Sales Tax Return Adjustments

An adjustment is something that you may deduct from or add to your gross receipts. Detailed records of all adjustments must be retained in your records, in case you are audited. Adjustments and exemptions are subject to be changed by state legislation.

The following is a listing of the types of items that may be sold by you that can be deducted from your gross receipts:

• Items purchased from you that will be resold by your customer.
• Sales of motor fuel subject to excise tax. This does not include motor fuel consumed in operating your business.
• Feed for livestock. This includes all feed for cattle, calves, sheep, swine, ratite birds, including but not limited to, ostrich and emu, aquatic products, elk documented as obtained from a legal source and not from the wild, goats, horses, other equine and rabbits.
• Economic poisons, pesticides or herbicides which are to be used in connection with the production of crops, fruit or orchards, aquaculture, livestock, and poultry.
• Components or ingredients of products manufactured, processed, compounded, mined, produced, or fabricated.
• Materials, replacement parts and equipment purchased for direct use on motor vehicles, boats/vessels, railroad rolling stock, or aircraft engaged as common carriers. This adjustment does not apply to contract carriers.
• Replacement machinery and equipment used directly in manufacturing, mining, fabricating, or producing a product.
• Machinery and equipment purchased to establish or expand an existing manufacturing, mining or fabricating plant in this state.
• Newsprint, ink, computers, photosensitive paper and film, toner, printing plates and other machinery, equipment, replacement parts and supplies used in producing newspapers published for dissemination of news to the general public.
• Air pollution equipment that has been certified as exempt by the Department of Natural Resources. The purchaser should present an exemption letter issued by the Department of Revenue.
• Water pollution equipment that has been certified as exempt by the Department of Natural Resources. An exemption letter is issued by the Department of Revenue should be presented by the purchaser.
• Tangible personal property purchased by a rural water district.
• All sales of metered water, electricity, electrical current, natural, artificial or propane gas, wood, coal or home heating oil used for domestic use. Utilities used in your normal business operations cannot be claimed under this adjustment.
• Fuel consumed or used in operation of ships, barges or waterborne vessels which are used for the transportation of property or person on navigable rivers bordering on or located in part of the state of Missouri.
• All sales of barges.
• Electrical energy of gas (natural, artificial, or propane) used in connection with the manufacturing of cellular glass.
• Property directly used in the research and development of prescription pharmaceuticals for humans and/or animals.
• Grain bins for storage of grain for resale.
• Feed used in the feedings of pets by a commercial breeder. The commercial breeder must present their Missouri Pet Breeders card at the time of purchase.
• Purchase of materials used by contractors fulfilling a contract for the purpose of construction, repairing or remodeling facilities for qualifying exempt entities. This does not include construction machinery, equipment or tools used in the project. A project exemption certificate and a copy of the exempt organization's exemption letter should be obtained from the contractor. You will be able to tell whether or not the contractor qualifies for this deduction by reading the organization's exemption letter.
• Medical items such as insulin, prosthetic or orthopedic devices, hearing aids and hearing aid supplies, prescription drugs, medical oxygen, home respiratory equipment and accessories, hospital beds and accessories and ambulatory aides, manual and powered wheelchairs, stairway life's, Braille writers and electronic Braille equipment.
• All sales of scooters, reading machines, electronic print enlargers, and magnifiers, electronic alternative and augmentative communications devices when purchased by or on behalf of a person with one or more physical or mental disabilities to enable them to function more independently.
• Items used solely to modify motor vehicles to permit the use of such motor vehicles by individuals with disabilities.
• Sales of over-the-counter or non-prescription drugs for individuals with disabilities.
• Purchase of electrical energy used in manufacturing, processing, compounding, mining or producing of a product. An “electrical energy direct pay” exemption letter should be presented before this exemption is granted.
• Purchase of electrical energy used by a material recovery processing plant. An “electrical energy direct pay” exemption letter should be presented before this exemption is granted.
• All purchases by businesses issued a “Missouri direct pay” exemption letter.
• Forty percent of the purchase price of a new manufactured home.
• Sales of used mobile homes on which Missouri sales tax was paid on the original sale.
• Trade-in allowances given at time of purchase of merchandise, except mobile homes.
• Sales shipped outside the state of Missouri. Title or ownership of this merchandise must not take place within this state.
• Room fees collected from persons considered to be a permanent resident of a hotel. The accommodations must be contracted in advance for a period of 30 consecutive days or more.
• Amounts allowed for cash or trade discounts.
• Separately stated labor charges, not to include labor that is part of the production cost.
• Delivery freight and transportation charges separately stated and not intended to be part of the sale.
• Parts purchased to repair motor vehicles that are intended for resale. The dealer registration number should be presented at time of purchase.
• Store coupons redeemed. Manufacturer or third-party coupons, for which you will be reimbursed, cannot be deducted.
• Farm machinery and equipment if used exclusively and directly for the production of crops or livestock, fish or poultry or of producing milk for sale at retail. A listing of usually exempt and usually taxable items may be found in 12 CSR 10-110.900.
• Personal property tax reimbursement charges on lease/rental, when separately stated or billed.
• Sales to the following organizations are exempt from sales tax:
  • Religious and charitable organizations and institutions. (Examples would include churches, seminaries, American Red Cross, American Cancer Society, and Diabetes Foundation)
  • Elementary and secondary schools operated at public expenses.
  • Civic, social, service, or fraternal organizations. This exemption can be granted only when the organization is purchasing items in the civic or charitable functions. (Example: A fraternal organization has a fundraiser and gives all the proceeds to a local homeless shelter. All items for this fundraiser can be purchased tax exempt.) This exemption may not be used to purchase items tax free for the general operation of these organizations, such as utilities, maintenance materials, etc.
  • Private not-for-profit institutions of higher education.
  • Private not-for-profit elementary or secondary schools.
  • State agencies, cities, counties, townships, and districts. (Examples include water, school, ambulance, library, road, nursing homes, and hospital.)
  • Copies of the exemption letters issued to the organization claiming exemption must be provided at the time of sale. Copies of these exemption letters should be kept for at least three years.
• Sales to the Federal Government.
• Missouri cigarette tax collected on the sale of cigarettes.
• Sales to diplomatic and consular personnel. The person is required to present an official exemption identification card issued by the United States Department of State.
• Purchases by State Senators and/or Representatives. Their exemption letter must be provided at the time of purchase.
• Purchases made with Federal Food Stamps or W.I.C. (Women, Infants, and Children) vouchers.
• All sales of lottery tickets.
• Sales of bullion and investment coins.
• Export sales. Generally, a sale is an export sale if the seller ships the merchandise by common carrier, contract carrier, or the seller's vehicle, and IF title passes to the purchaser when or after the merchandise is loaded onto the vehicle or carrier. If the purchaser gains title in Missouri, it is not an export sale even if the purchaser subsequently takes the merchandise out of state.

The following are the positive adjustments to be added to your gross receipts:

• Items purchased from a Missouri supplier for resale but used by you.

Example: You are in the business of selling stereos. You take a stereo off the shelf and take it home for your personal use. The retail price of this stereo is $300. The actual cost when purchased by your business was only $200. You would owe tax on the cost of the stereo ($200), not the retail price ($300). The tax rate used would be the rate in effect, at that business location, at the time the stereo was removed from inventory.

• You should self-assess consumer's use tax on items purchased for resale from an out-of-state supplier but used by you. This should be reported on your Form 53U-1, Use Tax Return