Saint Louis Sales Tax Crimes: What You Need To Know
Conducting business in Missouri requires collecting sales tax from your customers and remitting it to the state on a monthly, quarterly, or annual basis. Failure to comply with Missouri’s sales and use tax laws can lead to tax assessments, interest and penalties, criminal prosecution for Sales Tax Crimes and even the shutting down of your business.
As an officer or owner of the business, you could be held personally liable due to your fiduciary responsibility to ensure sales taxes are properly collected and paid.
If you owe back sales taxes on taxable services or have recently received a notice from Missouri’s Department of Revenue stating their intention to conduct a sales and use tax audit, it is important to secure legal representation immediately to avoid charges of Sales Tax Crimes or guide you through this intense process.
Even if you can’t repay the unremitted Missouri sales taxes in full, it’s still vitally important to come forward. The sales tax attorneys at Krus Tax Law can assist you in getting compliant with the Missouri Department of Revenue by making sure your sales tax returns are filed and proposing an affordable repayment plan.
Missouri Sales and Use Tax
Sales tax is the percentage of each sale that is paid to the state and local governments. The base sales tax rate in Missouri is 4.2%. As a merchant, you add sales tax to the price of your taxable goods and services and then send the collected sales tax to the Missouri Department of Revenue.
Certain cities, counties, and districts impose local sales tax as well (up to 5%) so the amount of tax you collect from your customers and pay to the the state is 4.2% plus the rate designated at your business’s location.
Use tax compliments sales tax. If you buy items from out-of-state vendors or use, give away, or consume an item from your inventory you intent to resell, you may owe sales tax to the state. It’s important to note that you only need to pay sales tax on out-of-state sales if you have nexus or a “physical presence” (office location, employee works remotely, marketing affiliate, drop-shipping from third party seller, etc) in other states.
The percentage of funds from state sales and use tax is distributed throughout the state government to finance general revenue, conservation, education, and parks.
When is Missouri Sales Tax Due?
The Missouri Department of Revenue will assign you a filing frequency. Your filing frequency is determined by the amount of state tax due.
- State taxes collected of $500 or more per month are to be reported on a monthly basis.
- State taxes collected $100 or more per quarter but less than $500 per month should be filed on a quarterly basis.
- State taxes collected less than $100 per quarter should be filed on an annual basis.
All Missouri sales tax return deadlines fall on the 20th day of the month.
Why Was My Company Selected for Audit?
The purpose of a sales tax audit is to determine if a company has collected, reported, and paid the correct amount of sales tax to the state.
For many large corporations in Missouri, a sales and use tax audit is a frequent occurrence due to their size, sales volume, or the complexity of their returns. Sole proprietors are also more likely to be audited because they usually file self-prepared returns which are more likely to have errors. But for some businesses, an audit can come as an unnerving surprise.
Triggers Which May Have Prompted Audit
- Failure to collect, report, or pay sales and use taxes
- Underreporting sales taxes
- Not filing sales tax returns or filing late
- Large increase in the amount of exempt sales
- Drop in taxable sales
- History of past sales tax audits that led to suspected
- One or more of your vendors was audited
- You’re in an industry that is highly audited due to substantial non-compliance
Sales Tax Crimes: Signs of Tax Evasion
- failure to issue sales receipts,
- failure to ring up purchases on a cash register,
- failure to report sales taxes collected, or
- very low prices.
Documents Needed for Sales Tax Audit
- report of fixed asset purchases from the audit period, along with the supporting invoices
- state and federal income tax returns
- balance sheets
- general ledger
- sales ledger
- sales and purchase invoices
- purchase orders
- bank statements
- resale certificates
- exemption certificates for tax-exempt sales
Sales Tax Crimes: Penalties
- Late Filing Penalty – 5% per month of the unpaid tax added for each month the return is not filed (cannot exceed 25%)
- Late Payment Penalty – multiply the amount of outstanding sales tax by 3%, the current interest rate on delinquent sales tax payments. Quarter-monthly payments made after the due date may result in a 5% penalty.
- Tax Evasion — Sales tax evasion can be either a misdemeanor or felony often depending on the dollar amount in question.