Effective August 28, 2019, Missouri has a new law that presents an unprecedented opportunity for recovering sales and use tax overpayments. Specifically, under the new law, the time period for claiming refunds is extended from three years to ten years.
Missouri imposes a tax on the privilege of selling tangible personal property at retail in the state and a complementary tax on the in-state use of tangible personal property purchased at retail. Under current law, the time period for claiming sales and use tax refunds is three years from the date of overpayment. The new legislation extends that period to ten years.
Low Risk in Filing Claims
In general, the time period for the state to make additional sales and use tax assessments is three years after the return was filed. The legislation does not extend the limitations period for proposing assessments. This asymmetry is critical because it enables taxpayers to file refund claims without risking assessment for certain periods.
Taxpayer Action Steps
Taxpayers with material expenditures in Missouri during the last ten years, or those who have received sales or use tax refunds or credits, should evaluate whether opportunity exists for purchases (or sales) during the additional window created by the new statute of limitations. If so, taxpayers should consider filing new refund claims to capture any additional benefit.
In addition, taxpayers who are currently under or have recently undergone audits should consider performing a simultaneous overpayment review covering the extended refund period allowed under the new law. Seven additional years of overpayments are potentially available to offset any underpayments identified for the three-year period allowed for assessments.
Time Is of the Essence
Although there has been no second guessing of the new law yet, it is possible that when lawmakers evaluate its presumably significant revenue effect, they may act to shorten or otherwise modify its extended limitations period. For this reason, taxpayers should consider performing overpayment reviews as soon as possible or engaging outside sales and use tax professionals who specialize in conducting such examinations to help position organizations to potentially benefit from this unprecedented legislative development.
TECHNICAL INFORMATION CONTACTS:
Winston Post
Principal
Ryan
469.399.4284
winston.post@ryan.com
Brian Browdy
Director
Ryan
312.980.1160
brian.browdy@ryan.com
Ryan Domagalski
Manager
Ryan
314.721.1300
ryan.domagalski@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.