COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:2041H.02P Bill No.:Perfected HCS for HB 894 Subject:Motor Vehicles; Business and Commerce Type:Original Date:April 12, 2023Bill Summary:This proposal modifies provisions relating to the motor vehicles.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on General
Revenue $0$0$0
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Conservation
Commission Fund*
$0 or Up to
($253,656)
$0 or Up to
($304,387)
$0 or Up to
($304,387)
Parks, Soils and
Water Fund*
$0 or Up to
($202,925)
$0 or Up to
($243,510)
$0 or Up to
($243,510)
School District Trust
Fund*
$0 or Up to
($1,014,623)
$0 or Up to
($1,217,548)
$0 or Up to
($1,217,548)
State Road Bond
Fund*
$0 or Up to
($3,043,870)
$0 or Up to
($3,652,644)
$0 or Up to
($3,652,644)
State Road Fund*$0 or Up to
($3,043,870)
$0 or Up to
($3,652,644
$0 or Up to
($3,652,644)
Highway Fund Unknown, Less than
$250,000
Unknown, Less than
$250,000
Unknown, Less than
$250,000
Highway Patrol
Inspection Fund
Unknown, Less than
$250,000
Unknown, Less than
$250,000
Unknown, Less than
$250,000
Total Estimated Net
Effect on Other State
Funds
$0 or Less than
($7,558,944)
$0 or Less than
($9,070,733)
$0 or Less than
($9,070,733)
*Current law allows (may) motor vehicle dealers to collect and remit sales taxes (dealers already
have this ability). This proposal requires motor vehicle dealers (as soon as technologically
possible following the development and maintenance of a modernized, integrated system) to
collect and remit sales tax. This may increase the amount of sales taxes paid to the state
(assuming some are not actually paying sales tax and registering their vehicles). However,
dealers would be allowed to retain the 2% timely-filed discount (which are the estimates above). L.R. No. 2041H.02P
Bill No. Perfected HCS for HB 894
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2024FY 2025FY 2026Total 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 2024FY 2025FY 2026Local Government$0 or Up to
($9,273,657)
$0 or Up to
($11,128,389)
$0 or Up to
($11,128,389) L.R. No. 2041H.02P
Bill No. Perfected HCS for HB 894
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FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue (DOR) assume the following regarding this
proposal:
Administrative Impact
To implement the proposed legislation, the Department will be required to:
• Update the Missouri titling manual;
• Make changes to procedures, correspondence letters, forms, and the Department website;
• Provide License Offices and stakeholders these changes as applicable; and
• Train staff
FY 2024- Motor Vehicle Bureau
Associate Research/Data Analyst 40 Hrs @ $19.90 = $796
Lead Admin Assistant 20 Hrs @ $17.05 = $341
Administrative manager 5 Hrs @ $26.96 = $135
FY 2024 Strategy and Communications Office
Associate Research/Data Analyst 10 Hrs @ $19.90 = $199
Total Cost =$1,471
The Department anticipates that they will be able to absorb these costs and that there will be
minimal impact. If multiple bills are passed that require department resources, FTE may be
requested through the appropriations process.
Officials from the Attorney General’s Office assume the proposal would have no fiscal impact
on their organization. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect a zero impact in the fiscal note for the AGO.
Officials from the Office of Administration - Administrative Hearing Commission and
Office of Administration
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.
House Amendment 2 – Motor Vehicle Dealers to Remit Sales Tax
In response to a similar proposal from 2023 (SCS for HB 415), officials from the Department of
Revenue (DOR) assumed the following regarding this proposal: L.R. No. 2041H.02P
Bill No. Perfected HCS for HB 894
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April 12, 2023
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§144.070.11
The changes require all Missouri licensed dealers to collect and remit the sales tax on all motor
vehicles that the dealer sells. When collecting and with timely remittance the dealer gets to keep
two percent of taxes collected.
Administrative Impact
Motor Vehicle Bureau
The implementation of this legislation will be coordinated with the integration of the
Department’s Motor Vehicle and Driver Licensing software system approved and passed by the
General Assembly in 2020 (Senate Bill 176). Dealers collecting tax is a part of the new system
requirements. The administrative impact for this bill is inclusive within the Department’s
development and implementation of the new system.
Compliance and Investigations Bureau (CIB)
The proposal will have an impact on CIB as well. If dealers are collecting and remitting sales
tax, this will increase the responsibilities of CIB to ensure appropriate tax collection. Additional
resources will be requested through the appropriations process, if needed.
Oversight assumes DOR is provided with core funding to handle a certain amount of activity
each year. Oversight assumes DOR could absorb the costs related to this proposal. If multiple
bills pass which require additional staffing and duties at substantial costs, DOR could request
funding through the appropriation process.
