Audit: Missouri revenue agency didn't refund businesses $20M

JEFFERSON CITY, Mo. -- The Missouri Department of Revenue didn't refund roughly $20 million in cash bonds to closed businesses, and the agency was not actively trying to return the money, a state audit released Tuesday found.

At issue are bonds businesses give the agency when applying for a license needed to collect sales taxes, which businesses can get back after two years of properly paying taxes or if they close and don't owe taxes.

The audit says the agency returned the cash bonds only if requested by businesses and roughly $19.4 million owed over several decades wasn't returned as of June 2014. Democratic Auditor Nicole Galloway said that figure is only for closed businesses and the department likely should have returned more to compliant, open businesses as well.

"The Department of Revenue has an obligation to actively seek out these businesses to refund these cash bonds," Galloway said. "Every dollar that the department does not refund back to a business is money that's due to that business and should be reinvested back into that business or otherwise invested in Missouri's economy."

Revenue spokeswoman Michelle Gleba said in a statement the agency has refunded about 35 percent of those bonds since it began repayments in August. She said the agency plans to refund the remainder in 10 to 12 weeks.

Gleba said the department also plans to refund about $11.3 million more to open and compliant businesses, with the average size of refunds at about $255.

A system to automatically refund closed or compliant businesses is set to take effect in July as part of a broader effort to update the state's main tax processing system.

Whether all of the $20 million in unreturned cash bonds cited in the audit will be repaid is unclear, and a Revenue Department spokeswoman didn't immediately comment further Tuesday. The audit notes agency personnel believed the bonds could be forfeited to the state after a five-year statute of limitations, although the audit says the department has never processed any forfeiture.

A spokeswoman for the auditor said the office doesn't agree there's a statute of limitations, arguing the money should be put in unclaimed property. About $16.3 million of the $20 million cited was held by the department for businesses closed for more than three years, when unclaimed property should be turned over to the state treasurer.

The department also said it was "willing and able" to speak with elected officials about the roughly $100 million in state and local sales tax revenue lost each year from fiscal year 2012 to 2014 because of "timely discounts," which exempt businesses of 2 percent of owed taxes if they pay on time. The report also advised the department to include a line on tax returns prompting filers to pay taxes on certain online purchases or and other items bought over the phone or through mail orders, the details of which the agency said already are available to taxpayers.

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