COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:5112H.01I Bill No.:HB 2599 Subject:Taxation and Revenue - General; Taxation and Revenue - Sales and Use;
Agriculture; Motor Vehicles; Department of Revenue
Type:Original Date:February 15, 2022Bill Summary:This proposal modifies provisions relating to farm equipment sales tax
exemptions.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2023FY 2024FY 2025General Revenue*(Unknown)(Unknown)(Unknown)Total Estimated Net
Effect on General
Revenue(Unknown)(Unknown)(Unknown)
* Represents the fiscal impact of additional farm equipment that was not previously eligible for
exemption that would now be sales-tax-exempt. Based on the responses from the Department of
Revenue and Budget and Planning, Oversight will assume the fiscal impact from this proposal
will not reach the $250,000 threshold.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025School District Trust
Fund (0688)
(Unknown)(Unknown)(Unknown)Parks and Soils State
Sales Tax Funds
(0613 & 0614)
(Unknown)(Unknown)(Unknown)
Conservation
Commission Fund
(0609)
(Unknown)(Unknown)(Unknown)
Total Estimated Net
Effect on Other State
Funds(Unknown)(Unknown)(Unknown)
Numbers within parentheses: () indicate costs or losses. L.R. No. 5112H.01I
Bill No. HB 2599
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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 2025Total Estimated Net
Effect on FTE 000
☐ 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$0$0$0 L.R. No. 5112H.01I
Bill No. HB 2599
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FISCAL ANALYSIS
ASSUMPTION
Section 144.030 (22) Farm MV Sales Tax Exemption
Officials from the Department of Revenue (DOR) note this provision modifies the sales tax
exemption on farm equipment. Currently farm equipment purchased for use on a farm is exempt
from sales tax. A purchaser provides his sales tax exemption certificate to the seller and no sales
tax is charged on the purchase if the purchaser says he will use the equipment on his farm. The
Department notes this exemption certificate process is not changed by this provision.
This provision adds the definition of utility vehicle to the list of farm equipment that is exempt to
clarify what counts as “farm equipment”. Questions have arisen as to what counts as farm
equipment and this proposal adds language clarifying that utility vehicles are farm equipment.
DOR assumes no fiscal impact from the clarifying language.
DOR notes this provision would no longer require the machinery in question to be used
“exclusively” for agricultural purposes. Now, the qualifying machinery would only need to be
used for “any” agricultural purpose. These changes could expand the current exemption to
include more “dual purpose” items, such as a vehicle that is used on a farm, but also driven on
public roads. DOR believes that this is already happening with equipment that qualifies for the
sales tax exemption. Should there be some equipment that was not eligible for the exemption
that will now be, this could have a minimal negative impact on the state.
Officials from the Office of Administration - Budget and Planning (B&P) note Section
144.030.2(22)(a) would add utility vehicles (UTVs) to the farm equipment sales tax exemption.
In addition, this section would expand the farm equipment exemption to all vehicles used for any
farm activities. B&P notes that the current exemption is for farm equipment used exclusively for
farm activities.
Based on information provided by DOR, they believe the sales tax exemption is already being
used for UTV purchases and for other motor vehicles that are not actually being used exclusively
for farm activities. Therefore, B&P notes this provision may have an unknown, likely minimal,
negative impact on MV sales tax funds.
Oversight notes the proposed changes to the current sales tax exemptions could result in
additional equipment that was not previously eligible for exemption that would now be exempt
under this proposal. DOR and B&P both indicated this could impact state revenues; therefore,
Oversight will show a negative impact of an unknown amount. However, based on DOR and
B&P’s response of “minimal negative impact to the state”, Oversight will assume the impact
would not exceed the $250,000 threshold. L.R. No. 5112H.01I
Bill No. HB 2599
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Section 144.210 Changes to Burden of Proof Language
Officials from the Department of Revenue (DOR) note this provision changes who has the
burden of proof that a sales tax exemption was accepted on good faith. Currently a purchaser
provides to a seller a copy of their sales tax exemption and the seller retains the exemption
certificate with their records. If a sale is under dispute, the seller has the burden of proof to show
they accepted the exemption certification in good faith. This proposal would require the seller
provide a copy of the exemption certificate and that once provided, the Department would have
to prove it was not accepted in good faith.
DOR assumes this may have a minimal negative impact on the amount of time needed to
determine the good faith acceptance of the sales tax exemption.
Officials from the Office of Administration - Budget and Planning (B&P) note this section
would shift the sales tax exemption burden of proof from the seller to DOR. Currently, sellers
must prove that a purchase was exempt from sales tax. Under this proposal, DOR would instead
have to prove that a purchase was not exempt from sales tax.
B&P assumes that the same decision would be reached regardless of who has to prove whether a
purchase qualified for a sales tax exemption. Therefore, B&P does not anticipate an impact to
state revenues from this change. B&P defers to DOR for the administrative impact on the
department.
