LR 8300
Taxability of the Rental of Portable Buildings
June 26, 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 March 25, 2024.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is a financing company collecting payments for Rent to Own contracts. Clients are dealers (“dealers”) located both inside and outside Missouri, that rent (with the option to purchase) portable buildings to their customers. Applicant provides financing via its Rent to Own lease contracts. Customers purchase the portable buildings from the dealer and the dealer finances the transaction via its Rent to Own contract. The Rental Purchase Agreement and Disclosures document provides: “renter does not own the leased property. Renter does not have any ownership rights in the leased property until renter has made the number of payments indicated herein.” “[R]isk of loss: If the leased property is lost, stolen, damaged or destroyed, the Renter is responsible for the leased property at the fair market value shown above.”
ISSUE 1:
What tax should be collected on sales where an in-state dealer rents a portable building to an in-state customer for delivery inside Missouri?
RESPONSE 1:
Sales tax should be collected where an in-state dealer rents a portable building to an in-state customer for delivery inside Missouri.
Section 144.020.1, RSMo, imposes a 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."
Section 144.020.1(8), RSMo, sets forth the amount charged for rental or lease of tangible personal property when the purchaser of the tangible personal property did not pay tax at the time of the purchase of the tangible personal property.
In this instance, an in-state dealer is renting the portable building to an customer, therefore sales tax should be collected on the rental payments.
ISSUE 2:
What tax should be collected on sales where an in-state dealer rents a portable building to an in-state customer for delivery outside Missouri?
RESPONSE 2:
No tax should be collected where an in-state dealer rents a portable building to an in-state customer for delivery outside Missouri.
See Response 1. Here the building is located outside Missouri and therefore is not subject to Missouri sales or use tax.
ISSUE 3:
What tax should be collected on sales where an out-of-state dealer rents a portable building to an in-state customer for delivery inside Missouri?
RESPONSE 3:
Use tax should be collected where an out-of-state dealer rents a portable building to an in-state customer for delivery inside Missouri.
Section 144.635, RSMo, imposes use tax on all sales made by out-of-state vendors where goods are shipped into Missouri. As an out-of-state dealer rents the portable building to an in-state customer, use tax must be collected on the rental by a dealer located outside Missouri for delivery to an address in Missouri.
However, if the portable building is in Missouri at the time of rental, Applicant should collect sales tax. 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 Senior Counsel, Kent L. Brown, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford