Over the past several years, NAC has made various recommendations related to the City general fund budget. Ever present in the discussions leading up to those recommendations have been forecasts of sales tax revenue. Such revenue is the lifeblood of the bulk of what we look for from the City: police and fire protection, City streets and infrastructure maintenance and a great many City programs that support business development, social services and much more.
In the past, one could fairly accurately predict sales tax revenue based on how the economy is going, but now, we can see sales tax revenue fall even when the economy is doing well. A key culprit, it seems, is the growth of online sales from sellers that do not collect sales tax. In most cases, they are not required to because they do not have physical operations in Missouri. As online sales grow, so does the local sales tax revenue loss, which right now is likely in the millions and growing.
There are various legislative initiatives being talked about at the state and federal levels to combat this tax revenue erosion. They are complicated and would probably be hard to implement. This got me thinking about what we might do on our own – today, right here in Springfield. Did you know that if you buy something online for which sales tax is not collected by the seller, you’re supposed to pay it on your own?
Many of us are off the hook because you’re not required to report nor pay unless you annually buy more than $2,000 for which no tax was collected, but that doesn’t mean you can’t pay even if you’re below the threshold. So why do this? Well, if I’m over the threshold, it’s the law. If I’m under, for one thing, if I think that the City police, fire or any other services are less than they should be, maybe I should ask myself if I am contributing to the problem – am I shouldering my share of the burden when I avoid sales tax via online purchasing? If I am avoiding the tax in this way, then maybe I shouldn’t complain if the police are not as responsive as I think they ought to be, or if the ditches along City streets don’t get mowed as often as they should, or those nuisance properties in my neighborhood don’t get addressed as fast as I would like, or other critical services the City provides are too lean, or jobs aren’t being attracted here as well as they might be.
You see, the City’s ability to make improvements relates in a significant way to the sales tax revenue it gets. And I should add that there is a pretty strong link between online sales and the recent loss of quite a few big (and small) retailers in Springfield and the hundreds of jobs they used to provide. A lot of those jobs were filled by normal working folk and in many cases, first jobs for our kids. Those jobs are gone, and that further exacerbates the impact to each of us. Maybe you know someone who lost one of those jobs at Kmart or Staples or many of the other stores that closed.
I spent some time recently trying to figure out how I would go about paying that uncollected sales tax, and I was surprised to discover how difficult it is! Without boring you with my Sherlock Holmesian experience to figure this out, here’s what you do. The first thing you need to know is that if the sales tax wasn’t collected, the consumer is supposed to pay it, but it’s not called “sales tax” when you pay it. It’s called “Consumer’s Use Tax.”
If you go to the Missouri Department of Revenue website (dor.mo.gov) and search for that term, you’ll get all the info, including the two forms to use to send in a payment: one for individuals and one for businesses. Now you’ll read on both forms that you’re not required to send anything in unless the pertinent purchases exceed $2,000 annually, but you can pay whether you are under or over that amount anyway. I know this because I called the DOR to ask, and after the very helpful person I spoke with picked herself up off the floor from the shock of me asking, she said you could. I know you’re thinking that I must be crazy to want to pay something I’m not absolutely required to, but then I keep thinking about all the value that we get from City services, and I figure maybe it would be good for us to be proactive about it.
I know we can debate about whether this or that City expenditure is a good idea, but all that seems to me to be another discussion. Final caveat: It’s not real easy to pay even if you have the forms, but if you’re still reading, you now at least have some awareness and a start. I’m hoping we might be able to put something on SGF Neighborhood News.com to make it easier in the future.
In the meantime, I have included the state’s FAQs about the topic under the NAC button on SGFNeighborhoodNews.com, which contains links to the two forms (Form 4340 for Individuals and 53-C for businesses).