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YELLOW SHEET Office of the State Auditor of Missouri |
May 15, 2001
Report No. 2001-39
The following areas of
concern were discovered as a result of a review conducted by our office of the
Department of Revenue, Division of Taxation and Collection, Sales and Use Tax
Refunds.
Missouri
state law authorizes the Department of Revenue (DOR), Division of Taxation, to
issue sales and use tax refunds due to an overpaid return, or an audited
return.� Our audit report, Review of
Department of Revenue, Division of Taxation and Collection, Sales and Use Tax
Refunds (report no. 2000-36) found that during fiscal year ended June 30, 1999,
the department disbursed sales and use tax refunds, including interest, of more
than $47 million.� This report noted
that since fiscal year 1990, refund amounts increased more than 400%.
During
that review we noted 128 sales and use tax refunds totaling approximately
$20,855,000 for which there was no indication in the files that the vendor was
going to return the sales tax or the interest to the original customer.� ��We contacted six contiguous states
regarding their policies related to returning refunds to the original customer.� Each of these states have regulations, state
laws, or policies which provide that refunds must be returned to the original
customer.� Additionally, we reviewed tax
refund files that did indicate the refund would be returned to the original
customer; however, there was no documentation the department had ensured the
refunds were actually returned to the original customer.� Because of the problems noted, that report
recommended, and we still recommend, the department pursue legislation which
would require sales tax refunds and related interest be returned to the
original consumer.
This
concern had been noted in reports as far back as 1994.
The Department of Revenue has not pursued legislation on
its own; however, the department indicated support for legislation pertaining
to this issue.� House Bill 286 and
Senate Bill 195 were introduced during the 2001 legislative session.� The bills provide that the vendor must
�demonstrate to the satisfaction of the director of revenue� that the tax was
or will be returned to original customers.
Legislation introduced in the past would have prohibited the refund or credit of sales or use tax erroneously collected by a retailer, unless it was demonstrated that all erroneously collected amounts would be refunded to the person that originally paid the tax.� However, this provision was not approved by the General Assembly.
