COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:4964H.01I Bill No.:HB 2382 Subject:Taxation and Revenue - General; Taxation and Revenue - Sales and Use; Utilities;
Department of Revenue
Type:Original Date:February 8, 2022Bill Summary:This proposal modifies the definition of "sale at retail" for the purposes of
sales taxes on certain purchases of utilities.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2023FY 2024FY 2025
General Revenue*(Could exceed
$81,426,246)
(Could exceed
$7,468,881)
(Could exceed
$7,468,881)
Total Estimated Net
Effect on General
Revenue
(Could exceed
$81,426,246)
(Could exceed
$7,468,881)
(Could exceed
$7,468,881)
*The proposal allows for refunds on certain taxes remitted. Current statutes allow for 10 years
of amended returns; therefore, FY 2023 represents 10 years-worth of refunds plus 10 months of
current impact from the sales tax exemption allowed by this proposal.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025School District Trust
Fund (0688)(Could exceed
$26,970,961)
(Could exceed
$2,489,627)
(Could exceed
$2,489,627)
Parks And Soils State
Sales Tax Funds
(0613 & 0614)
(Could exceed
$2,697,096)
(Could exceed
$248,963)
(Could exceed
$248,963)
Conservation
Commission Fund
(0609)
(Could exceed
$3,371,370)
(Could exceed
$311,203)
(Could exceed
$311,203)
Total Estimated Net
Effect on Other State
Funds
(Could exceed
$33,039,427)
(Could exceed
$3,049,793)
(Could exceed
$3,049,793)
Numbers within parentheses: () indicate costs or lo L.R. No. 4964H.01I
Bill No. HB 2382
Page 2 of
February 8, 2022
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2023FY 2024FY 2025FTE Changes – DOR*10 FTE0 FTE0 FTETotal Estimated Net
Effect on FTE10 FTE0 FTE0 FTE
*Oversight assumes all of the prior years (10 years) refunds would be processed in FY 2023 –
therefore, DOR would not require the additional FTE beyond FY 2023.
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Local Government(Could exceed
$108,692,973)
(Could exceed
$10,033,197)
(Could exceed
$10,033,197)
FISCAL ANALYSIS L.R. No. 4964H.01I
Bill No. HB 2382
Page 3 of
February 8, 2022
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ASSUMPTION
Section 144.011 Exemption for Purchase of Utilities by Transient Guest Accommodations
Officials from the Department of Revenue (DOR) state this proposal modifies the definition of
“sale at retail” found in section 144.010, and adds a sales tax exemption to section to 144.011,
regarding the purchases of utilities by transient guest accommodations. The utilities exempted
include electricity, electrical current, water and gas used to heat or cool a guest’s
accommodations. Utilities purchased by hotels, motels, and transient accommodation
establishments are currently subject to sales tax, but this proposal would make these utilities an
exemption.
DOR notes this proposal allows this exemption for the sleeping rooms, meeting and banquet
rooms as well as customer space rented by guests. It should be noted this applies to hotels,
motels, bed-and-breakfasts as they are classified as transient. It is unclear if this exemption
would be allowed for short-term rentals, such as VRBO or Airbnb. If these types of properties
were allowed the exemption, the calculated estimate would be expected to be higher.
DOR found research that indicates the average utility cost for a hotel room is $2,196 per room
per year. The Department was unable to determine the current number of sleeping rooms or
conference/banquet rooms in the state but DOR was able to find information on the number of
sleeping rooms (113,371) in the 12 largest cities in the state.
City# Hotel
Rooms
St. Louis40,000 Springfield6,395 Columbia3,600 Jefferson City 1,270 Lake of the Ozarks1,304 Joplin1,497 St. Joseph827 Cape Girardeau801 Kirksville415 Warrensburg412 Kansas City34,000 Branson22,850 113,371
Using these 113,731 rooms DOR was able to calculate the estimated total utility costs per year of
$248,962,716. L.R. No. 4964H.01I
Bill No. HB 2382
Page 4 of
February 8, 2022
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The current state sales tax rate is 4.225% and is distributed with 3% to General Revenue, 1% to
the School District Trust fund, 0.125% to the Conservation Commission and the 0.1% to the
Park, Soil & Water fund. When calculating the local impact, DOR used a 4.03% weighted
average. This proposal is expected to result in a loss of both the state and local sales tax on hotel
utilities.
DOR notes this proposal has an effective date of August 28, 2022 and therefore DOR estimates
only a 10 month impact in FY 2023 from the exemption. DOR calculated the following loss per
fiscal year.
FundTax RateFY 2023 ( 10 month)FY 2024 +GR0.03($6,224,068)($7,468,881)Education0.01($2,074,689)($2,489,627)Conservation0.00125($259,336)($311,203)DNR0.001($207,469)($248,963) Local0.0403($8,360,998)($10,033,197)
This proposal also adds language that allows any person who would be exempt from paying the
sales tax on hotel utilities starting August 28, 2022, to request a refund of the utilities they paid
prior to that date. Per Section 144.190.2, taxpayers can request a refund for up to ten years.
