LR 8184
HVAC/Plumbing Installation and Repair Services not Subject to Sales Tax
March 25, 2022
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 31, 2022.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is an HVAC & Plumbing company located in Arkansas. Applicant provides services for the maintenance, repair, and installation of HVAC/Plumbing Equipment. Applicant's employees travel to Missouri to service their customer base inside the state. Applicant purchases its materials and equipment in the state of Arkansas. Applicant does not pay sales tax for those materials and equipment purchased in the state of Arkansas.
ISSUE 1:
Should Applicant be charging sales tax to Missouri customers?
RESPONSE 1:
No. Applicant should not be charging sales tax to its Missouri customers.
Section 144.020.1, RSMo provides "[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." Tangible personal property used by Applicant in the provisions of its services to customers are annexed to real property and become part of that real property. See Buchholz Mortuaries, Inc. v. Director of Revenue 113 S.W.3d 192, 193 (Mo. banc 2003). Applicant neither sells personal property to its customers nor renders a taxable service. Therefore, Applicant should not be charging sales tax to Missouri customers.
ISSUE 2:
Should Applicant be paying Missouri consumer's use tax on its cost of parts and materials used in jobs in the state of Missouri?
RESPONSE 2:
Yes. Applicant should be paying consumer's use tax on its cost of parts and materials used in jobs in the state of Missouri. "A contractor is the final user and consumer of the materials and supplies used and consumed in fulfilling a construction contract and which become part of a completed real property improvement." 12 CSR 10-112.010. In relevant part, under section 144.610.1, RSMo, "[a use] tax is imposed for the privilege of storing, using or consuming within this state any article of tangible personal property." Therefore, Applicant is required to pay use tax on its cost of parts and materials used in jobs in the state of Missouri.
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 Legal Counsel Stephen S. Krogmeier, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, (573)-751-0961.
Sincerely,
Wayne Wallingford