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Supreme Court extends Sales Tax to Dance Classes

Posted by on Jan 16, 2016 in Local Government Concerns | 0 comments

Last week, the Missouri Supreme Court determined that dance classes were subject to state sales tax because they are fun, as well as educational. Will this open the door for taxing yoga classes or karate classes? And what does that mean for local governments who also impose sales taxes?

In the case, Miss Dianna’s School of Dance v. Director of Revenue (SC95102), the Supreme Court agreed with the State Director of Revenue and instructed the dance school to pay over $18,000 for past due sales taxes from 2007 to 2009. Under Missouri law, the state imposes a 4% sales tax on admission charges or fees paid to any place of amusement, entertainment or recreation, and the Director of Revenue determined that that tax included dance classes.

The state law has an exception for educational classes, and for years, Miss Dianna’s School claimed their classes were primarily educational, and therefore, not subject to tax. However, the Supreme Court decided that because fun and diversion were a substantial part of the dance classes, they were subject to tax under Missouri law. The Court looked at three factors, but the top consideration was how the company held itself out to the public. In Miss Dianna’s case, the school often advertised that their classes were “full of energy, fun and structure.” These words helped subject the school to the sales tax.

This case could bring significant changes to the businesses which will be required to collect sales taxes as part of their classes. The taekwondo dojang that advertises its classes as fun and focused could now be mandated to collect sales tax, and if it fails to do so, the Director of Revenue could impose fines and interest upon the amount that should be collected. Likewise for the yoga program that promotes itself as a relaxing method to live healthier.

Places of amusement have always been subject to this particular sales tax, but the new decision by the Supreme Court will require businesses to reconsider whether the programs they offer are solely educational, or if they have a component of fun and diversion. If they are fun, program managers should strongly consider whether they should start collecting sales taxes on their program fees.

Promissory Estoppel & the Statute of Frauds

Posted by on Mar 3, 2015 in Uncategorized | 0 comments

Missouri law includes a Statute of Frauds, which requires all transactions involving real estate to be made in writing.[1] The purpose of the statute is two-fold. First, it encourages the parties to take such agreements seriously by requiring them to formalize their agreement into writing. Second, the requirement ensures that there is good evidence relating to the transaction, because the sale of land is a significant exchange. A written agreement provides the greatest proof when a dispute arises.

However, shortly after the drafting of the Statute of Frauds, Missouri courts recognized that there are situations which need to be excepted from the written requirement of the statute. These exceptions fall into three broad categories: first, when it is necessary to prevent individuals from using the statute to defraud one of the parties; second, when the doctrine of promissory estoppel may be used to remove an oral contract from the statute’s written requirements; and finally, when there has been full or partial performance by one of the parties.[2] These three categories are closely linked, as most situations will trigger multiple concerns.

The doctrine of promissory estoppel can be used to enforce an agreement when one party has partially fulfilled their portion of the agreement. Specifically, promissory estoppel requires four elements: First, there must be a promise made between the parties. Second, one of the parties must rely on the promise to their detriment. Third, the non-relying party must have reasonably expected the other party to rely on the promise. Finally, there must be an injustice in allowing the non-relying party to escape from enforcement of the promise. The focus of promissory estoppel is that it would be unjust to allow one party to breach the oral contract after the other party has already fulfilled their portion of the agreement. Promissory estoppel is derived from the court’s equitable power to grant relief even when there may not be a written agreement.

In Missouri, an oral contract can be valid and enforceable, even if it would normally violate the Statute of Frauds, if one person has partially fulfilled their responsibility under the contract.[3] This approach recognizes that the second goal of the State of Frauds (providing good evidence of an agreement) can be met by showing that one party has acted to their detriment in reliance upon the contract. For example, if a party has already conveyed a portion of real estate, the court will consider that as strong evidence that an agreement existed, even if it was not made in writing. It also recognizes that Missouri courts possess great power in equity to craft remedies to address issues of significant injustice.



[1] RSMO § 432.010 (A contract for the sale of land is one among several types of contracts that must be made in writing under this statute.)

[2] Mika v Central Bank of Kansas City, 112 S.W.3d 82, 88 (Mo. App. W.D. 2003)

[3] Shumate v. Dugan, 934 S.W.2d 589, 592 (Mo. App. S.D. 1996)

Expenses of Probate Administration

Posted by on Feb 27, 2014 in Estate Planning | 0 comments

Many people do not realize that a Last Will & Testament must be probated by the court following their death. This process can be lengthy and often runs from at least six months up to several years before all of the property is finally distributed. Additionally, the process can incur significant fees that may deplete the estate’s assets. Careful planning in advance can help ensure that your assets will be distributed quickly and efficiently following your death.