Revenue Impact
DOR noted the following estimates have been made using data from FY 2022 state and local
sales tax collected on motor vehicles if the 2% timely discount is allowed for dealers that
remit sales tax.
Total amount of state sales tax collected for motor vehicles sold by dealers in FY 2022
= $417,111,230 x 2% = $8,342,225 - Estimated Loss in MV State Sales Tax
Total amount of local
= $340,659,669 x 2% = $6,813,193 - Estimated Loss MV Local Sales/Use Tax
Estimated loss of revenue annually = $15,155,418 ($757,770,899 x 2%)
This would be a decrease to state, city, and county funds.
Dealers collecting sales tax at the time of purchase should result in an unknown increase in
Motor Vehicle sales tax collections. This increase should mitigate/offset the loss in sales tax
collections resulting from the 2% collection fee dealers will be able to retain. L.R. No. 2041H.02P
Bill No. Perfected HCS for HB 894
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FY 2024 (6
months)
FY 2025FY 2026Conservation($123,406)($246,811)($246,811)Parks, Soils & Water($98,725)($197,449)($197,449)School District Trust Fund($493,623)($987,246)($987,246)State Road Bond Fund($1,480,868)($2,961,737)($2,961,737)State Road Fund($1,480,868)($2,961,737)($2,961,737)Locals($493,623)($987,245)($987,245)Total($4,171,113)($8,342,225)($8,342,225)
In response to a similar proposal from 2023 (SCS for HB 415), officials from the Office of
Administration - Budget and Planning (B&P) assumed the following regarding this proposal:
Section 144.070
This proposal would require motor vehicle dealers to collect and remit sales taxes, rather than
applying the sales tax to the purchaser at the time of titling a vehicle. Motor vehicle dealers are
to begin collecting and remitting the sales tax after the development of DOR’s integrated motor
vehicle system.
B&P notes that motor vehicle dealers would be eligible for the 2% timely filing discount under
Section 144.140. Therefore, B&P estimates that this provision may reduce revenues to state and
local taxing jurisdictions.
B&P also notes that the 3% tax on motor vehicles is deposited into the State Road Bond Fund
(50%); the State Road Fund (36.5%); the State Transportation Fund (1%); and the Fuel Local
Deposit Fund (FLOYD) (12.5%) which is then distributed to local jurisdictions. In addition to
the 3% general tax, a tax of 1% is levied for education, 0.125% for Conservation, and 0.1% for
Parks, Soil and water.
In FY 2022, the state 3% MV sales tax collections were $365,264,400. Based on the 3%
amount, B&P estimates that total taxable sales were $12,175,480,006. Therefore, B&P estimates
that granting the 2% timely filing discount to MV dealers would reduce state tax collections by
up to $9,070,733 (includes state sales taxes minus FLOYD distributions) annually. In addition,
B&P estimates that this would reduce local sales tax collections by up to $11,128,389 (includes
both local sales tax plus FLOYD distributions) annually.
Table 1 shows the impact by fiscal year by impacted fund. B&P notes that the estimated impact
is “up to” the amounts shown as not all MV businesses may qualify for the timely filing discount
throughout a full fiscal year. L.R. No. 2041H.02P
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Table 1: Impact by Fund and Fiscal Year FY 2024FY 2025FY 2026+State Funds
Education$0 or Up to($1,014,623)$0 or Up to($1,217,548)
Up
to($1,217,548)Conservation$0 or Up to($253,656)$0 or Up to($304,387)
Up
to($304,387)DNR$0 or Up to($202,925)$0 or Up to($243,510)
Up
to($243,510)State Road Bond Fund$0 or Up to($3,043,870)$0 or Up to($3,652,644)
Up
to($3,652,644)State Road Fund$0 or Up to($2,962,700)$0 or Up to($3,555,240)
Up
to($3,555,240)
State Transportation
Fund$0 or Up to($81,170)$0 or Up to($97,404)
Up
to($97,404)Loss to All State Funds$0 or Up to($7,558,944)$0 or Up to($9,070,733)
Up
to($9,070,733)
Local Funds Fuel Local Deposit
(FLOYD)$0 or Up to($1,014,623)$0 or Up to($1,217,548)
Up
to($1,217,548)Sales Tax$0 or Up to($8,259,034)$0 or Up to($9,910,841)
Up
to($9,910,841)Loss to All Local Funds$0 or Up to($9,273,657)$0 or Up to($11,128,389)
Up
to($11,128,389)
Oversight does not have information to the contrary and therefore, Oversight will reflect the
revenue loss estimates as provided by B&P. In addition, Oversight will reflect an “Unknown”
increase in revenue as indicated by DOR for the potential increase in sales tax collections due to
motor vehicle dealers having the ability to collect the sales tax at the time of sale – if those sales
taxes would not have otherwise been collected.
