Navigating the Complexities of Missouri's Food Pantry Tax Credit

For the third consecutive year, taxpayers claiming Missouri's food pantry tax credit have faced challenges in receiving the full value of their claims. The credit, designed to incentivize charitable donations to food pantries, homeless shelters, and soup kitchens, has been subject to a cap that has resulted in taxpayers receiving only a portion of the credit they claimed. This article delves into the intricacies of the credit, the impact on taxpayers, and the legislative efforts to address the issue.

Uncovering the Limitations of Missouri's Food Pantry Tax Credit

The Capped Credit and Its Consequences

The food pantry tax credit in Missouri allows taxpayers to claim up to ,500 for 50% of their qualifying donations to food pantries, homeless shelters, and soup kitchens. However, the credit is capped at .75 million annually. This year, the total claims exceeded the cap, resulting in taxpayers receiving only 87.8% of the amount they claimed. The disallowance notice also stated that taxpayers would be responsible for the difference, plus interest and penalties on the unused portion.

The Apportionment Dilemma

This is not the first time taxpayers have faced this issue. In the previous two years, less than 75% of each individual credit claim was allowed. The Department of Revenue spokesperson, Anne Marie Moy, explained that the law creating the credit does not provide provisions to waive interest and penalties due to the apportionment of the food pantry tax credit. The interest is statutory and cannot be waived, leaving taxpayers to bear the additional financial burden.

The Champion for Children Tax Credit Conundrum

The food pantry tax credit is not the only credit that has been subject to apportionment. The champion for children tax credit, which helps agencies that support children involved in court cases or family crises, has also been apportioned in the past. The cap on this credit was million in fiscal 2019 and has since been increased to .25 million.

Legislative Efforts to Address the Issue

State Representative Brenda Shields, a Republican from St. Joseph, introduced a bill this year to stop the interest and penalties until a taxpayer has been given a chance to pay or make arrangements to cover the difference. Shields was surprised to learn that people who thought they had paid in full were receiving bills with interest and penalties. Her bill would give taxpayers a grace period of 60 days after receiving the disallowance notice to pay the balance or make arrangements to do so.

The Broader Landscape of Missouri's Tax Credits

The food pantry tax credit is one of about a dozen credits in Missouri that encourage charitable donations to organizations that promote adoptions, help victims of domestic violence, provide diapers and food for people in poverty, and perform other tasks that lawmakers wish to support. These credits generally offer a 50% or more deduction for donations, which can be used by the donor to offset their own state taxes.

The Carryover Provision and Its Limitations

If a portion of the credit cannot be claimed in the year it is issued, the remainder can be carried over for up to three years. However, this does not exempt the taxpayer from interest and penalties on the unused portion. For a return that claimed the maximum credit of ,500, the allowed amount would have been ,195, leaving a remainder of 5. If this 5 was not paid when the return was filed, the initial charge of interest and penalties would be .35.

The Impact on Charitable Giving

Representative Shields expressed concern that the interest and penalties associated with the apportionment of the food pantry tax credit could discourage people from contributing to local food pantries. Many donors to these organizations are individuals who have themselves used the free groceries to feed their families, and the additional financial burden may be a deterrent to their continued support.