Through the probate process, a personal representative or executor must be appointed to manage your estate while it is being probated. One of the first duties of the personal representative is to complete an inventory of the estate detailing every asset that is to be distributed. Then, the estate must publish notice in the newspaper announcing to any creditors that they may file a claim against your estate for any past due bills. After the publication, the estate must remain open for a minimum of six months to allow creditors time to file their claims. Once all of the claims are filed, the personal representative must determine which claims should be paid and which need not be. After the claims are paid, property may need to be liquidated if it cannot be distributed in its present form.

Although a good attorney can handle many of the details of the probate process, the personal representative or executor must still participate in reviewing and approving documents for the court. Because of the waiting periods and court schedule, most probate cases take approximately nine to fourteen months to resolve. However, large estates may take longer, while smaller estates may be completed in a more timely fashion.

In addition to the length of the process, many people are concerned with the expenses associated with probate administration. Along with court fees and publication costs, both the personal representative and estate attorney are entitled to a statutory percentage under Missouri law. This percentage is based upon the value of all of the assets of the estate that are involved in the probate process. An example of these fees is provided below:

Example 1 (Estate Value of $150,000)

 

Personal Representative Fee

Estate Attorney Fee

For the first $5,000 (5%)

$250

$250

For the next $20,000 (4%)

$800

$800

For the next $75,000 (3%)

$2,250

$2,250

For the next $300,000 (2.75%)

$1,375

$1,375

Total Fees:

$4,675

$4,675

Total Fees Paid by Estate:

$9,350

In Example 1, an estate of $150,000 in assets is a reasonably modest estate. It may include a house, a vehicle or two, a small pension or other bank accounts and miscellaneous person property. However, the fees paid during the administration of such a modest estate quickly become rather substantial during the probate process. And of course, in larger estates, the expenses of probate administration can become even higher.

Although there are some benefits to probate administration, many people prefer to utilize other methods to distribute their property to save the time and money of their heirs. If you would prefer to have your assets distributed without the hassle of the probate process, you should discuss your wishes with your attorney. He or she can provide you with valuable insights and help you ensure that your property will be distributed following your wishes in the most efficient way possible.

Sunshine Law & the Tentative Agenda

Posted by on Dec 4, 2013 in Uncategorized | 0 comments

Sunshine Law & the Tentative Agenda

Allowing citizens to participate in government is one of the fundamental principles of democracy. The Missouri Sunshine law outlines standards for governmental agencies to ensure that they open their information to the general public. One of those standards requires agencies to provide notice of their upcoming meetings so that the public can attend. And the law outlines specific requirements for those notices that ensure the public has certain details about the upcoming meeting.

Before each meeting, a public agency must post a notice of the meeting that provides the date, time and place of the upcoming meeting. If local news agencies have requested notice of the meetings, the agency should send copies of the notice to those news outlets. The notice should also be posted in a public place at the agency’s primary business location, or at the location where the meeting is held.

In addition to the above details, the notice of the meeting should include a tentative agenda to be followed by the public body. There is nothing in the statute that limits the agency’s ability to alter or add to the tentative agenda at the actual meeting itself, as the law only requires a tentative agenda. Some public agencies begin their meetings by offering the opportunity for members to add items to the agenda. Although publishing every item to be discussed is certainly a best practice, agencies are not prevented from adding items by law.

The notice for the meeting must be posted at least twenty-four hours before the scheduled meeting, unless an emergency situation dictates otherwise. In the event of such an emergency, the agency should take care to note the emergency in the meeting minutes, so that there is a clear record of what events prevented the posting of the notice in advance.

Complying with the Missouri Sunshine law not only protects the public agency from lawsuits, but it also ensures that the citizens of the community have a fair opportunity to participate in the business of our government. And since citizen participation is one of the founding principles of the United States democracy, it is certainly a goal worth putting a little extra time into pursuing.

Closing County Roads in Missouri

Posted by on Nov 7, 2013 in Agricultural & Farming Issues, Local Government Concerns | 0 comments

Missouri county roads are the lifeline of the local community in many ways. They allow goods and merchandise to be transported to and from the local residents and businesses. They also provide avenues that help connect friends and family for weekend visits and holidays. And they provide the daily backbone of travel to and from work and entertainment that brings together our homes with the outside world.

