Big lesson for a small municipality: $1.2 million penalty for failure to file annual financial statements

A small Missouri municipality, with a population of less than 200, has been assessed a $1.2 million fine for failing to file annual financial reports for seven consecutive years. Under Section 105.145 RSMo, Missouri municipalities are required to file annual financial statements with the State Auditor’s Office, and noncompliance carries a penalty of $500 per day. The statute authorizes the Director of Revenue (DOR) to recover fines for failure to file financial statements by withholding a city’s sales tax revenue. This past August, HB 199 was passed in the Missouri Senate, allowing the possibility for DOR to reduce accumulated fines once all delinquent financial statements are filed, offering some relief to municipalities that miss deadlines.

Nevertheless, this should serve as a reminder to other municipalities to prioritize the timely submission of their annual financial statements to avoid substantial fines. Municipalities can use the Missouri State Auditor’s portal to check the status of their current financial report.