Cape use tax could begin next month for certain purchases

For some Cape Girardeau shoppers, a use tax may start sooner than expected.

City of Cape Girardeau officials expected to start collecting use tax revenue in 2023. However, a recent notice from the Missouri Department of Revenue stated collection of the use tax would commence in January for certain purchases.

Dustin Ziebold

According to Dustin Ziebold, director of finance for the City of Cape Girardeau, city officials projected when the use tax could be implemented based on information in Missouri Senate Bill 153.

Gov. Mike Parson signed the bill into law in June, allowing Missouri and local jurisdictions to collect an online use tax.

Ziebold said the city based its Jan. 1, 2023, start date on a line in the bill stating "the provisions of this act relating to sales tax administration, use taxes, and income taxes shall become effective Jan. 1, 2023."

Collection of the use tax will begin in January only for purchases made from certain merchants. The city will fully collect use tax revenue from all online purchases from out-of-state vendors in January 2023, Ziebold said.

According to a news release from the City of Cape Girardeau, determining which purchases will be subject to the tax in January is hard to determine because of conflicting legislation.

"Regardless of those inconsistencies we'll see leading up to 2023, we will still honor commitments we made to voters to support essential services and workers with those funds," Ziebold said in the release.

The unexpected early commencement is "good news for the city's balance sheet," city officials stated in the release. Cape Girardeau could see some use tax receipts at the end of the first quarter of 2022.

How much the city may receive is uncertain, according to city manager Kenny Haskin. The city will refrain from altering financial plans in the meantime.

"Unfortunately, it's a very muddy topic because of inconsistent information," Ziebold told the Southeast Missourian. "We weren't trying to mislead anyone."

How the confusion started

Cape Girardeau voters approved a use tax in the Nov. 2 municipal election with a 61.52% "yes" vote.

In accordance with state law, the city attorney sent a notification of the election results to the Missouri Department of Revenue on Nov. 10, a release from the city stated.

The city received a return notice from the Department of Revenue this week. The notice stated the use tax would begin in January.

Ziebold said he and the city attorney communicated with the Missouri Municipal League and Department of Revenue for clarification.

To the city's surprise, per the Department of Revenue, collection of the use tax will commence in January 2022 for certain merchants.