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County roads also place a large responsibility on the local government to manage and maintain often hundreds of miles of paved, gravel or dirt roads. Occasionally, those roads that best suited one generation become less important, or even and unnecessary burden years later. County roads that fall out of public use can be vacated, or released from government control in two ways. The Missouri statutes provide a formal process to vacate a county road (RSMO § 228.110), as well as the option to vacate a road simply through non-use (RSMO § 228.190).

The more formal process begins when twelve local citizens petition the County Commission to order that the road be vacated. The petition must be presented and read by the commission on the first day of the term, which may be the first Monday in January, April, July or October. Notice of the petition must be posted in three public places for a period of twenty days, and all persons whose lands are crossed or touched by the road must be served with a copy of the petition. Finally, the petition must be read again on the first day of the next term of the County Commission, and this reading is generally followed by a hearing held by the commission.

This process is designed to give landowners, and others interested in using the county road, an opportunity to be heard and participate in the decision making process. Because closing a road can have significant effects upon those whose land borders the road, they must receive direct notice through service of a petition. Others may learn of the request by reading the notices posted in public places. Those who may disagree with the vacation of the roadway should have an opportunity to protest and be a part of the discussion before the County Commission.

The second method for vacating a roadway is based upon the failure of the public to use the roadway. When a county road has been abandoned for an extended period of time, the law presumes that the road is no longer a public roadway. In the State of Missouri, this period must be no less than five years. However, the abandonment by the public must be clear, and even infrequent or intermittent use by members of the public is sufficient to defeat a claim of abandonment. The state law has a strong presumption against abandonment of public roadways, so the petitioner has a heavy burden in showing that the county road has been abandoned. However, if abandonment can be proven, there is no need for a formal petition to be heard by the County Commission.

Roadways are a vital asset of the community. But, for neighboring property owners, and for the citizens that pay taxes, roads that are rarely used or poorly maintained do little to assist anyone. The laws of the State of Missouri allow such roads to be closed and for the land to revert back to the appropriate landowners when it is clear that the road will no longer be used for public use.

 

Impeachments for Mayors & City Councils

Posted by on Nov 5, 2013 in Local Government Concerns | 0 comments

Impeachments for Mayors & City Councils

Our system of government provides many checks and balances to ensure that no one individual can amass too much authority. One of those important checks allows a legislative body to impeach elected officials who may step outside their bounds. For city councils, they may occasionally be faced with mayor or alderman who continuously goes beyond their authority in taking actions on behalf of the city. Or they may have to deal with an elected official who disregards the law and is causing a disruption to the city operation.

It is clear that Missouri law provides only one method to remove a member of the Board of Alderman from office: Impeachment. RSMO § 79.240 allows the mayor, or a member of the Board of Aldermen, to be removed from office with the consent of two-thirds vote of all members of the board. The removal must be based upon “cause shown,” which Missouri courts have interpreted to include any legally sufficient ground or reason for the impeachment.[1] The reason should relate to, or effect, the administration of the office and be related to the rights and interests of the public. Such reasons could include an act of improperly performing his duty, exceeding his authority or failing to fulfill his responsibilities.[2]

Any process for impeachment should afford the mayor, or other official, notice of the allegations made against him and the opportunity to be heard. These are the basic due process rights that are protected by both our state and federal constitutions. Because of these requirements, the standard practice for impeaching an elected official includes two steps. First, the governing body adopts the Articles of Impeachment which outlines the accusations made against the offending official. Then, an impeachment hearing is scheduled. Both steps of this process would be open to the public under the Missouri Sunshine Law.

At the impeachment hearing, the agency’s attorney presents the case for impeachment to the governing body, while the official may be represented by private counsel. Witnesses and other evidence can be adduced in the same manner as would occur at a trial, and it is then up to the Board of Alderman to consider the impeachment evidence. At the conclusion of the evidence, the governing body votes upon the Articles of Impeachment. In the case of a municipality, a two-thirds vote is required upon at least one article to result in an impeachment. In the event an official is impeached, he or she may appeal the matter for review in circuit court.

Of course, the impeachment process can be an expensive burden upon the city, as well as an embarrassing affair for all those involved. Aldermen and mayors would do well to be cautioned against using impeachment in all but the most extreme circumstances. Although censures and formal reprimands have little actual force, they can often be effective in bringing a problem to the attention of others, and possibly, allowing the removal of an officer to be done through the next election, rather than an impeachment hearing.



[1] Boyer v. City of Potosi, 77 S.W.3d 62, 71 (Mo. App. E.D. 2002), citing Fitzgerald v. City of Maryland Heights, 796 S.W.2d 52, 56 (Mo. App. 1990).

[2] Id. See also McCallister v. Priest, 422 S.W.2d 650, 657 (Mo. banc 1968).

Orders, Resolutions & Ordinances

Posted by on Oct 19, 2013 in Local Government Concerns | 0 comments

Orders, Resolutions & Ordinances

Local governments in Missouri always act through the council or board that makes decisions for the local community. This can include decisions ranging from hiring a new staff member, recognizing retiring staff members, purchasing a police vehicle, creating a law against public nuisances,  or entering multi-million dollar contracts that bind the agency and its taxpayers for years to come. Since the only way a governmental body can act is through the deliberate process of the council or board, every action requires some method for making those decisions. Depending on the importance of the decision being made, there are different levels of formality given to each decision.

The most common and basic action of a local government may be taken through motions or orders entered in the minutes of the organization. The decisions are made with very little formality, but always include the votes of those present. Many times, votes may even be taken by voice vote, or a simple call for yeas and nays.  Frequently, organizations use these common methods to approve the hiring of a new staff member or approving minor purchases.

Technically, under Missouri law, a resolution is no different than an order or motion. However, in every day practice, resolutions often given the semblance of a greater formality to decisions made regarding special occasions. City governments frequently use resolutions to recognize individuals or community groups for their commitment to bettering their local community. Resolutions may also be used to provide direction to agency employees, or to express the opinion of the governing body on a particular issue.

For city governments that have mayor’s who possess the power to veto actions, orders, motions and resolutions are considered to be administrative, simply giving direction to the agency. Orders may be used to call a special election, and resolutions may be used to direct employees to carry out certain actions. Unlike ordinances, orders and resolutions are not considered law, but they instead direct the everyday business of the local community. And, because they are not ordinances, orders and resolutions are not subject to the mayor’s approval or veto.

The most formal mode of action to be taken by a governmental body is the passing and approval of an ordinance. A duly passed ordinance carries with it the full force of law in the State of Missouri. Violations of an ordinance can be prosecuted in the city court, for which the punishment can include fines and even limited imprisonment. Ordinances must be passed by the majority vote of the governing body, and in cities of the Third and Fourth Class, the ordinance must be approved, or vetoed, by the Mayor.

Understanding when each method of decision-making is appropriate can be a tricky task. For most actions taken by local government agencies, there is little direction given on what type of action is required. Generally, motions and orders can accomplish most common decision faced by a local government agency, and ordinances can be reserved for those decisions that face long term consequences.  Where certain actions or decisions require an ordinance, that requirement is most often outlined by state statute. Failure to follow the requirements of the state statute often result in courts determining that the decision was invalid because it was not properly made.

Missouri Park Boards & City Government

Posted by on Sep 16, 2013 in Local Government Concerns | 0 comments

One of the greatest resources any city government has is the employees and staff that help operate the community programs. Next in line, the natural resources and recreational spaces available help bring a spirit of peace and sense of community in shared spaces. Missouri law helps guide local communities in working together to create excellent parks and recreational facilities that work to bring the community together, and the local park board can be a bit asset in making that effort a success.

The Missouri Statutes allow for the creation of a park board to manage the city’s parks and money collected as part of the park fund. This park fund is made up of taxes paid in under the city park tax and any donations or gifts made to the Park Board. The Park Board is given exclusive control over the monies in the park fund under Missouri Statute RSMO § 90.550. However, this control does not diminish the oversight of the Board of Aldermen in setting the vision for the city’s parks and recreational programs.

The Board of Aldermen or City Council has some direct control on the actions of the Park Board. Members of the Park Board are appointed by the Mayor, with the council’s consent. Each member serves a three year term, and the statute provides for nine initial members. The Park Board then elects its own president and other officers as they designate through the board’s by-laws. The Park Board must provide a report to the council each year, on or before the first Monday in June, and members may be removed by the Mayor for misconduct or neglect of duty.

The by-laws of any park board may establish various officers and committees that will function under the authority and direction of the board. The most common officers include a President, Vice-President, Secretary & Treasurer. Committees can be formed for a variety of purposes, depending on the specific needs of the local community. Members of the committees are appointed by the President of the Park Board and the committees are to make written reports to the Park Board.

The creation of a park board does not take authority away from the Board of Aldermen, including the authority to buy or sell property that has been designated as a city park. Collins v. Vernon, 512 S.W.2d 470, 476 (Mo. App. 1974). The duties of the park board are considered administrative duties only. Id. The Board of Aldermen retains the power to enact any and all ordinances as necessary for the good government of the city, including those necessary to oversee the operations of the city’s parks and recreation programs. RSMO § 79.110.

Although the Missouri Statutes give control of the monies deposited in the park fund to the Park Board, it is reasonable to assume that the Board of Alderman or City Council retains the authority to direct the actions and expenditures of the Park Board by ordinance or by regulating their proposed budget. As the Park Board is administrative only, it is still left to the Board of Aldermen to make discretionary decisions regarding the future of the city parks & programs. Ideally, the Board of Aldermen and the city Park Board will work together to complement each other and bring out the best in the recreational programs of the local community.

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Missouri Park Boards help facilitate the wonderful parks and recreational programs that are available in many communities, both large and small, throughout the State of Missouri.

Eminent Domain & Heritage Value

Posted by on Sep 13, 2013 in Agricultural & Farming Issues, Local Government Concerns | 2 comments

Most citizens are aware that the government is empowered to take land or property under certain circumstances. The court actions that arise in these situations are referred to as eminent domain. Both the United States Constitution and the Constitution of the State of Missouri require that the property owner receive “just compensation” when the government decides to use eminent domain to take their property. Most commonly, these situations arise in building new roads or seeking easements for new utility lines.

But for many Missourians, a fair market value wouldn’t do justice to the investment they have in their family farm. For some of those farmers, their families’ land has been passed down through multiple generations, and that bond between the family and the farm cannot be adequately reflected in an appraised value. That’s one of the reasons the Missouri Legislature created a special “heritage value” consideration in determining “just compensation.”

When the state government begins the process of taking property that has been owned by the same family for fifty years or longer, that family is entitled to a payment including the “heritage value” under RSMO § 523.039(3). This statute provides that the amount of just compensation is determined by taking the fair market value and increasing it by an additional fifty percent. So, a landowner is entitled to a final payment that equals 150% of the fair market value of the property.

In a case that goes to trial, the jury must first decide the fair value of the property by considering evidence from many sources, often including experts testifying about the appraised value. It is then left to the judge to increase the amount determined by the jury so that the landowner receives the just compensation which she is entitled to.

As with many court actions, the process can be complicated and seem daunting to those without advanced legal training. When anyone is involved in the process of an eminent domain action, it is usually best to seek the advice of an attorney who can help make sure that the landowner receives the full amount she deserves.

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Get Involved in Local Government!

Posted by on Aug 5, 2013 in Local Government Concerns | 0 comments

Get Involved in Local Government!

It feels great to be an American on the Fourth of July when we can sit back and watch the fireworks blast away. And there’s something special about that moment before the sports game when 100,000 fans stand together for the National Anthem. In times like that we can feel a connection between our sense of citizenship today and the vision of our Founding Fathers so many years ago.

When the words “We the People of the United States of America” were first penned to the page, most of those individuals participating in that room had recently risked their lives for the liberty they cherished. They recognized that freedom and liberty would be best preserved by placing the power of the government into the hands of the People.

Today, we do not have to risk our lives to participate in the organized system of democracy that makes up our American government. But in a similar way, participating and protecting our democracy does take our attention and commitment at various times. Sometimes that means showing up at the polls on election day to cast our vote. And sometimes that may mean sacrificing an evening to participate in a city council or school board meeting.

Our modern world loves to criticize the work of government, but many of the activities that affect our everyday lives are controlled by decisions made by our neighbors and friends. The city streets that we use to get to work, the school bus that picks up our children, and the water that comes from our kitchen tap are all examples of the handiwork of our local government in action. And those who serve on the councils or boards that help make that happen may be the same individuals that we know from the grocery store or Sunday church service.

The next time you meet someone who serves in our local government system, take the time to thank them for helping make democracy work in America. Without them, we wouldn’t have many of the great conveniences that government brings to our everyday lives. And, while you’re visiting with them about their service to our communities, maybe you could also consider whether you’d be willing to make a similar commitment to democracy some day in the future.