Cities must follow new procedures before filing delinquent license tax lawsuits

Recently, the Eastern District Court of Appeals upheld the dismissal of a city’s delinquent license tax petition against several telecommunications companies because the City failed to provide notice of an assessment of delinquent license taxes before filing suit. City of Jefferson v. Sprint Commc'n., et al., 730 S.W.3d 157 (Mo. App. E.D. 2025). Cities typically bring delinquent license tax actions under § 71.625 RSMo. In this case, the court held that certain language in that statute “broadly incorporates the Sales Tax Law’s process prior to bringing suit, which routinely requires an assessment and notice of additional taxes due.” As a result, a city must now assess any delinquent taxes it believes are owed and provide notice of that assessment to the business before filing suit to collect delinquent license taxes.

Other procedures from the Sales Tax Law may also apply. For example, in a typical delinquent sales tax case, a taxpayer may appeal an assessment to the Administrative Hearing Commission (AHC), and the losing party may then seek judicial review of the AHC’s decision. The court of appeals declined to decide whether those additional Sales Tax Law procedures apply in delinquent license tax cases. Accordingly, if your city is considering a delinquent license tax action, it should conduct an assessment and provide notice of that assessment before filing suit. Cities should also remain mindful that other Sales Tax Law procedures may apply.