LR 8116
Taxability of Shoes Ordered Via Online Internet Sales
September 25, 2020
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 July 22, 2020 and in a conversation you had with Senior Counsel Thomas A. Houdek.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is a retail store with multiple retail locations in Missouri as well as an online sale presence. Applicant is registered with the Department and is required to collect and remit Missouri sales tax on its retail sales in Missouri. Applicant's online sales are new and all online orders ship from its warehouse located outside Missouri to the customer's location. Applicant's online sales orders are processed in its offices outside Missouri.
ISSUE 1:
Are Applicant's online sales that are shipped from Applicant's warehouse located outside Missouri subject to Missouri state and local sales tax?
RESPONSE 1:
No. Applicant's online sales that are shipped from Applicant's warehouse located outside Missouri are not subject to Missouri state and local sales tax.
Section 144.020.1, RSMo, provides that "[a] tax is hereby levied and imposed 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."
While Applicant has multiple retail locations in Missouri, Applicant's online sales are not subject to Missouri sales tax because the online orders placed with Applicant are processed in its offices outside Missouri and shipped directly to the customer from applicant's warehouse that is not located in Missouri. Applicant's online sales are not retail sales that occur within the state of Missouri. Therefore, Applicant's online sales that are shipped from Applicant's warehouse located outside Missouri are not subject to Missouri state and local sales tax.
ISSUE 2:
Are Applicant's online sales that are shipped from Applicant's warehouse located outside Missouri subject to Missouri state and local vendor's use tax?
RESPONSE 2:
Yes. Applicant's online sales that are shipped from Applicant's warehouse located outside Missouri subject to Missouri state and local vendor's use tax.
Section 144.610.1, RSMo, provides "[a] tax is imposed for the privilege of storing, using or consuming within this state any article of tangible personal property." Section 144.605(14), RSMo, defines "Vendor" as:
every person engaged in making sales of tangible personal property by mail order, by advertising, by agent or peddling tangible personal property, soliciting or taking orders for sales of tangible personal property, for storage, use or consumption in this state, all salesmen, solicitors, hawkers, representatives, consignees, peddlers or canvassers, as agents of the dealers, distributors, consignors, supervisors, principals or employers under whom they operate or from whom they obtain the tangible personal property sold by them, and every person who maintains a place of business in this state, maintains a stock of goods in this state, or engages in business activities within this state and every person who engages in this state in the business of acting as a selling agent for persons not otherwise vendors as defined in this subdivision. Irrespective of whether they are making sales on their own behalf or on behalf of the dealers, distributors, consignors, supervisors, principals or employers, they must be regarded as vendors and the dealers, distributors, consignors, supervisors, principals or employers must
be regarded as vendors for the purposes of sections 144.600 to 144.745.
Section 144.635, RSMo, provides:
Every vendor making a sale of tangible personal property for the purpose of storage, use or consumption in this state shall collect from the purchaser an amount equal to the percentage on the sale price imposed by the sales tax law in section 144.020 and give the purchaser a receipt therefor. The required amount of the tax collected by the vendor from the purchaser shall be shown separately upon the sales slip or other evidence of sale.
Missouri Code of State Regulations 12 CSR 10-113.200(1) provides:
If a sale is not subject to Missouri sales tax but the property is stored, used or consumed in Missouri, the transaction is subject to use tax. If the transaction is subject to use tax and the seller has nexus with Missouri, the seller must collect the tax at the time of the sale and remit it to the department.
Missouri Code of State Regulations 12 CSR 10-113.200(2)(a) defines "Nexus" as "contact with the state sufficient under the United States Constitution to allow the state to exercise its power to tax."
Applicant has various retail locations in the state of Missouri and based upon these locations, Applicant qualifies as a Vendor and has Nexus with the state of Missouri. Therefore, Applicant's online sales processed at its office outside Missouri and shipped directly to its customer from its warehouse outside Missouri is subject to Missouri state and local use tax. Applicant is required to collect and remit Missouri state and local use tax to Missouri and file a Missouri vendor's use tax return with Missouri.
When Applicant collects and remits use tax on its online sales, Applicant shall collect and remit Missouri state and local use tax to the Department based upon each Missouri customers' location in Missouri. Applicant shall report on its vendor's use tax return each location in Missouri Applicant ships an online sale and remit the state and local use tax imposed for each location Applicant reports on its vendor's use tax return.
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 Senior Counsel Thomas A. Houdek, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.
Sincerely,
Ken Zellers