Over the course of the last several years, there has been a growing trend within the Missouri Department of Revenue to use letter rulings and changes in tax code interpretation to find new ways to tax goods and services in Missouri.
By acting without legislative approval or going through the formal administrative rule-making process, the DOR has repeatedly shown little regard for taxpayers and small business owners. In fact, since fiscal year 2009, the DOR has issued over 1000 letter rulings and formally filed just 16 administrative rules. In response, the Legislature has been forced to spend an increasing amount of time and energy working to keep the DOR in check.
Passed by the General Assembly during the 2016 session, Senate Bill 1025 is just another example of legislative pushback against the DOR. This measure seeks to restore instructional classes taught at gyms, dance studios and other fitness facilities to the same designation as educational classes, which is the classification they held before the DOR applied yet another letter rule.
Senate Bill 1025 is a necessary fix to the DOR’s detrimental decision to start collecting sales tax on exercise classes.
As the DOR is unlikely to change its ways anytime soon and new letter rulings are continuing to be drafted and implemented, my Senate colleagues and I will continue drafting legislation aimed at holding the bureaucracy of Missouri government accountable and ensuring fairness for Missouri taxpayers whenever necessary.
SB 1025 passed with solid support in both the House and Senate, unfortunately the governor decided to veto the measure. Accordingly, this measure has returned to the General Assembly for consideration during the upcoming veto session and I anticipate the legislature will attempt to override the governor’s veto and pass the bill into law.