Section 301.010 Definition of Farm Tractor and Utility Vehicle
Officials from the Department of Revenue (DOR) note this provision modifies the definition of
farm tractor and utility vehicle to echo the changes made in Section 144.030. Changing these
definitions is not expected to have any additional impact other than the impact listed in Section
144.030.
Officials from the Office of Administration - Budget and Planning (B&P) note this section
expands the definition farm tractor to any farm tractor used for any farm activity. Currently the
definition is limited to farm tractors used exclusively for farm activities.
This section also expands the definition of utility vehicle to include any landscaping, lawn care,
farming, or maintenance purpose. Currently such vehicles must primarily be used for
landscaping, lawn car, or maintenance purposes.
Based on information provided by DOR, the definition expansions in this section are not
expected to impact state revenues. L.R. No. 5112H.01I
Bill No. HB 2599
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Proposal as a Whole
Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
may impact the calculation under Article X, Section 18(e)
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Oversight assumes JCAR will be able to administer any rules from this proposed legislation
with existing resources.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor.
Oversight assumes the SOS could absorb the costs of printing and distributing regulations
related to this proposed legislation. If multiple bills pass which require the printing and
distribution of regulations at substantial costs, the SOS could request funding through the
appropriations process.
Officials from the Department of Natural Resources defer to the Department of Revenue for
the potential fiscal impact of this proposal.
Officials from the Missouri Department of Conservation note this proposal will have an
unknown fiscal impact but greater than $250,000. The Conservation Sales Tax funds are derived
from one-eighth of one percent sales and use tax pursuant to Article IV Section 43 (a) of the
Missouri Constitution. Any change in sales and use tax collected would affect revenue to the
Conservation Sales Tax funds. However, the initiative is very complex and may require
adjustments to Missouri sales tax law, which could cause some downside risk to the
Conservation Sales Tax. The Department assumes the Department of Revenue would be better
able to estimate the anticipated fiscal impact that would result from this proposal.
Oversight notes that the Conservation Sales Tax funds are derived from one-eighth of one
percent sales and use tax pursuant to Article IV Section 43 (a) of the Missouri Constitution, thus
MDC=s sales taxes are constitutional mandates. Therefore, Oversight will reflect the B&P’s and
DOR’s fiscal impact estimates for MDC’s funds. L.R. No. 5112H.01I
Bill No. HB 2599
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Officials from the St Louis Budget DivisionCity of O’Fallon each assume the proposal
will have no fiscal impact on their respective organizations. Oversight does not have any
information to the contrary. Therefore, Oversight will reflect a zero impact in the fiscal note for
these agencies. L.R. No. 5112H.01I
Bill No. HB 2599
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FISCAL IMPACT – State GovernmentFY 2023
(10 Mo.)
FY 2024FY 2025GENERAL REVENUERevenue Loss - §144.030 Modification
of Farm Equipment Sales Tax
Exemption p. 3-4
(Unknown)(Unknown)(Unknown)ESTIMATED NET EFFECT ON
GENERAL REVENUE
(Unknown)(Unknown)(Unknown)SCHOOL DISTRICT TRUST FUNDRevenue Loss - §144.030 Modification
of Farm Equipment Sales Tax
Exemption p. 3-4
(Unknown)(Unknown)(Unknown)ESTIMATED NET EFFECT ON
SCHOOL DISTRICT TRUST FUND
(0688)
(Unknown)(Unknown)(Unknown)PARKS AND SOILS STATE SALES
TAX FUNDS (0613 & 0614)
Revenue Loss - §144.030 Modification
of Farm Equipment Sales Tax
Exemption p. 3-4
(Unknown)(Unknown)(Unknown)ESTIMATED NET EFFECT ON
PARKS AND SOILS STATE SALES
TAX FUNDS (0613 & 0614)
(Unknown)(Unknown)(Unknown)FISCAL IMPACT – State Government
(continued)
FY 2023
(10 Mo.)
FY 2024FY 2025CONSERVATION COMMISSION
FUND (0609) L.R. No. 5112H.01I
Bill No. HB 2599
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Revenue Loss - §144.030 Modification
of Farm Equipment Sales Tax
Exemption p. 3-4
(Unknown)(Unknown)(Unknown)ESTIMATED NET EFFECT ON
CONSERVATION COMMISSION
FUND (0609)
(Unknown)(Unknown)(Unknown)
FISCAL IMPACT – Local GovernmentFY 2023
(10 Mo.)
FY 2024FY 2025ESTIMATED NET EFFECT ON
LOCAL POLITICAL
SUBDIVISIONS
$0$0$0
FISCAL IMPACT – Small Business
Small businesses that purchase or sell farm equipment may be impacted.
FISCAL DESCRIPTION
The proposed legislation modifies provisions relating to farm equipment sales tax exemptions.
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
Office of the Secretary of State
Joint Committee on Administrative Rules
Department of Natural Resources
Missouri Department of Conservation
Department of Revenue
Office of Administration - Budget and Planning
St Louis Budget Division
City of O’Fallon L.R. No. 5112H.01I
Bill No. HB 2599
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Julie MorffRoss StropeDirectorAssistant DirectorFebruary 15, 2022February 15, 2022