Oversight notes, DOR has indicated that the average estimated time to implement the new
integrated system is between three and five years; therefore, Oversight will reflect the fiscal L.R. No. 2041H.02P
Bill No. Perfected HCS for HB 894
Page 7 of
April 12, 2023
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impact as $0 (new system has not been implemented yet) up to the estimates indicated by B&P
(new system has been implemented).
In response to a similar proposal from 2023 (SCS for HB 415), officials from the Missouri
Department of Transportation deferred to the DOR for the potential fiscal impact of this
proposal.
In response to a similar proposal from 2023 (SCS for HB 415), officials from the Missouri
Highway PatrolOversight
does not have any information to the contrary. Therefore, Oversight will reflect a zero impact in
the fiscal note for DPS-MHP.
Rule Promulgation
In response to a similar proposal from 2023 (SCS for HB 415), officials from the Joint
Committee on Administrative Rules assume this proposal is not anticipated to cause a fiscal
impact beyond its current appropriation.
In response to a similar proposal from 2023 (SCS for HB 415), 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.
House Amendment 3 – Motor Vehicle Inspections
In response to a similar proposal from 2023 (HCS for HB 207), officials from the Department
of Revenue (DOR) assumed the following regarding this proposal:
Administrative Impact
To implement the proposed legislation the Department will be required to:
• Update procedures, correspondence letters and the Department website;
• Update the Missouri Titling Manual;
• Send Communications to License offices and other Contracted stakeholders; and
• Train Staff L.R. No. 2041H.02P
Bill No. Perfected HCS for HB 894
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FY 2024 - Motor Vehicle Bureau
Associate Research/Data Analyst 40 Hrs @ $19.90 = $796
Lead Admin Assistant 20 Hrs @ $17.05 = $341
Administrative manager 5 Hrs @ $26.96 = $135
FY 2024 - Strategy and Communications Office
Associate Research/Data Analyst 10 Hrs @ $19.90 = $199
Total Cost =$1,471
The Department anticipates that they will be able to absorb these costs. If multiple bills are
passed that require department resources, FTE may be requested through the appropriations
process.
Officials from the Missouri Highway Patrol (MHP) assumed the following regarding this
proposal:
The fiscal impact to the state of Missouri on vehicle inspections equates to $1.50 per each
additional used vehicle safety inspected prior to sale, with $1.00 deposited into the Highway
Fund (0644) and $0.50 deposited into Highway Patrol’s Inspection Fund (0297). It is unknown
how many additional inspections, per year, would be conducted with this proposed legislation.
Oversight is unable to determine how many more vehicles will require a safety inspection as a
result of this proposal; therefore, Oversight will reflect an “Unknown, but less than $250,000”
fiscal impact to the Highway Fund and the Highway Patrol Inspection Fund.
Officials from the Missouri Department of Transportation assumed the proposal will have no
fiscal impact on their organization. Oversight does not have any information to the contrary.
Therefore, Oversight will reflect a zero impact in the fiscal note for MoDOT.
FISCAL IMPACT – State GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026CONSERVATION COMMISSION
FUND (0609)
Revenue – potential increase in sales
tax collection due to dealers having the
ability to collect sales tax at the time of
sale (p. 6) (HA 2)$0 or Unknown $0 or Unknown $0 or Unknown L.R. No. 2041H.02P
Bill No. Perfected HCS for HB 894
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Loss – 2% timely fee possibly being
retained by dealerships (p. 6) (HA 2)
$0 or Up to
($253,656)
$0 or Up to
($304,387)
$0 or Up to
($304,387)
ESTIMATED NET EFFECT ON
THE CONSERVATION
COMMISSION FUND
$0 or Up to
($253,656)
$0 or Up to
($304,387)
$0 or Up to
($304,387)
FISCAL IMPACT – State Government
(continued)
FY 2024
(10 Mo.)
FY 2025FY 2026PARKS, SOIL AND WATER FUND
(0613 & 0614)
Revenue – potential increase in sales
tax collection due to dealers having the
ability to collect sales tax at the time of
sale (p. 6) (HA 2)$0 or Unknown$0 or Unknown$0 or Unknown
Loss – 2% timely fee possibly being
retained by dealerships (p. 6) (HA 2)
$0 or Up to
($202,925)
$0 or Up to
($243,510)
$0 or Up to
($243,510)
ESTIMATED NET EFFECT ON
THE PARKS, SOIL AND WATER
FUND
$0 or Up to
($202,925)
$0 or Up to
($243,510)
$0 or Up to
($243,510)
SCHOOL DISTRICT TRUST FUND
(0688)
Revenue – potential increase in sales
tax collection due to dealers having the
ability to collect sales tax at the time of
sale (p. 6) (HA 2)$0 or Unknown$0 or Unknown$0 or Unknown
Loss – 2% timely fee possibly being
retained by dealerships (p. 6) (HA 2)
$0 or Up to
($1,014,623)
$0 or Up to
($1,217,548)
$0 or Up to
($1,217,548)
ESTIMATED NET EFFECT ON
THE SCHOOL DISTRICT TRUST
FUND
$0 or Up to
($1,014,623)
$0 or Up to
($1,217,548)
$0 or Up to
($1,217,548) L.R. No. 2041H.02P
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FISCAL IMPACT – State Government
(continued)
FY 2024
(10 Mo.)
