Out of state vehicle purchases not subject to local tax, local government picks up the tab

A Missouri State Supreme Court ruling that local sales tax cannot be collected on vehicles purchased out of state is in full effect this month. Counties like Callaway potentially face thousands in lost revenue due to the decision.

A Missouri State Supreme Court ruling that local sales tax cannot be collected on vehicles purchased out of state is in full effect this month. Counties like Callaway potentially face thousands in lost revenue due to the decision.

April marks the first full month the Missouri Supreme Court ruling deciding that Missourians who purchase vehicles outside of the state would not have to pay county sales tax went into effect, which has Callaway County officials biting their nails.

The ruling, which went into effect March 21, came about when a Springfield man who purchased a boat in Maryland for $12,000 found that he owed $191.19 in local sales tax. He challenged the tax all the way to the state’s Supreme Court, which ruled that he — and Missourians like him — would not have to pay.

Local officials such as Callaway County commissioner Doc Kritzer doesn’t like the potential loss of revenue that threatens Missouri governments at a local level. Kritzer says that the projected losses in vehicle sales tax revenue for Missouri counties is $128,000. That number is only about 4 percent of Callaway’s total sales tax budget, but it is a much larger chunk of the vehicle tax allotment.

“We didn’t think initially it’d affect us too much, but the more we thought about it that really became an eye opener,” said Kritzer.

Kritzer said that the state government was not overly concerned about the implications of this new decision, as the state sales tax of 4.225 percent is still in place on out-of-state vehicles, but county and city governments are right to fret. The decision also only affects counties that utilize a sales tax but not a use tax, although only 29 of Missouri’s 114 counties currently utilize such a tax. Callaway is not one of them.

The issue poses a bigger threat for counties and cities without a use tax poised along the border. For Callaway County, which sits about an hour and a half drive from Illinois, doesn’t seem to have felt too much immediate strain from car shoppers making a run for the border. Mark Archambault, dealer at Par-Five Auto in downtown Fulton, said that he hadn’t noticed a major change in their business and hadn’t even heard all the details about the decision when he was asked Wednesday afternoon.

Kritzer and presiding county commissioner Gary Jungermann, however, doesn’t think Callaway County can rest easy just yet.

“Counties are (going to be) losing lots of revenue for this plan,” said Jungermann. “You can’t lose that kind of money and survive.”

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