LR 8279
Taxability of the Sales of Tangible Personal Property by Out of State Seller
January 04, 2024
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 October 25, 2023.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is a building materials broker located in another state that sells materials wholesale to customers located in Missouri. The items sold are shipped from Applicant's location in another state to customers in Missouri through unrelated third-party carriers. Applicant does not have any physical locations or employees in Missouri.
For each sale to Missouri customers, Applicant receives resale certificates, sales tax exemption certificates, or similar exemption certificates.
ISSUE 1:
Is Applicant required to register and file with the Missouri Department of Revenue?
RESPONSE 1:
No. Applicant is not required to register and file with the Missouri Department of Revenue.
Section 144.605.14, RSMo, defines "Vendor" as "every person engaged in making sales of tangible personal property by mail order, by advertising, by agent or peddling tangible personal property, soliciting or taking orders for sales of tangible personal property, for storage, use or consumption in this state."
Section 144.650, RSMo, provides "[e]very vendor selling tangible personal property for storage, use or consumption in this state shall ... register with the director of revenue and give the names and addresses of all agents operating in this state, the location of all distribution or sales houses or offices or other places of business in this state and other information that the director of revenue requires."
Further, Section 144.655.1, RSMo, explains "[e]very vendor ... shall file with the director of revenue a return of all taxes collected ... showing the total sales price of the tangible personal property sold by the vendor, the storage, use or consumption of which is subject to the tax levied by this law, and other information the director of revenue deems necessary."
Applicant is a vendor that sells tangible personal property for storage, use or consumption in Missouri. However, Applicant is not required to register with the Missouri Department of Revenue unless Applicant exceeds the economic nexus threshold described in Response 2.
ISSUE 2:
Is Applicant liable for collecting Missouri use tax as a vendor pursuant to section 144.635, RSMo?
RESPONSE 2:
No. Applicant is not liable for collecting use tax as a vendor, as long as Applicant does not have a substantial nexus with Missouri.
Section 144.635, RSMo, provides "[e]very vendor making a sale of tangible personal property for the purpose of storage, use or consumption in this state shall collect from the purchaser an amount equal to the percentage on the sale price imposed by the sales tax law in section 144.020 and give the purchaser a receipt therefor."
Missouri Code of State Regulations 12 CSR 10-114.100 titled: Determining When a Vendor has Substantial Use Tax, provides guidance on when a vendor is liable for use tax pursuant to section 144.635, RSMo.
12 CSR 10-114.100(1) provides:
In general, an out-of-state vendor must register with the department, and collect and remit use tax when the vendor has substantial nexus with Missouri. Substantial nexus exists when the vendor has ... economic nexus in Missouri.
12 CSR 10-114.100.2(C) defines "Economic Nexus" as:
Selling tangible personal property for delivery into this state, provided the seller's gross receipts from taxable sales from delivery of tangible personal property into this state in the previous calendar year or current calendar year exceeds one hundred thousand dollars ($100,000).
12 CSR 10-114.100.4(A-B) provide relevant examples:
A) A taxpayer is located in Alabama. The taxpayer makes taxable sales of over one hundred thousand dollars ($100,000) into Missouri. The taxpayer has economic nexus and should register with the department and collect and remit use tax.
(B) A taxpayer is located in Indiana. The taxpayer makes less than one hundred thousand dollars ($100,000) of taxable sales into Missouri. The taxpayer has no other contacts with the state. The taxpayer is not required to collect Missouri tax.
Applicant will be liable to collect use tax as a vendor pursuant to section 144.635, RSMo, if they make over $100,000 of Missouri taxable sales in a calendar year. However, Applicant has stated that tax exemption certificates are received for each sale to a Missouri customer. Therefore, as long as Applicant does not exceed the threshold of taxable sales, Applicant does not need to collect and remit use 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 Legal Counsel Michael C. Reed General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford