LR5529

March 13, 2009

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020 in response to your letter dated January 21, 2009.

The facts as presented in your letter and a telephone conversation with Associate Counsel, Amy Bartolomucci are summarized as follows:

Applicant is a Missouri corporation that sells forklift trucks. Applicant sold a forklift truck to a customer, a Missouri corporation that manufactures aerospace supplies and parts, for the customer’s out-of-state facility to expand the customer’s operations. The terms of sale included F.O.B. destination to the St. Louis area. Applicant delivered the forklift truck to the St. Louis area where it was “cross docked” onto the customer’s truck for final delivery out-of-state. The truck is being used out-of-state and was never used in Missouri. Applicant’s customer did not pay taxes to Applicant claiming the purchase was exempt because the customer’s out-of-state operation was tax exempt. The customer also claimed that the transaction was in commerce because the forklift truck was merely inspected in Missouri and then loaded for shipment out-of-state.

ISSUE 1:

Is Applicant’s sale of the forklift truck to its customer subject to state and local sales tax unless otherwise exempt by a specific tax exemption?

RESPONSE 1:

Yes, Applicant’s sale of the forklift truck to its customer is subject to state and local sales tax unless otherwise exempt by a specific tax exemption.

Section 144.020.1 imposes a sales tax “upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state.”

12 CSR 10-113.200(1) provides, “a sale of tangible personal property is subject to sales tax if title to or ownership of the property transfers in Missouri unless the transaction is in commerce.”

12 CSR 10-113.200(2)(B) defines the term in commerce as “a transaction is in commerce if the order is approved outside Missouri and the tangible personal property is shipped from outside Missouri directly to the buyer in Missouri.”

Section 144.020 imposes a sales tax on the sale of tangible personal property in Missouri; however, sales tax is not imposed on transactions that are in commerce. The term in commerce is defined by regulation as a transaction where the order is approved outside Missouri and the property is shipped directly to the purchaser in Missouri from outside Missouri. Applicant is a Missouri business that sold a forklift truck to another Missouri business. The terms of sale included F.O.B. destination to the St. Louis area. Applicant delivered the truck to the St. Louis area where the customer took title to the truck. Therefore, Applicant’s sale of the forklift truck to its customer is subject to state and local sales tax unless otherwise exempt by a specific tax exemption.

ISSUE 2:

Is Applicant’s sale of the forklift truck to its customer for the expansion of the customer’s out-of-state facility and used in the manufacturing process exempt from state sales and use tax and local use tax?

RESPONSE 2:

Yes, Applicant’s sale of the forklift truck to its customer for the expansion of the customer’s out-of-state facility and used in the manufacturing process is exempt from state sales and use tax and local use tax, but not local sales tax.

Section 144.030.2(5), provides an exemption from state and local sales and use tax for

[M]achinery and equipment, and parts and the materials and supplies solely required for the installation or construction of such machinery and equipment, purchased and used to establish new or to expand existing manufacturing, mining or fabricating plants in the state if such machinery and equipment is used directly in manufacturing, mining or fabricating a product which is intended to be sold ultimately for final use or consumption.

Section 144.030.2(5) provides an exemption from state and local sales and use tax for machinery and equipment “purchased and used to establish new or to expand existing manufacturing, mining or fabricating plants in the state. . . .” Applicant’s customer is purchasing the forklift truck for manufacturing in another state, not in Missouri, so the customer cannot claim an exemption from state and local sales and use tax under Section 144.030.2(5).

Section 144.054.2 provides an exemption from state sales and use tax and local use tax, but not local sales tax, for “machinery, equipment, and materials used or consumed in the manufacturing, processing, compounding, mining, or producing of any product.”

Section 144.054 provides an exemption from state sales and use taxes and local use taxes, but not local sales tax, for machinery and equipment used or consumed in manufacturing. Applicant’s customer can claim an exemption under this section because it is not limited to manufacturing in Missouri. Applicant should collect and remit the local sales tax on its sale of a forklift truck because Section 144.054 only provides an exemption from state sales tax. Applicant’s customer should provide a Missouri exemption certificate, Form 149, to claim the exemption from state sales tax. Applicant cannot accept an exemption certificate from another state. Therefore, Applicant’s sale of the forklift truck to its customer for the expansion of the customer’s out-of-state facility is exempt from state sales and use tax and local use tax, but not local sales tax. A copy of a blank Form 149 is enclosed.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Associate Counsel Amy Bartolomucci, General Counsel’s Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.

Sincerely,

Karen King Mitchell