The Missouri Court of Appeals, Eastern District, has rules that municipalities must comply with state sales tax assessment and notice procedures before filing suit to collect delinquent business license taxes. In City of Jefferson v. Sprint Communications Inc., the court denied the city’s attempt to collect allegedly underpaid municipal telecommunications license taxes because the city failed to follow procedural steps required under Missouri’s Sales Tax Law.
The City of Jefferson imposes a municipal license equal to 7% of gross receipts from local telecommunications services. After determining that several telecommunications providers had underreported and underpaid the tax, the city filed suit seeking delinquent taxes, interest, penalties, declaratory relief, and an accounting. The problem is that the city went straight to court without prior completion of the assessment and notice steps required under Missouri Law.
Missouri statute Section 71.625.2 states that the “limitation for bringing suit” to collect delinquent municipal license taxes is the same as under Missouri’s Sales Tax Law. The city argued that the language refers only to a time limit such as a statute of limitations, but the court disagreed. Instead, the court held that when local tax statute incorporates the Sales Tax Law, it also pulls in the procedure framework, including conducting an assessment and providing notice of that assessment to the taxpayer before filing suit. Although the city alleged it had conducted audits and assessments, they failed to show the court that the taxpayers were notified of those assessments or given an opportunity to respond prior to litigation.
The court also dismissed claims under Missouri’s telecommunications statute because municipalities don’t have standing under that provision and requests for an accounting, finding that normal tax assessment procedures already provide an adequate legal remedy. For taxpayers, the decision highlights the importance of reviewing whether jurisdictions have satisfied all statutory prerequisites before issuing demands or initiating suits.
(City of Jefferson v. Sprint Communications, Inc., Missouri Court of Appeals, Eastern District, December 2, 2025)