Missouri Supreme Court Ruling Could Cost Arnold Thousands

On Jan. 31, a Missouri Supreme Court ruling on the case Street v. Missouri Department of Revenue eliminated sales tax collection on vehicles and boats purchased out-of-state and then brought into Missouri.

Because of this ruling, municipalities across Missouri, including Arnold, could lose the sales tax revenue generated by those out of state purchases.

Arnold Finance Director Debbie Lewis said the city does not have a way to calculate the amount of that sales tax revenue that could be loss. Lewis, however, confirmed that the Missouri Department of Revenue calculated that amount of revenue lost to be about $63,000.

“We don’t get that detail from the Missouri Department of Revenue on what is in-state or out of state purchases,” Lewis said. “That number is the amount that the Department of Revenue estimates.”

In order to prevent local municipalities from losing that money, the Missouri Congress passed a law that would fix the issue.

House Bill 1329, which is pending Nixon’s approval, would allow the department of revenue to collect sales tax on motor vehicles and boats based on the person’s residence and not the place of purchase.

In May, however, Nixon issued a statement hinting that he may not sign the bill, according to a Lincoln County News Live article.

“In January, the Missouri Supreme Court issued a unanimous ruling that invalidated local taxes on out-of-state vehicle transactions that have not been approved by the voters,” Nixon said. “Following that ruling, my administration began working with the legislature, local government officials and Missouri auto dealers to identify a solution to the issues raised by the Court and state law.  As passed by the General Assembly, House Bill 1329 would bypass a vote of the people and improperly impose a tax increase.  My administration remains committed to working with the legislature and others to resolve these issues, but the people of Missouri must have the opportunity to make their voices heard.”

Whether Nixon signs the bill or not, Lewis said the possible $63,000 loss would not do that much damage to Arnold’s $4.8 million sales tax revenue.

Lewis, however, the city would like to avoid any possible loss of revenue.

“As part of our sales tax revenue is not a large piece, but any reduction in revenues impacts the city because it goes to the whole pool,” Lewis said. “If something else is down, it hurts. It’s not a significant percentage but it impacts city services.”