Tax penalty case transferred to Supreme Court

The Court of Appeals Western District says it’s up to the state Supreme Court to decide if a doughnut shop in St. Louis can suffer a tax penalty for failing to keep adequate financial records.

The Department of Revenue assessed the $1,715 penalty against Eddie’s South Town Donuts, which represented 5 percent of the approximately $34,000 the department alleges the business owed in unpaid sales taxes from 2011 to 2014.

The department said the penalty was due to the store’s having “displayed intentional disregard and negligence” by failing to verify the accuracy of its sales tax figures. According to the opinion, the business didn’t retain receipts of daily sales, and auditors said there were inconsistencies in the records it did keep.

In its June 9 opinion, the Western District transferred the case to the Missouri Supreme Court, which has exclusive appellate jurisdiction in all cases involving construction of state revenue laws. Because the definition of “negligence” in collecting sales tax “has not been provided by the General Assembly nor has it been defined by our Supreme Court, we lack jurisdiction to construe its meaning,” the court wrote.

The case is SEBA LLC v. Director of Revenue, WD83083.