Practice of trading corn for cars comes under scrutiny

BENTON, Mo. -- All charges have been dropped against a former Sikeston mayor relating to a "Corn for Cars" bartering arrangement.

A state tax exemption -- commonly referred to as "Corn for Cars" -- legitimately allows farmers in Missouri to barter their own agricultural products to car dealerships in exchange for vehicles.

But Scott County prosecutors had charged Josh Bill, the owner of a grain company and the Sikeston mayor in 2000 and 2001, with forgery and willfully failing to make a sales tax return.

The charges related to transactions conducted through Bill's company, where an amount of corn equal to the value of a car was bought and traded to car dealers to avoid sales tax.

The forgery charge related to allegations that Bill removed a sentence from a letter he received from the Department of Revenue. The sentence reportedly said Bill would owe sales tax on the sale of grain to the car buyers.

Prosecutor Paul Boyd said the charges were dropped Friday while the department considers other remedies.

Bill told the Sikeston Standard Democrat that the transactions were legal all along.

"Do I intend to resume these transactions and save people sales tax when buying cars? Absolutely," he told the newspaper.

A bill that passed the legislature last month contains language intended to clarify that the tax break applies only to people who trade grain or livestock that they produced. Gov. Bob Holden has not said whether he will sign the bill.

The state Department of Revenue said last year that about 640 people traded agricultural products they produced for $9.5 million in vehicle credits.

"A farmer would be allowed to bring a product the farmer had grown, such as corn, and trade it to the dealership for a car," said Jessica Robinson, a department spokeswoman.

Usually the bartering works as a paper transaction, where the farmer gives an amount of corn or other product to a car dealership in exchange for a vehicle. Then the car dealer sells the corn to a grain elevator or another client to recoup the cost of the vehicle.

The farmers, in turn, don't need to pay state sales tax.

The "Corn for Cars" tax exemption is supported by the Missouri Corn Growers Association.

"We continue to lobby for the program because it provides some flexibility for our farmers in the purchase of their vehicles," said Fred Stemme, an association spokesman.

Robinson said she thinks it's already clear that someone who is not a farmer should not be allowed to use the process to avoid paying sales tax.

House Tax Policy Committee Chairman Shannon Cooper sponsored the new language aimed at correcting what he called "the vagueness of the law."

The new language "says you must raise the grain or livestock to get the tax break," said Cooper, R-Clinton.