LR 8297
Taxability of Purchases Made Out of State
April 29, 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 February 28, 2024.
The facts as presented in your letter ruling request are summarized as follows:
Applicant has locations in Missouri and Illinois. Applicant takes orders from customers located in Missouri at Applicant's Illinois locations. Applicant is an HVAC distributor selling to contractors. Almost all of Applicant's sales are made on account. The orders taken in Illinois are approved and processed there and then delivered by Applicant's trucks to Missouri. Applicant's invoice states that title does not pass from vendor to vendee until payment is made in full.
ISSUE:
Are Applicant's sales of their products from Illinois to Missouri subject to Missouri sales tax?
RESPONSE:
Yes. Applicant's sales of their products from Illinois to Missouri are subject to Missouri sales tax.
Section 144.020.1, RSMo, imposes a sales tax "upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state."
Regulation 12 CSR 10-113.200(1) provides, "a sale of tangible personal property is subject to sales tax if title to or ownership of the property transfers in Missouri..."
All of Applicant's sales to Missouri customers are subject to Missouri sales tax because title to the products always transfers to Applicant when the products are delivered in Missouri. Title of the products then passes within Missouri from Applicant to Applicant's customers. Therefore, Applicant should collect and remit sales tax on sales that are dropped shipped by Applicant's supplier to customers in Missouri.
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 If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest, and penalties, which may be imposed prospectively from the date of the change.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 Senior Counsel J. Kent L. Brown, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford