The Undue Burden

Hundreds of St. Charles County residents received a surprise letter from the Department of Revenue (DOR) this week — requiring them to pay several hundred dollars in sales tax on vehicles purchased one, two, or even three years ago.

In a recent audit, the city of O’Fallon discovered that the license office had undercharged residents for the sales tax due on their motor vehicles. Now, DOR has billed many residents for the difference in what they paid and what they should have paid in taxes. (Even three years later, the DOR may legally assess these taxes under Chapter 144 of the Missouri Revised Statutes.)

This case is an example of how inefficient government bureaucracy results in undue burdens on citizens.

To a family hit hard by the recession, several hundred dollars can be difficult to come up with on short notice. This isn’t a case of citizens paying their fair share; it’s a case where a relatively minor governmental mistake can have unexpected and burdensome consequences on individuals.

Sales tax rates in Missouri differ from municipality to municipality because the total is comprised of special, local, and state sales taxes. While there is a general state rate of 4.225 percent, each municipality may charge its own additional rate. On top of that, special taxing districts within a municipality may impose relatively small sales taxes for specific purposes, causing sales tax rates to differ block by block in some areas.

In this case, the multiple layers of taxing authorities did not properly communicate and failed to charge residents the correct amount.

It is unclear who exactly made the error, but it likely occurred because of outdated maps that did not reflect O’Fallon’s recent annexations. Many vehicle owners were charged sales tax rates for unincorporated St. Charles County, when, in fact, they lived within O’Fallon’s city limits. When they paid the sales tax on their vehicles, the licensing office apparently acted on incorrect information.

According to Tom Drabelle, O’Fallon’s Director of Public Relations:

“It is very possible some of the maps being used by the local office, maybe even the state, weren’t updated as they should have been with all the annexations that took place and the changes that occurred literally on the fly sometimes.”

Because of confusion at different levels of government, hundreds of Missouri taxpayers are forced to bear an immediate burden. For more information, please see the article on KSDK’s website.