LR 8186
Taxability of Interlock Devices and Interlock Service Fees
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 received by the Department on February 16, 2022.
The facts as presented in your letter ruling request and after a discussion with Senior Counsel Thomas A. Houdek are summarized as follows:
Applicant is an out-of-state corporation that installs alcohol ignition interlock devices (Device) into individuals' vehicles as mandated by the Missouri courts for intoxication-related traffic offenses. The Device is a breath-testing device connected to the vehicle's ignition that prevents the vehicle from operating if alcohol in the individual's breath exceeds concentration limits in the breath sample provided. Information stored in the Device includes, but is not limited to an event log, storing such data as test taken, alcohol concentrations, vehicle starts, and vehicle stops.
Applicant leases the Devices from a third party supplier. Applicant does not pay tax on the rental of the Devices from the third party supplier. Applicant then rents the Device to the individual required by the Missouri courts to install the Device in the individual's vehicle. Applicant charges the individual a monthly rental fee for the Device. Applicant does not sell the Device.
Applicant charges the individual for various services required to be performed on the Device. Those services are:
Installation Fee - Applicant charges the individual renting the Device a fee to install the Device in the individual's vehicle. The Installation Fee is separately stated on the invoice.
Monitoring Service Fee - the Monitoring Service includes downloading the information to a computer and then uploading the information contained on the Device to a database that is reviewed by the state agency required to review the testing information. The information downloaded includes, but is not limited to an event log, storing such data as test taken, alcohol concentrations, vehicle starts, and vehicle stops. When the Monitoring Service is performed, Applicant also recalibrates the Device. In the future, Applicant may charge a separate recalibration fee to the individual for recalibrating the Device.
The Monitoring Fee is separately stated on the invoice and is charged monthly. Individuals may rent the Device without the Monitoring service after the court mandated monitoring ends.
Removal Service Fee - Applicant charges the individual a fee for removing the Device from the individual's vehicle. The Removal Fee is separately stated on the invoice.
ISSUE 1:
Is Applicant's rental of the Device to the individual subject to Missouri state and local sales tax?
RESPONSE 1:
Yes. Applicant's rental of the Device to the individual is subject to Missouri state and local sales tax.
Section 144.020.1, RSMo, imposes a sales tax on sales of tangible personal property and certain enumerated services. Section 144.020.1(8), RSMo, provides:
A tax equivalent to four percent of the amount paid or charged for rental or lease of tangible personal property, provided that if the lessor or renter of any tangible personal property had previously purchased the property under the conditions of sale at retail or leased or rented the property and the tax was paid at the time of purchase, lease or rental, the lessor, sublessor, renter or subrenter shall not apply or collect the tax on the subsequent lease, sublease, rental or subrental receipts from that property.
When Applicant rents the Device from the third-party supplier, Applicant does not pay tax. Because Applicant does not pay tax on the Device rentals from the third-party supplier, Applicant's rental of the Devices to individuals are subject to Missouri state and local sales tax. Applicant must collect and remit Missouri state and local sales tax on its rentals of Devices to individuals.
ISSUE 2:
Are Applicant's installation, monitoring, and removal fees charged to individuals subject to Missouri state and local sales tax?
RESPONSE 2:
No. Applicant's installation, monitoring, and removal fees charged to individuals are not subject to Missouri state and local sales tax.
Section 144.020.1, RSMo, imposes a sales tax on sales of tangible personal property and certain enumerated services. Missouri Code of State Regulations 12 CSR 10-103.600(3)(A)(2) provides "[i]f the purchaser is not required to pay the service charge as part of the sale price of tangible personal property, the amount paid for the service is not subject to tax if the charge for such service is separately stated."
When Applicant charges individuals the installation, monitoring, and removal fees, Applicant separately states those charges on the invoices. As the fees are separately stated, the installation, monitoring, and removal fees are not subject to Missouri state and local sales tax.
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, (573)-751-0961.
Sincerely,
Wayne Wallingford