Temp tags: New Missouri vehicle sales tax law takes effect in August

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ST. LOUIS — During summer travel in Missouri, playing the license plate game is always a favorite past time for many families. But counting the number of Missouri temporary tags, well that’s thousands across the state.

“Temp tags and expired temp tags in Missouri if you drive the roads — I see them everywhere,” said Doug Smith, head of the Missouri Automobile Dealers Association. “It’s not just a St. Louis problem. It’s the entire state.”

Currently, if you purchase a vehicle from a car dealer in Missouri, you get temporary paper tags and have 30 days to pay the sales tax at a DMV office.

For instance, a car that costs $10,000 in the city would be $1,000 in sales tax, which can be a lot for many.

But now, Gov. Mike Parson has signed into law a plan to update the state’s vehicle sales tax process.

It means when you purchase a new car, instead of just letting you drive it home and assuming you’ll go to the DMV to pay taxes later, Missouri will now ask you to pay your taxes at the point of sale. Many other states, like Illinois, already combine the two payments, according to the St. Louis Post Dispatch.

Smith said it will make things easier on Missourians who might not have another $1,000 or more to pay later at the DMV.

“If you’re financing your vehicle for 48, 60 or 72 months, you’re talking just a few dollars per month that would be included in that retail installment contract,” Smith said. 

“It’s really a way to make it easier to solve a lot of problems with the revenue collection and also make it easier on the taxpayer. Keep the taxpayer from not breaking the law by titling their vehicle.”  

Smith welcomes the new law that begins Aug. 28. The plan will allow the Missouri Department of Revenue to get upgrades to their old computer system, and customers will also be able to pay the sales tax at the dealership, cutting out an extra step.

“By doing it at the point of sale with these, it upgrades those systems (and) can talk to the highway patrol,” Smith said. “Those systems can talk to motor vehicle registration, and you have a seamless way to communicate all that information.”

Smith estimates the state will generate $26-40 million that will fund improvements to roads, bridges and safety.

Those temp tags you see everywhere won’t go away overnight. Expect that to be a slow process over the next four years.

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