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Sales Tax
Reseller Exemption Saved FEC Members Money A Missouri Supreme Court decision that became effective last September reversed many years of state policy and practice with respect to state sales tax for virtually every business in Missouri. This decision did away with the so-called "reseller exemption." If implemented by the Department of Revenue, this ruling would have, for the first time, required generation and transmission co-ops to start collecting state sales tax from the distribution co-ops on retail electricity sales to tax exempt co-op members. In essence, the court held that "someone up the ladder" had to pay the state sales tax even though the distribution co-op would remain prohibited from collecting the tax directly from the tax-exempt member. This necessarily would mean an increase in the co-op's overall cost of service, which in turn, would have to be recovered either through rate increases or reductions in capital credits to members such as you. The Department of Revenue was required to start implementing the court's decision retroactively to last September unless legislation was passed immediately to overturn the decision. The Association of Missouri Electric Cooperatives (AMEC) worked in cooperation with the Missouri Chamber of Commerce, Associated Industries of Missouri, investor and municipally owned utilities, the Department of Revenue, the Missouri Retailers Association, Boeing and many others in drafting legislation to overturn the court's decision. Reps. Mike Sutherland and Brian Munzlingereach filed this legislation in the House, while Sen. Brad Lager filed it in the Senate. During the course of the legislative session, it was added as amendments to several other bills to increase its chance of passage. AMEC, along with the stakeholders' coalition, pulled out all the stops in lobbying for the legislation, fighting off unrelated delaying amendments and moving it on to the governor's desk as quickly as possible. As a result, Senate Bill 928 sponsored by Sen. Lager passed the Senate 31 to 0 on April 6 and then passed the House 150 to 1 on April 28. The bill was sent to Gov. Nixon on April 29, and he signed it in a public ceremony on May 12, just prior to the end of the legislative session. SB 928 became effective immediately upon Governor Nixon signing it. The Department of Revenue will not be implementing the court's decision. In these tough economic times, when the state is looking for new sources of revenue to balance the budget and fund the many programs it provides, it would have been easy for Gov. Nixon and our legislators, Sen. Lager, Rep. Mike Lair, Rep. Tom Shively, Rep. Bob Nance, Rep. Jim Guest, Rep. Therese Sander and Rep. Casey Guernsey, to throw up their hands and blame the Supreme Court for driving up your electric bill. Instead, they recognized the hardship this would put on ratepayers and the potential loss of jobs from other affected industries. Farmers' Electric Cooperative wishes to publicly thank our area legislators for their bipartisan support for this legislation, and especially for the emergency clause that made it effective immediately. Of all the things done in this legislative session, the passage of this bill was the most important for our state. |
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