LR 8285
Taxability of Items Sold at Online Auction
January 25, 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 December 5, 2023.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is an online no reserve auctioneer and sales platform specializing in construction, agricultural, and fleet assets. Applicant has one location, which is in Kansas. It operates, however, in a number of states, including Missouri. Auction items are sold from their location, which could be any state where Applicant operates. Applicant charges a "10% buyer's premium" based on the winning bid for all sales, including sales inside Missouri. In consideration for payment of that premium, Applicant provides a variety of services to both the buyer and the seller that creates a less risky sale across a wider marketplace than if each were to engage in a purchase without the aid of Applicant.
ISSUE 1:
Must Applicant collect and remit state and local sales tax on the "buyer's premium" for sales of tangible personal property inside the state of Missouri?
RESPONSE 1:
Yes. Applicant does have to collect and remit applicable state and local sales tax on the "buyer's premium" for sales of tangible personal property inside the state of Missouri.
Section 144.020, RSMo, imposes a sales tax on the retail sales of tangible personal property. Section 144.070.2, RSMo, states that the purchase price is the entire amount of the contract agreed upon to complete the acquisition of the vehicle, regardless of medium of payment. Section 144.605(8), RSMo, further makes the price for labor or services related to the sale of tangible personal property part of the sales price.
Applicant charges a "buyer's premium" of 10% of all winning bids. The buyer's premium is intended by all parties to be part of the sales transaction. The seller chooses the services of Applicant in order to secure payment for the property being sold, there can be no sale without payment of the premium. Because of these factors, the buyer's premium is part of the sales price.
Applicant should remit sales tax for property pursuant to section 144.020, RSMo, and all applicable Missouri statutes and regulations.
ISSUE 2:
Must Applicant collect and remit state and local sales tax on the "buyer's premium" for sales of property that is titled inside the state of Missouri?
RESPONSE 2:
No. Applicant does not have to collect and remit applicable state and local sales tax on the buyer's premium for sales of property that is titled, such as motor vehicles, trailers, and boats inside the state of Missouri.
Section 144.020, RSMo, imposes a tax on the titling of certain vehicles and boats. Section 144.020(9), RSMo, states that vehicles subject to a titling tax have the tax "imposed on the person titling such property." The purchasers of the property will be responsible for paying the tax when they title the property pursuant to section 144.020(9), RSMo.
ISSUE 3:
Is the buyer's premium part of the purchase price for a piece of property titled in Missouri, and should it be reflected on the title as part of the purchase price?
RESPONSE 3:
The buyer's premium is part of the purchase price for a piece of titled property (see Response 1). Because the buyer's premium is part of the purchase price for a piece of titled property, it should be reflected on the title as part of the purchase price.
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 Associate Counsel J. Ross Shelton General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford