LR 8224
Taxability of Window Coverings
December 30, 2022
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 communication of November 1, 2022.
The facts as presented in your letter ruling request, along with research into your operations, are summarized as follows:
Applicant is an out-of-state business that sells and installs window coverings (such as blinds, shades, and shutters). All blinds that will be sold in Missouri will also be installed by the Applicant, as there will be no sales without installation or installations without a sale. The Applicant will not own, lease, or maintain real property in Missouri, but will travel from Arkansas to fill orders and perform installations.
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. The tax should be accrued at the rate imposed at the job site.
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 Nathan Jefferson, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford
WW:MAS:CRF:NJ:km
LR 8224