisons work for MVE making products including furniture, clothing, notepads, and a variety of other products. All state agencies are required by law to purchase any product they need from MVE if it’s made there.

Gregory said when he looked into one specific product, a chair purchased from MVE by the Department, he found that, “the exact same chairs sell online at Office Depot for $150. Our Department of Revenue paid almost $400 a chair. That’s too much. That’s way too much,” said Gregory. “I like the MVE. I love the program. I think it’s a great idea and we’re going to work with them, but paying $400 – requiring a $400 spend on chairs is absolutely ridiculous.”

Overall Gregory said the Department spent $4.2-million a year with MVE.

“If we could get the MVE to commercial rates of one-third of what it is … even if we could just do a 50-percent cut … that’s $2.1-million a year in savings,” said Gregory, who said he’s been talking to MVE’s director and believes changes to that agency’s pricing can be implemented.

In looking at size, Gregory found that Indiana’s Department of Revenue covers about half-a-million more residents over about the same land size with 822 employees compared to 1,145 in Missouri’s Department. Gregory said he has identified 283 employees he believes the Department could cut without falling behind in its operations.

Gregory emphasized to the committee that his findings were just that; not recommendations or proposals. The budget subcommittee that deals with the Department will consider whether to explore them further or act upon them.

House Budget Committee Chairman Scott Fitzpatrick said the Department will be given time to react, “As opposed to us doing it through the budget right now and maybe forcing the changes to occur too fast.”

“What happens now is I want to see to it that we implement and execute on those observations if the budget committee and the General Assembly agrees with me,” said Gregory. “A lot of them aren’t things you can just do overnight, so generally like I said in my presentation, my recommendation’s going to be that we work with management over a course of 12, 18, 24 months and see what we can do together to execute.”

Gregory said any changes the Department does experience could take years and some could require legislation. At some point he hopes to see a similar review done with other state agencies.