FY 2025FY 2026STATE ROAD BOND FUND (0319)Revenue – potential increase in sales
tax collection due to dealers having the
ability to collect sales tax at the time of
sale (p. 6) (HA 2)$0 or Unknown$0 or Unknown$0 or Unknown
Loss – 2% timely fee possibly being
retained by dealerships (p. 6) (HA 2)
$0 or Up to
($3,043,870)
$0 or Up to
($3,652,644)
$0 or Up to
($3,652,644)
ESTIMATED NET EFFECT ON
THE STATE ROAD BOND FUND
$0 or Up to
($3,043,870)
$0 or Up to
($3,652,644)
$0 or Up to
($3,652,644)
STATE ROAD FUND (0320)Revenue – potential increase in sales
tax collection due to dealers having the
ability to collect sales tax at the time of
sale (p. 6) (HA 2)$0 or Unknown$0 or Unknown$0 or Unknown
Loss – 2% timely fee possibly being
retained by dealerships (p. 6) (HA 2)
$0 or Up to
($3,043,870)
$0 or Up to
($3,652,644
$0 or Up to
($3,652,644)
ESTIMATED NET EFFECT ON
THE STATE ROAD FUND
$0 or Up to
($3,043,870)
$0 or Up to
($3,652,644)
$0 or Up to
($3,652,644)
HIGHWAY FUND (0644) L.R. No. 2041H.02P
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Revenue – MHP – increase in the
number of inspections ($1 per) (p. 8)
(HA 3)
Unknown, Less
than $250,000
Unknown, Less
than $250,000
Unknown, Less
than $250,000
ESTIMATED NET EFFECT ON
THE HIGHWAY FUND
Unknown,
Less than
$250,000
Unknown,
Less than
$250,000
Unknown,
Less than
$250,000
FISCAL IMPACT – State Government
(continued)
FY 2024
(10 Mo.)
FY 2025FY 2026HIGHWAY PATROL INSPECTION
FUND (0297)
Revenue – MHP – increase in the
number of inspections ($0.50 per) (p. 8)
(HA 3)
Unknown, Less
than $250,000
Unknown, Less
than $250,000
Unknown, Less
than $250,000
ESTIMATED NET EFFECT ON
THE HIGHWAY PATROL
INSPECTION FUND
Unknown,
Less than
$250,000
Unknown,
Less than
$250,000
Unknown,
Less than
$250,000
FISCAL IMPACT – Local GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026LOCAL POLITICAL
SUBDIVISIONS
Revenue – potential increase in sales
tax collection due to dealers having the
ability to collect sales tax at the time of
sale (p. 6) (HA 2)$0 or Unknown$0 or Unknown$0 or Unknown
Loss – (FLOYD) - 2% timely fee
possibly being retained by dealerships
(p. 6) (HA 2)
$0 or Up to
($1,014,623)
$0 or Up to
($1,217,548)
$0 or Up to
($1,217,548)
Loss – (local sales tax only) - 2%
timely fee possibly being retained by
dealerships (p. 6) (HA 2)
$0 or Up to
($8,259,034)
$0 or Up to
($9,910,841)
$0 or Up to
($9,910,841) L.R. No. 2041H.02P
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April 12, 2023
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ESTIMATED NET EFFECT ON
LOCAL POLITICAL
SUBDIVISIONS
$0 or Up to
($9,273,657)
$0 or Up to
($11,128,389)
$0 or Up to
($11,128,389)
FISCAL IMPACT – Small Business
Small motor vehicle franchises, dealerships and those that provide inspections could be impacted
as a result of this proposal.
FISCAL DESCRIPTION
This proposal modifies provisions relating to the motor vehicles.
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
Department of Revenue
Attorney General’s Office
Office of Administration - Administrative Hearing Commission
Office of Administration
Office of Administration - Budget and Planning
Missouri Department of Transportation
Missouri Highway Patrol
Office of the Secretary of State
Joint Committee on Administrative Rules
Julie MorffRoss StropeDirectorAssistant DirectorApril 12, 2023April 12, 2023