What You Need to Know About the Missouri Department of Revenue Sales and Use Tax Litigation

Your Guide to Missouri Sales Tax Litigation and MO Sales and Use Tax Compliance

For business owners in the Show-Me State, navigating the complexities of MO sales and use tax can feel like wandering through a labyrinth. If you misstep, you might find yourself heading toward Missouri sales tax litigation with the Missouri Department of Revenue (DOR).

Receiving an audit notice or a proposed assessment of back taxes, penalties, and interest can threaten your business’s financial health. Because of this, understanding the process and your rights is not just advisable but essential. 

Fortunately, we are here to guide you through the critical things you need to know about disputes concerning MO sales and use tax.

The Path to Missouri Sales Tax Litigation: From Audit to Appeal

A dispute with the Missouri DOR typically follows a structured path. Knowing this roadmap is your first defense against formal Missouri sales tax litigation.

1. The Audit: It all begins with an audit notice. The auditor will examine your records, culminating in a Letter of Findings proposing any adjustments.
2. The Administrative Hearing: You have the right to an administrative appeal. You must file a written petition for review with the Missouri Administrative Hearing Commission (AHC) within 60 days of the assessment. This is a critical stage where presenting a well-organized case can lead to a settlement. If the appeal is not resolved, the case will be heard in a trial-like proceeding in which evidence is presented.
3. Appeal to the Missouri Supreme Court: An unfavorable decision from the AHC can be appealed to the Missouri Supreme Court.

Key Defense Strategies in MO Sales and Use Tax Cases

A successful defense against a MO sales and use tax assessment hinges on a proactive and strategic approach.

• Documentation: Meticulously maintained records are important. This includes all invoices, exemption certificates, and sales records. The burden of proof falls on the taxpayer.
• Understand the Law: Successful defenses are built on a precise interpretation of Missouri statutes, regulations, and case law concerning MO sales and use tax.
• Challenge the Auditor’s Methodology: Auditors sometimes use sampling and extrapolation to estimate liability. Challenging the validity of their sample can significantly reduce an assessment.
• Negotiations and Settlements: The goal isn’t always to win a courtroom battle. The most cost-effective solution is often negotiating a settlement with the DOR, potentially reducing the overall liability including negotiating a payment plan.

Facing a Missouri sales and use tax audit notice can be intimidating, but you don’t have to face it alone. 

By understanding the process that leads to Missouri sales tax litigation, preparing your records, and seeking expert advice, you can confidently navigate the maze and protect your business’s interests.