JEFFERSON CITY — Upon the signing of legislation passed by the General Assembly during the 2013 regular session that eliminates both state and local use taxes on motor vehicles, trailers boats and outboard motors, Sen. Doug Libla, R-Poplar Bluff, would like to inform citizens from the 25th District about changes in state law that took effect over the weekend.  Senate Bill 23, which became law upon the governor’s signature on July 5, gives authority to collect sales tax for the titling of certain motor vehicles and equipment.

The new law states that taxing jurisdictions that did not previously approve a local use tax now have to put to a vote of the people whether to discontinue collecting sales tax on titling of motor vehicle bought from someone rather than a licensed Missouri dealer.  These same jurisdictions can also hold a vote to repeal the tax. 

“Missourians need to know local sales taxes will be imposed upon the titling of most motor vehicles, trailers, all-terrain vehicles (ATVs), boats and outboard motors,” said Sen. Libla.  “This new law replaces the state highway use tax with our state’s sales tax.” 

Regarding state tax, provisions in Senate Bill 23 now require the Department of Revenue (DOR) to collect state sales tax at the time of titling motor vehicles, trailers, ATVs, vessels and outboard motors. 

Local tax is factored in when DOR is required to collect local sales tax at the time of titling these vehicles and equipment sold by individuals and out-of-state dealers.  Local option use tax will no longer apply to these units.  This local tax provision was previously vetoed by the governor this year in Senate Bill 182, which was intended to address the Missouri Supreme Court’s 2012 decision in Street v. Director of Revenue.  In that case, the Supreme Court held that a local sales tax could not be collected on the out-of-state purchases of motor vehicles, boats, trailers and outboard motors, stating such transactions were, under previous law, subject to a local use tax. 

“The newly signed Senate Bill 23 addresses instances when citizens cross state borders to purchase vehicles, which results in Missouri losing sales to competing states and municipalities losing tax revenue,” said Sen. Libla.  “Our local auto dealers in border counties were undersold by out-of-state businesses that were using our Supreme Court’s decision as an incentive to get Missourians to buy cars and boats across state lines.  This resulted in local taxing entities losing their portion of the state’s special use sales tax.”

The legislation also modifies the sales tax calculator to include the appropriate tax changes; revises applicable tax forms; continues to apply local option use tax to manufactured homes, which are not affected by the new law; contains provisions and timeframes for cities and counties to hold an election to repeal or continue the local sales tax on these vehicles and equipment sold by an individual or out-of-state dealer; and makes no changes to sales made by Missouri dealers.

For more information on Senate Bill 23, visit www.senate.mo.gov and click on the Truly Agreed Bills link under the Legislation tab.