LR 8225
Taxability of Purchases by Government Contractors
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 letter dated November 7, 2022.
The facts as presented in your letter ruling request and subsequent phone call are summarized as follows:
Applicant has a Form 149, Sales and Use Tax Exemption Certificate, completed by a Government Contractor for work done under a government contract, listing the reason for exemption as "Other: purchases on behalf of the U.S. Government." Applicant then presents this exemption form to vendors for purchases of materials that are then used in their work for the Government Contractor. Some of Applicant's vendors have refused to accept this form, and have suggested alternative ways to complete the form.
ISSUE:
Are Applicant's purchases of materials that are used in their work with the Government Contractor exempt from taxation?
RESPONSE:
No. Applicant's purchases of materials that are used in their work with the Government Contractor are not exempt from taxation.
Section 144.020, RSMo, imposes a sales tax on the privilege of making retail sales of tangible personal property or providing certain taxable services in this state.
Sales to the U.S. Government are exempt from sales tax under section 144.030.1, RSMo, because they are "retail sale[s] which the State of Missouri is prohibited from taxing pursuant to the Constitution or laws of the United States of America."
Here, Applicant is a subcontractor and is not making sales directly to the United States government, and Applicant does not purchase their items from vendors for the purpose of resale. Therefore, there is no provision of law that exempts Applicant's purchases of materials that are used to provide a service for a government contractor.
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 If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.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 J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford
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