Therefore, these qualifying establishments could seek a refund from August 28, 2012 to August
28, 2022. This refund is projected to be a loss to the following funds:
FundTax Rate
FY 2023
(refunds)
GR0.03($74,688,815)Education0.01($24,896,272)Conservation0.00125($3,112,034)DNR0.001($2,489,627) Local0.0403($100,331,975)
While this proposal does not limit when a person could apply for the refund, for the simplicity of
the fiscal note DOR will show all the refund impact FY 2023.
As noted previously, the projected impact is expected to exceed the estimated amounts due to the
limited number of hotel rooms DOR used in the calculations. Additionally, if short-term rentals
were allowed to receive the exemption, DOR would expect an even greater loss of revenue. The
impact is projected: L.R. No. 4964H.01I
Bill No. HB 2382
Page 5 of
February 8, 2022
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Estimated Impact by Fund
FY 2023*FY 2024 +General Revenuecould exceed($80,912,883)could exceed($7,468,881)Education (SDTF)could exceed($26,970,961)could exceed($2,489,627)Conservationcould exceed($3,371,370)could exceed($311,203)DNRcould exceed($2,697,096)could exceed($248,963)Total State Losscould exceed($113,952,310)could exceed($10,518,674) Local Sales Tax Losscould exceed($108,692,973)could exceed($10,033,197)*Assumes all refund claims are received during FY23.
DOR notes this refund will be claimed on the existing sales tax refund form. DOR notes that
they would need 1 FTE for every 1,100 refund claims received a year. Due to the expected
volume of refund requests estimated, DOR would start with hiring 10 FTE and add additional
FTE as the number of refund claims increases.
Given the number of returns that might be affected, Oversight will show the abovementioned 10
FTE for purposes of this fiscal note in FY 2023. If multiple bills pass which require additional
staffing and duties at substantial costs, DOR could request funding through the appropriation
process.
Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
will impact the calculation under Article X, Section 18(e).
B&P notes this proposal would exempt the utilities for transient accommodation establishments
from state and local sales tax. Utilities include electricity, electrical current, water, and gas.
Qualifying uses include all guest accommodations, including sleeping rooms, meeting and
banquet rooms, and any other space rented by guests and are included in the charges made for
accommodations.
B&P notes that the last use “included in the charges made for accommodations” could include
any service offered by establishments. Including pools, restaurants, bars, lobby/congregation
areas etc. as long as the cost of the item is included in the price paid by a guest.
B&P further notes that this exemption would apply to hotels, motels, bed-and-breakfasts, as well
as other accommodations classified as transient. It is unclear if this would also apply to Airbnb
or other short-term rentals.
Based on research, B&P determined that the average utility cost for a hotel is $2,196 per room
per year. B&P was unable to determine the total number of hotel rooms in Missouri. However
based on additional research, B&P found that there are more than 113,371 hotel rooms located in
12 largest areas of the state. L.R. No. 4964H.01I
Bill No. HB 2382
Page 6 of
February 8, 2022
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Table 1 lists the number of hotel rooms for portions of Missouri. Table 1: Hotel Rooms
by City
St. Louis40,000 Kansas City34,000 Branson22,850 Springfield6,395 Columbia3,600 Jefferson City 1,270 Lake of the
Ozarks1,304
Joplin1,497 St. Joseph827 Cape
Girardeau801
Kirksville415 Warrensburg412 113,371
B&P further notes that this number does not include banquet and conference rooms, nor other
services areas that would be exempted under this proposal.
Based on the information above, B&P estimates that this proposal could exempt at least
$248,962,716 (113,371 hotel rooms x $2,196 avg utility cost) from state and local sales tax.
B&P notes that the state sales tax rate is 4.225% and the population weighted local sales tax rate
for 2021 was 4.03%. Therefore, B&P estimates that this proposal could reduce TSR by an
amount that could exceed $10,518,675 annually.
In addition, this proposal would allow qualifying establishments to request a refund for any sales
taxes paid prior to August 28, 2022. B&P notes that per Section 144.190.2 taxpayers may
request sales tax refunds for up to ten years. Therefore, under this proposal qualifying
establishments could request refunds on the state and local sales taxes paid from August 27, 2012
through August 27, 2022. Therefore, B&P estimates that qualifying establishments could
request more than $105,186,748 in refunds. For the purpose of this fiscal note, B&P will reflect
all refund claims as occurring in FY23. However, it is possible that refund claims could occur
over multiple fiscal years.
B&P further notes that the exemption would begin August 28, 2022. Therefore, FY23 will see a
reduction for 10 months, in addition to the refund claims for the prior ten years. Based on the
information above, B&P estimates that this proposal could reduce GR by an amount that could
exceed $80,912,883 and TSR by an amount that could exceed $113,952,310 in FY23. In L.R. No. 4964H.01I
Bill No. HB 2382
Page 7 of
February 8, 2022
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addition, this proposal could reduce local revenues by an amount that could exceed $108,692,973
in FY23.
B&P notes once refund claims have been paid, this proposal could reduce GR by an amount that
could exceed $7,468,881 and TSR by an amount that could exceed $10,518,674. This proposal
could also reduce local revenues by an amount that could exceed $10,033,197 once refund
claims have been paid. Table 2 shows the estimated impact by fund.
Table 2: Estimated Impact by Fund FY 2023*FY 2024 +General Revenuecould exceed($80,912,883)could exceed($7,468,881)Education (SDTF)could exceed($26,970,961)could exceed($2,489,627)Conservationcould exceed($3,371,370)could exceed($311,203)DNRcould exceed($2,697,096)could exceed($248,963)Total State Losscould exceed($113,952,310)could exceed($10,518,674) Local Sales Tax
Losscould exceed($108,692,973)could exceed($10,033,197)
*Assumes all refund claims are received during FY23.
Oversight notes both DOR and B&P assume this proposal will have a negative fiscal impact to
state and local funds. Oversight does not have any information to the contrary; therefore,
Oversight will show DOR and B&P’s fiscal estimates for the purpose of this fiscal note.
Officials from the Department of Natural Resources defer to the Department of Revenue for
the potential fiscal impact of this proposal.
Oversight notes the Park, Soil, and Water Sales Tax funds are derived from the one-tenth of one
percent sales and use tax pursuant to Article IV Section 47 (a) thus DNR’s sales taxes are
constitutional mandates. Therefore, Oversight will reflect the B&P’s and DOR’s estimates on the
fiscal note for impact to DNR’s funds.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other cities and counties were requested to respond to this proposed legislation but did
not. A general listing of political subdivisions included in Oversight’s database is available upon
request. L.R. No. 4964H.01I
Bill No. HB 2382
Page 8 of
February 8, 2022
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FISCAL IMPACT – State
Government
FY 2023
(10 Mo.)
FY 2024FY 2025GENERAL REVENUECosts – DOR §144.010 p. 5 Salaries$219,400$0$0 Fringe Benefits$196,851$0$0 Equipment and Expense$97,112$0$0Total Costs - DOR$513,363 $0 $0FTE Changes - DOR10 FTE0 FTE0 FTERevenue Reduction - §144.010 Sales
tax exemption and refunds p. 3-7
(could exceed
$80,912,883)
(could exceed
$7,468,881)
(could exceed
$7,468,881)
ESTIMATED NET EFFECT ON
GENERAL REVENUE
(Could exceed
$81,426,246)
(Could exceed
$7,468,881)
(Could exceed
$7, 468,881)
SCHOOL DISTRICT TRUST
FUND
Revenue Reduction - §144.010 Sales
tax exemption and refunds p. 3-7
(Could exceed
$26,970,961)
(Could exceed
$2,489,627)
(Could exceed
$2,489,627)
ESTIMATED NET EFFECT ON
SCHOOL DISTRICT TRUST
FUND (0688)
(Could exceed
$26,970,961)
(Could exceed
$2,489,627)
(Could exceed
$2,489,627)
PARKS AND SOILS STATE
SALES TAX FUNDS (0613 &
0614)
Revenue Reduction - §144.010 Sales
tax exemption and refunds p. 3-7
(could exceed
$2,697,096)
(could exceed
$248,963)
(could exceed
$248,963)
ESTIMATED NET EFFECT ON
PARKS AND SOILS STATE
SALES TAX FUNDS (0613 &
0614)
(Could exceed
$2,697,096)
(Could exceed
$248,963)
(Could exceed
$248,963) L.R. No. 4964H.01I
Bill No. HB 2382
Page 9 of
February 8, 2022
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FISCAL IMPACT – State
Government (continued)
FY 2023
(10 Mo.)
FY 2024FY 2025CONSERVATION
COMMISSION FUND (0609)
Revenue Reduction - §144.010 Sales
tax exemption and refunds p. 3-7
(could exceed
$3,371,370)
(could exceed
$311,203)
(could exceed
$311,203)
ESTIMATED NET EFFECT ON
CONSERVATION
COMMISSION FUND (0609)
(Could exceed
$3,371,370)
(Could exceed
$311,203)
(Could exceed
$311,203)
FISCAL IMPACT – Local GovernmentFY 2023
(10 Mo.)
FY 2024FY 2025LOCAL POLITICAL SUBDIVISIONSRevenue Reduction - §144.010 Sales tax
exemption and refunds p. 3-7
(Could exceed
$108,692,973)
(Could exceed
$10,033,197)
(Could exceed
$10,033,197)
ESTIMATED NET EFFECT ON
LOCAL POLITICAL SUBDIVISIONS(Could exceed
$108,692,973)
(Could exceed
$10,033,197)
(Could exceed
$10,033,197)
FISCAL IMPACT – Small Business
This proposal may impact hotels, motels, or other transient accommodation establishments that
include utility costs in the charge made for such accommodations.
FISCAL DESCRIPTION
This proposal modifies the definition of "sale at retail" for the purposes of sales taxes on certain
purchases of utilities.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION L.R. No. 4964H.01I
Bill No. HB 2382
Page 10 of 10
February 8, 2022
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Department of Revenue
Department of Natural Resources
Office of Administration - Budget and Planning
Julie MorffRoss StropeDirectorAssistant DirectorFebruary 8, 2022February 8, 2022