Missouri Manufacturers Get Good News with Made in Missouri Act

Missouri manufacturers with interstate income received good news this month.  Governor Nixon has signed HB 128, which adds an additional single sales factor apportionment option to Missouri tax laws.  This new single factor apportionment option enables Missouri to remain competitive with neighboring states in regards to income taxation via apportionment methods.

Under the current method, companies with interstate income must add their in-this-state sales to one-half of the sales partially in this state.  The result is divided by the company’s total sales to arrive at the company’s apportionment percentage.  This percentage is multiplied by the company’s net income to determine its Missouri taxable income.

The new law, signed into effect on July 12, 2013, adds an elective option to determine the company’s apportionment percentage by dividing the in-this-state sales by total sales.  The resulting factor eliminates the inclusion of one-half of the sales partially in this state from the numerator.

“In-this-state” sales are defined as sales where the purchaser’s destination point is in Missouri.  A sale is considered “not in-this-state” if the purchaser’s destination point is outside Missouri.   The new law also defines a sale as “not in-this-state” if the purchaser receives the property in-this-state for delivery to the purchaser’s location outside this state.

The effective date of this new law is anticipated to be August 28, 2013.  However, administrative guidance has yet to be published by the Missouri Department of Revenue.  The result should allow Missouri manufacturers to keep jobs in Missouri by lowering their tax burden.

The Anders Manufacturing and Distribution Group is following the Made in Missouri Act and other tax-related and business issues that could affect your company in our blog, newsletters and client communication.  For more specific information, please contact us.