LR 8291
Taxability of Sales to Exempt Organizations
March 22, 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 January 24, 2024.
The facts as presented in your letter ruling request are summarized as follows:
Applicant has entered into written agreements with several organizations that hold exemption letters with Missouri as religious, charitable and/or educational institutions. Applicant works with the organizations to operate the food service programs, consisting of normal school cafeteria service, snacks and beverages dispensed from vending machines on the organizations' premises that are accessible only by students, staff and other school invitees, and special occasion function food service.
Applicant, as agent for each organization, collects monies paid by students and staff at the time of purchase of the meals and Applicant and the organizations share responsibility for determining the food to be served and the food and drink prices. The Applicant, as agent, deposits all monies collected from operation of the food service program into a separate bank account in the Organizations' name with Applicant shown as agent for the organization.
Applicant, as agent, orders from purveyors' foodstuffs and supplies for the Organization's food service program. The purveyors thereafter sell, invoice, deliver and convey title to such food stuffs and supplies directly to each organization. Since each organization purchases, holds legal title and physical possession and control of food stuffs, supplies and materials, any loss that may occur due to an event at the school would be the sole responsibility of the organization.
The fee structure may vary. In some agreements Applicant's fee is the sum remaining after paying all allowable expenses. In other agreements Applicant's fee is the sum remaining after paying all allowable expenses and a specified amount or a percentage of sales to the organization.
ISSUE 1:
Are Applicant's purchases of food and supplies necessary for the provision of meals for the organizations exempt from sales tax?
RESPONSE 1:
Yes. Applicant's purchases of food and supplies necessary for the provision of meals for the organizations are exempt from sales tax, so long as Applicants' organizations have a relevant exemption letter.
Section 144.030.2(19), RSMo, provides:
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.
Section 144.030.2(20), RSMo, provides an exemption for:
...all sales made by or to not-for-profit civic, social, service, or fraternal organizations...in their civic or chartable functions and activities...
Missouri Code of State Regulations CSR 10-110.955(3)(D) provides:
All sales made to or by any religious and charitable organizations and institutions in their religious, charitable or educational functions and activities are exempt from Tax. All sales by the same type of organizations and institutions of other states are exempt from tax providing such organizations and institutions are exempt from a similar tax in their own states.
Section 144.030.2(19), RSMo, provides an exemption for sales made to religious and charitable organizations in their religious, charitable, or educational functions and elementary and secondary schools. Applicant provides food services to various exempt organizations. According to the contractual agreements with the schools, Applicant is an agent acting on behalf of the schools. The food and supplies vendors invoice, deliver, and convey title to the food and supplies directly to the organizations. Based upon the contracts with the organizations, Applicant, as an agent, may purchase the food and supplies necessary for the provision of meals to the organizations exempt from Missouri sales tax. See Becker Electric Co. v. Director of Revenue, 749 S.W.2d 403 (Mo. banc 1988).
ISSUE 2:
Are Applicant's sales of their meals on behalf of the organizations exempt from sales tax?
RESPONSE 2:
Yes. Applicant's sales of their meals on behalf of the organizations are exempt from sales tax, so long as the organizations have an exemption letter.
See Response 1.
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
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