Out-of-state contractors and sub-contractors
A Department of Revenue task force recently completed a report that verified that an increasing number of out-of-state contractors and sub-contractors are working on construction projects in Missouri but are failing to properly withhold taxes from the wages of their employees. As a result, out-of-state employees return home and never pay Missouri income tax. Out-of-state workers would owe Missouri income tax if they earn more than $600 per year in Missouri. At the average pay rate for construction workers, it would take only three days to exceed that filing requirement.

As a result of the task force recommendations, the DOR has implemented procedures to ensure that companies operating in Missouri comply with their withholding tax requirements. When the department determines that a company is not complying, it will immediately utilize all of the tools currently at its disposal, up to and including obtaining a court order to stop work on the project. Additionally, the department is undertaking measures to increase cooperation among state and federal agencies concerned with this issue, including the Internal Revenue Service, the Missouri Department of Labor and Industrial Relations, and local authorities issuing building permits. The department is also exploring the possibility of seeking legislation requiring owners and prime contractors that contract with out of state contractors to withhold 2 percent of payments to ensure compliance with Missouri withholding laws.

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...back to 23 September 2004

Further information:
www.dor.mo.gov/news/2004/EpAVkVVZ.htm