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Focus on State and Local Taxation: Missouri Instructional Classes

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During the recent 2016 veto session the Missouri legislature acted to protect taxpayers by overriding Governor Nixon’s veto of a senate bill related to the taxability of instructional classes. 
September 21, 2016

During the recent 2016 veto session the Missouri legislature acted to protect taxpayers by overriding Governor Nixon’s veto of a senate bill related to the taxability of instructional classes.

Under current sales tax law, a “sale at retail” includes charges and fees paid to or in places of amusement, entertainment or recreation. The Missouri Department of Revenue has used a very broad interpretation of the current statute requiring sales tax to be collected and remitted on these charges. The Department has issued audit assessments to taxpayers providing instructional classes, including yoga classes, dance studios and martial arts classes, among others.

Due to widespread taxpayer objection and the Department’s inconsistency in administration of sales tax on this issue, Senate Bill 1025 was drafted to exempt instructional classes from sales tax. The bill received overwhelming support in both the House and Senate for override.

New Missouri legislation typically goes into effect August 28th of each year, however; as this bill was originally vetoed and subsequently overridden it will go into effect 30 days after the override date, October 14, 2016.

The full text of this legislation can be found here.

Please contact any of our State and Local Tax (SALT) professionals at RubinBrown today to assist you in understanding the impact that this law change may have on your business.

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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