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Bill Summary · HB 3539

Overview

Missouri House Bill 3539 (HB 3539), introduced in the 2026 session, seeks to modify how motor fuel tax exemptions and refunds are administered for motor fuel used to propel motor vehicles on highways. The bill would repeal current law and enact a new framework that shifts the basis for exemptions/refunds from a fiscal-year approach to a tax-year approach beginning in 2027, and it expands or clarifies the methods by which taxpayers may claim the exemption and refund.

Main purpose and intent

  • Repeal and replace existing Section 142.822 to reorganize the motor fuel tax exemption and refund process.
  • Transition from a fiscal-year basis (through fiscal year 2026) to a tax-year basis starting in 2027.
  • Provide taxpayers with two avenues to claim the exemption and refund: a receipt-based method or a standard refund, with the latter offered as an option tied to Missouri income tax filings.
  • Establish specific dollar amounts for the standard refund for certain years, with increases over time.
  • Ensure refunds are funded from the proceeds of an increased tax under subsection 3 of Section 142.803, and subject to available tax revenue.

Key provisions and changes

  • Coverage: Exemption applies to motor fuel used to propel motor vehicles on highways.
  • Basis of exemption/refund:
    • For 2026, refunds/exemptions are computed on a fiscal-year basis (continuing the current framework through FY2026).
    • Beginning in 2027, exemptions/refunds are based on the tax year of fuel consumption.
  • Claim methods (two tracks): 1) Receipt-based exemption/refund:
    • Requires a written, perjury-verified statement detailing total fuel tax paid for the applicable tax year for each vehicle.
    • Claims may be filed electronically and must include vehicle VIN, sale date, purchaser/seller names and addresses, gallons purchased, and gallons taxed at Missouri rate.
    • Filing window: after January 1, but before April 15 following the close of the tax year; no transfer/assignment allowed; eligibility verified by the Department. 2) Standard refund (claimed with Missouri income tax return):
    • Filed as part of the individual income tax filing, either as an immediate refund or as a credit against Missouri income tax liability (chapter 143).
    • Claimant cannot pursue the receipt-based refund for the same tax year.
    • The standard refund is a flat amount schedule:
      • 2026: $30
      • 2027: $45
      • 2028: $60
      • 2029 and thereafter: $75 per tax year
    • Requires a Department of Revenue form and can be submitted with the income tax return (or electronically).
    • The form must collect specific information, including vehicle ownership details and verification of eligible purchases.
  • Funding and limits:
    • Exemption/refund payments are funded from the proceeds of an additional motor fuel tax under subsection 3 of Section 142.803.
    • Refunds cannot exceed the tax collected in the relevant tax year; if claimed refunds exceed tax collected, they are paid in the order the claims were filed.
    • The section includes audit provisions and allows the Department to verify qualifications.
  • Recordkeeping and administration:
    • Taxpayers must maintain records for three years to substantiate claims, including invoices and receipts.
    • The Director has broad authority to investigate claims before and after issuance.
    • If a refund is not issued within 45 days of a complete filing, interest accrues at the rate specified in section 32.065 until payment.
  • Vehicle eligibility:
    • The exemption/refund applies only to motor fuel delivered into motor vehicles with a gross weight of 26,000 pounds or less.
  • Rulemaking:
    • The Director of Revenue is authorized to promulgate rules necessary to implement the provisions, with standard administrative-law protections and nonseverability of rules under Missouri law.

Who is affected

  • Missouri taxpayers who use motor fuel for on-highway vehicles (gasoline/diesel in cars, trucks, etc., up to 26,000 pounds gross vehicle weight) and pay the motor fuel tax under subsection 3 of Section 142.803.
  • Vehicle owners and operators who may claim the exemption/refund via either the receipt-based method or the standard tax-return method beginning in 2027.
  • Taxpayers who previously relied on a FY-based process will transition to a tax-year basis, affecting timing of when refunds/exemptions are claimed and paid.
  • Missouri Department of Revenue and relevant mechanics of enforcement and audits.

Procedural and timeline aspects

  • Effective transition:
    • Fiscal year 2026 remains under the current fiscal-year framework for claims.
    • Starting in 2027, claims will be based on the tax year; partial-year 2026 taxes (July 1, 2026–December 31, 2026) are to be reported under the new framework as applicable.
  • Claim windows:
    • Receipt-based claims: July 1 to September 30 following the fiscal year (for fiscal-year basis) and January 1 to April 15 following the tax year (for the tax-year basis).
    • Standard refund claims: January 15 to April 15 following the tax year.
  • Refund priority and limitations:
    • If total claimed refunds exceed tax collected for the year, refunds are paid in filing order until funds run out.
    • All refunds drawn from the additional motor fuel tax proceeds under Section 142.803(3).
  • Audits and compliance:
    • The Department may audit claims; recordkeeping requirements apply for three years post-claim.

Summary conclusion

HB 3539 modernizes and streamlines the motor fuel tax exemption/refund process in Missouri by shifting from a fiscal-year basis to a tax-year basis starting in 2027, offering taxpayers a choice between a receipt-based refund or a standard refund (claimed with the income tax return). It sets explicit dollar amounts for the standard refund in future years, clarifies filing and information requirements, and ties funding to an increased motor fuel tax revenue source. The bill retains audit and administrative safeguards and imposes recordkeeping obligations on claimants.

Compiled from official sources — confirm details with the bill’s official record.

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