LR 8263
Taxability of Sales Made Online by a Non-Profit Marketplace Facilitator
July 31, 2023
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 June 7, 2023.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is a California based 26 USC section 501(c)(3) nonprofit organization ("501(c)(3) organization(s)") and marketplace facilitator. Applicant provides a marketplace platform exclusively to members of similar 501(c)(3) organizations. Applicant's revenue is inclusive of their own sales as a seller on the platform as well as fees collected from third-party sellers for use of the platform.
On the platform, the third-party sellers create listings and conduct auctions of donated merchandise. Buyers may place bids on listed items or purchase the items outright. The sales primarily consist of used consumer goods or donated items. All proceeds from sales on the marketplace platform go toward the mission of the member 501(c)(3) organizations.
As states adopted marketplace facilitator laws across the United States, Applicant registered and began collecting Missouri vendors use tax for all marketplace sales effective January 1, 2020.
ISSUE 1:
Are the sales on Applicant's marketplace platform exempt from use tax?
RESPONSE 1:
Yes. Sales on Applicant's marketplace platform are exempt from use tax.
Section 144.752, RSMo, provides the definition of Marketplace facilitator:
(1) "Marketplace facilitator," a person that:
(a) Facilitates a retail sale by a marketplace seller by listing or advertising for sale by the marketplace seller, in any forum, tangible personal property or services that are subject to tax under this chapter;
Applicant facilitates retail sales of tangible personal property in Missouri through the use of their marketplace platform.
Additionally, Section 144.752.2(1), RSMo, provides:
(1) Beginning January 1, 2023, marketplace facilitators that engage in business activities within this state shall register with the department to collect and remit use tax, as applicable, on sales made through the marketplace facilitator's marketplace by or on behalf of a marketplace seller that are delivered into the state, whether by the marketplace facilitator or another person, and regardless of whether the marketplace seller for whom sales are facilitated possesses a retail sales license or would have been required to collect use tax had the sale not been facilitated by the marketplace facilitator. Such retail sales shall include those made directly by the marketplace facilitator and shall also include those retail sales made by marketplace sellers through the marketplace facilitator's marketplace. The collection and reporting requirements of this subsection shall not apply to retail sales other than those made through a marketplace facilitator's marketplace. Nothing in this section shall be construed to limit or prohibit the ability of a marketplace facilitator and a marketplace seller to enter into agreements regarding the fulfillment of the requirements of this chapter.
Because the Applicant meets the definition of a marketplace facilitator, they must collect and remit use tax, as applicable, on sales made through their platform.
However, Applicant's marketplace is facilitating sales on behalf of 501(c)(3) organizations as part of their charitable activities.
Section 144.615.3, RSMo, specifically exempts from use tax:
Tangible personal property, the sale or other transfer of which, if made in this state, would be exempt from or not subject to the Missouri sales tax pursuant to the provisions of subsection 2 of section 144.030.
Section 144.030.2(19), RSMo, exempts from sales tax,
All sales made by or to religious and charitable organizations and institutions in their religious, charitable or educational functions and activities and all sales made by or to all elementary and secondary schools operated at public expense in their educational functions and activities
Since Applicant is facilitating sales for charitable organizations in their charitable capacity, they are exempt from use tax pursuant to section 144.615.3, RSMo's, inclusion of applicable sales tax exemptions.
ISSUE 2:
If Applicant's sales through its marketplace facilitator are exempt from tax, are they required to register with Missouri as a Marketplace Facilitator?
RESPONSE 2:
No. Applicant is not required to register with the Missouri Department of Revenue as a marketplace facilitator.
Although Applicant meets the definition of marketplace facilitator pursuant to section 144.752.1, RSMo, and section 144.752.2, RSMo, in this situation, Applicant is not required to register with the department, because they will not be remitting tax due to the exempt nature of the 501(c)(3) organizations.
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