Can You Make Payments on Sales Tax in Missouri?

Businesses operating in Missouri are responsible for collecting sales tax from customers and remitting those funds to the Department of Revenue (DOR). These taxes are considered trust funds, meaning the business holds them on behalf of the state before payment. Circumstances can sometimes make it difficult for a business to remit these collected funds by the established deadlines. When such challenges arise, business owners should understand the available avenues for addressing the liability with the state.

Determining Eligibility for a Payment Agreement

The Missouri DOR evaluates requests for installment agreements on a case-by-case basis. A primary requirement is that the business must be in full compliance with all other tax obligations. This means all required tax returns for all periods and tax types must be filed before an agreement will be considered. Delinquent accounts with outstanding, unfiled returns are generally not eligible for a payment plan.

The DOR typically offers payment plans for a term of 24 months, although a period of up to 36 months may be granted in certain situations. To qualify for a longer term, a business will likely need to provide detailed financial information. The state also assesses a taxpayer’s history; a previous default on a payment plan can be a reason for denial of a new agreement. For balances of $50 or more, businesses can seek an installment agreement, while amounts less than $50 must be paid in full.

How to Request a Payment Agreement

The primary method for a business to request a payment arrangement for sales tax is through the MyTax Missouri online portal. Before beginning the online application, a business should gather specific information. You will need:

• Your business’s legal name, physical address, and Missouri Tax Identification Number
• The specific tax periods for which sales tax is owed and the total amount of the liability
• The proposed payment plan, where you must state the monthly payment amount you can afford
• A disclosure of the business’s financial situation, including details about current income and monthly expenses

Once the request is submitted through the portal, the DOR will begin its review. A collections representative may contact the business owner to discuss the terms of the proposed agreement. The DOR will issue a formal notice of approval or denial. If the installment agreement is approved, the business must begin making payments as outlined in the finalized plan. Strict adherence to the agreed-upon payment schedule is necessary to keep the agreement in good standing.

Understanding the Offer in Compromise Program

For businesses facing significant financial hardship that prevents them from paying their sales tax liability in full, Missouri offers an alternative called the Offer in Compromise (OIC) program. An OIC is different from an installment agreement; it allows a qualifying taxpayer to resolve their entire tax debt for a reduced amount. This option is reserved for situations where there is a legitimate doubt that the full tax amount could ever be collected by the state.

Eligibility for an OIC is governed by Section 32.378, and the criteria are much stricter than for a payment plan. The DOR will only consider an OIC after all other payment options, including an installment agreement, have been explored and deemed unfeasible. A business must be fully compliant with all tax filing requirements, not be in an open bankruptcy proceeding, and be current on any estimated tax payments to qualify. The basis for an OIC is typically “Doubt as to Collectibility,” meaning the taxpayer must demonstrate through extensive financial documentation an inability to pay the full amount owed.

The application process requires the submission of Form MO-656B, Offer in Compromise for Businesses. This form requires a comprehensive disclosure of all income, expenses, and assets. The DOR’s decision to accept or reject an OIC is final and cannot be appealed. If an offer is accepted, the business must remain compliant with all tax laws for three years, or the original debt may be reinstated.

Interest and Penalty Implications

Entering into an approved installment agreement with the Missouri DOR provides a significant benefit by halting more severe collection actions, such as bank levies or asset seizures. As long as the business complies with the terms of the agreement, the state will refrain from these measures. An installment agreement does not stop the accumulation of interest and penalties on the unpaid tax balance.

Statutory interest will continue to accrue on the outstanding liability until the debt is paid in full. Penalties will also continue to be added. The penalty for failing to file a return is 5% per month, up to a maximum of 25% of the tax due. If a return is filed on time but the tax is not paid on time, a flat 5% penalty is applied.