CODE OF STATE REGULATIONS 1 Rebecca McDowell Cook (10/31/00) Secretary of State Rules of Department of Revenue Division 10—Director of Revenue Chapter 4–State Use Tax Title Page 12 CSR 10-4.005 Purchaser Includes .............................................................................5 12 CSR 10-4.010 Purchaser’s Responsibilities...................................................................5 12 CSR 10-4.015 Sale Consummation ............................................................................5 12 CSR 10-4.020 Delivery ..........................................................................................5 12 CSR 10-4.025 Guideline for When Title Passes (Rescinded January 12, 1987) .......................6 12 CSR 10-4.030 Delivery Charges (Rescinded May 9, 1994) ...............................................6 12 CSR 10-4.035 Consideration Other Than Money ...........................................................6 12 CSR 10-4.040 Delivery Expenses to Purchaser (Rescinded April 9, 1994) ............................6 12 CSR 10-4.045 Cancelled Sales .................................................................................6 12 CSR 10-4.050 Cost of Doing Business ........................................................................7 12 CSR 10-4.055 Regulations Under Section 144.020, RSMo ...............................................7 12 CSR 10-4.060 Vendor Includes .................................................................................7 12 CSR 10-4.070 Use Tax License Necessary ...................................................................7 12 CSR 10-4.075 Sales to Contractors ............................................................................7 12 CSR 10-4.080 Sales to National Banks and Other Financial Institutions................................7 12 CSR 10-4.085 Liability of Out-of-State Vendors ............................................................8 12 CSR 10-4.090 Regulations Under Subdivisions (2) and (3) of Sections 144.030 and 144.040, RSMo ...............................................................................8 12 CSR 10-4.095 Motor Vehicle Purchased ......................................................................8 12 CSR 10-4.100 Tax Paid to Another State .....................................................................8 12 CSR 10-4.105 Resale .............................................................................................8
Transcript
CODE OF STATE REGULATIONS 1Rebecca McDowell Cook (10/31/00)Secretary of State
Rules of
Department of RevenueDivision 10—Director of Revenue
Chapter 4–State Use Tax
Title Page
12 CSR 10-4.005 Purchaser Includes .............................................................................5
12 CSR 10-4.050 Cost of Doing Business........................................................................7
12 CSR 10-4.055 Regulations Under Section 144.020, RSMo ...............................................7
12 CSR 10-4.060 Vendor Includes .................................................................................7
12 CSR 10-4.070 Use Tax License Necessary...................................................................7
12 CSR 10-4.075 Sales to Contractors ............................................................................7
12 CSR 10-4.080 Sales to National Banks and Other Financial Institutions................................7
12 CSR 10-4.085 Liability of Out-of-State Vendors ............................................................8
12 CSR 10-4.090 Regulations Under Subdivisions (2) and (3) of Sections 144.030 and144.040, RSMo ...............................................................................8
12 CSR 10-4.095 Motor Vehicle Purchased......................................................................8
12 CSR 10-4.100 Tax Paid to Another State .....................................................................8
12 CSR 10-4.632 Certificate of Deposit—Use Tax ............................................................18
12 CSR 10-4.634 Delivery, Freight and Transportation Charges—Use Tax...............................24
Title 12—DEPARTMENT OFREVENUE
Division 10—Director of RevenueChapter 4—State Use Tax
12 CSR 10-4.005 Purchaser Includes
PURPOSE: This rule aids in determiningwho is a purchaser and interprets and appliessections 144.605(5) and 144.610, RSMo.
(1) A person who is a purchaser of tangiblepersonal property for use, storage or con-sumption includes not only persons whoacquire title to or ownership of the propertybut also persons who acquire the right to use,consume or store the property to which title,ownership or right was acquired through asale. Therefore, a bailee, lessee or borroweror person having the right to use, store orconsume is subject to the use tax.
PURPOSE: This rule is intended to aid indefining a purchaser’s responsibilities forstate use taxes and interprets and applies sec-tions 144.610 and 144.620, RSMo.
(1) When a person has delivered an exemp-tion certificate to an out-of-state vendor andthe person delivering the exemption certifi-cate uses the tangible personal property in amanner other than that indicated on theexemption certificate, then the person deliv-ering the exemption certificate is subject tothe use tax on the value of the tangible per-sonal property at the time it is converted touse.
(2) When a person purchases tangible per-sonal property outside Missouri upon whichthe Missouri use tax has not been imposed,that person is subject to the use tax on thepurchase price of the tangible personal prop-erty, unless the tangible personal property ispurchased for resale.
(A) Example: A veterinarian, Dr. Horse,located in Jefferson City, Missouri, purchas-es chemicals and supplies from two (2) com-panies, “C” and “D”. Companies “C” and“D” are both located in Chicago, Illinois anddo all their business strictly by mail order.During calendar year 1973, Dr. Horse pur-
chased one thousand dollars ($1000) worth ofmerchandise from each company. Company“C” is registered with the MissouriDepartment of Revenue for the payment ofuse tax and should collect and remit the usetax on Dr. Horses’s purchases. Company“D” does not file a return with Missouri andDr. Horse must file a return showing theamount of purchase from Company “D” andpay the use tax on those purchases.
Southwestern Bell Telephone Co. v. Morris,345 SW2d 62 (1961). A compensating use taxsuch as the one now under scrutiny has beenaptly characterized as a levy on the privilegeof using, within the taxing state, propertypurchased outside the state, if the propertywould have been subject to the sales tax hadit been purchased at home. It seems to be uni-versally considered that the use tax and salestax laws are complimentary and supplemen-tary to each other.
Pryor Executive Planes, Inc. v. Director ofRevenue, Case No. RS-82-0463, (A.H.C.8/6/87). The Administrative HearingCommission examined the case under144.615(6), RSMo which limits the resaleexemption to goods held by 1) retailers, 2)solely for resale, and 3) in the regular courseof business. As a retailer whose regular busi-ness was the sale of aircraft, petitioner mettwo prongs of the test. Petitioner failed tomeet the second requirement because peti-tioner chartered the aircraft, rented the air-craft to its shareholders and depreciated theaircraft for income tax purposes. The com-mission stated these uses were inconsistentwith petitioner’s holding of aircraft solely forresale, and instead constituted use or con-sumption sufficient to subject the acquisitionof the aircraft to use tax.
12 CSR 10-4.015 Sale Consummation
PURPOSE: This rule aids in determiningwhen a sale takes place and interprets andapplies section 144.605(5), RSMo.
(1) A sale takes place at the time the tangiblepersonal property is delivered to the Missouripurchaser for the purpose of consuming, stor-ing or using, when the property has finallycome to rest in this state or when commin-
gled with general mass of properties of thisstate. The place of sale is the place of deliv-ery of the property to the purchaser, user,storer or consumer, whether the delivery bemade by the vendor, the United States mail orcommon carrier.
(2) In addition to the delivery requirement, asale is considered consummated when theownership of or title to tangible personalproperty is transferred from the vendor to thepurchaser or buyer. In transactions where thepurchaser acquires possession of property butthe title is retained by the vendor, the saletakes place when the possession of the goodstransfers to the purchaser.
Director of Revenue v. Superior AircraftLeasing Co., Inc., No. 68857 (Mo. banc7/14/87). The Missouri Supreme Court over-ruled the line of cases applying the old tax-able moment doctrine in L & L MarineService and Management Services andadopted the four-part test of Complete AutoTransit, 430 U.S. 274, 97 S. Ct. 1076(1977).
The state’s right to tax interstate commerceis limited, however, and no state tax may besustained unless the tax: 1) has a substantialnexus with the state; 2) is fairly apportioned;3) does not discriminate against interstatecommerce; and 4) is fairly related to the ser-vices provided by the state.
Here, even though the plane was hangaredand repairs, if needed, were made in Dayton,Ohio, there were contacts with Missouri suf-ficient to create a substantial nexus. The tax-payer could use Missouri courts to enforceresolutions arising from its board meetings.The court concluded also that the use taximposed was also fairly apportioned.Missouri statutes allow credits for taxes paidto another state; however, Superior Aircrafthad not paid sales or use tax to any otherstate and even if it had done so Missouri hasa system of tax credit for taxes paid in otherstates.
Finally, the court concluded that there wasno discrimination since interstate andintrastate commerce are equally burdened.
12 CSR 10-4.020 Delivery
PURPOSE: This rule indicates the effectdelivery has on when and where a sale occurs
CODE OF STATE REGULATIONS 5Rebecca McDowell Cook (10/31/00)Secretary of State
Chapter 4—State Use Tax 12 CSR 10-4
and interprets and applies sections144.605(5) and 144.615(5), RSMo.
(1) If a purchaser takes possession of proper-ty in another state him/herself, Missouri usetax would not apply provided similar taxeswere imposed on the sale by another stateequal to or in excess of the taxable rateimposed under the Missouri Use Tax Act.For the purposes of this Act, the date andplace of the sale is determined by the deliv-ery of the property into the purchaser’s pos-session.
(2) All types of sales, bailments, loans, con-ditional sales, installment and credit saleswill make the purchaser subject to the use taxwhere there is an acquisition of title to, orownership of, tangible personal property or aright gained by consideration paid or to bepaid to use, consume or store the property.
(3) The provisions as to the time and place ofconditional sales are the same as those appli-cable to other types of sales, except bail-ments. The vendor, where conditional salestransactions are involved, must report andpay the full amount of the use tax as deter-mined by the full amount of the sales price ofthe property sold under the conditional saletransaction.
(4) Example: The Tiny Construction Com-pany located in St. Louis, Missouri purchas-es a basic earthmover tractor for one hundredninety thousand dollars ($190,000) in EastSt. Louis, Illinois from the Big TractorCompany. Big Tractor Company delivers thetractor to St. Louis, Missouri. Big TractorCompany is to be registered with the Mis-souri Department of Revenue and is to collectand remit Missouri use tax in the amount offive thousand seven hundred dollars ($5700).
Director of Revenue v. Superior AircraftLeasing Co., Inc., No. 68857 (Mo. banc7/14/87). The Missouri Supreme Court over-ruled the line of cases applying the old tax-able moment doctrine in L & L MarineService and Management Services andadopted the four-part test of Complete AutoTransit, 430 U.S. 274, 97 S. Ct. 1076(1977).
The state’s right to tax interstate commerceis limited, however, and no state tax may besustained unless the tax: 1) has a substantial
nexus with the state; 2) is fairly apportioned;3) does not discriminate against interstatecommerce; and 4) is fairly related to the ser-vices provided by the state.
Here, even though the plane was hangaredand repairs, if needed, were made in Dayton,Ohio, there were contacts with Missouri suf-ficient to create a substantial nexus. The tax-payer could use Missouri courts to enforceresolutions arising from its board meetings.The court concluded also that the use taximposed was also fairly apportioned.Missouri statutes allow credits for taxes paidto another state; however, Superior Aircrafthad not paid sales or use tax to any otherstate and even if it had done so Missouri hasa system of tax credit for taxes paid in otherstates.
Finally, the court concluded that there wasno discrimination since interstate andintrastate commerce are equally burdened.
Therefore, under the test prescribed inComplete Auto Transit, the court held thatthe imposition of Missouri use tax was per-missible under the Commerce Clause of theUnited States Constitution.
12 CSR 10-4.025 Guideline for WhenTitle Passes(Rescinded January 12, 1987)
PURPOSE: This rule interprets and appliessection 144.605(5), RSMo. State use taxesapply to the fair market value of propertyexchanged.
(1) The term sale is defined to include theexchange of properties whether in moneys orany other valuable consideration. Use tax islevied on the consideration paid or chargedfor the exchange of tangible personal proper-
ty or taxable services, including the fair mar-ket value of the property at the time and placeof the exchange. Consequently, a sale mayexist whether moneys have been exchanged ornot, as long as there is a valuable considera-tion.
Weather Guard, Inc. v. Director of Revenue,746 SW2d 657 (Mo. App. 1988). The courtcited King. v. National Super Markets, Inc.,653 SW2d 220 (Mo. banc 1983), which heldthat when the cost of paper sacks was fac-tored into the price for which goods weresold, that constituted a resale under section144.615(6), RSMo. The court opined thatbecause the customers paid sales tax on theincreased cost of insulation, there was no lossof revenue, and to impose a use tax on theinsulation blowing machines to the whole-saler of the insulation would amount to dou-ble taxation.
12 CSR 10-4.040 Delivery Expenses toPurchaser(Rescinded April 9, 1994)
PURPOSE: This rule indicates what a tax-payer may do when a sale is subsequentlycancelled and interprets and applies sections136.035 and 144.130, RSMo.
(1) Where a contract for sale has been can-celled within ninety (90) days of the date ofdelivery to the purchaser, a vendor of tangi-ble personal property or services may excludethose receipts or charges from his/her returnif the sale has not been reported.
(2) Where the use tax has been reported andpaid, an application for refund/credit for thetax paid upon such receipt or charge shall befiled within two (2) years from the date thetax was paid.
AUTHORITY: section 144.705, RSMo 1994.*U.T. regulation 605-9 originally filed Oct.
6 CODE OF STATE REGULATIONS (10/31/00) Rebecca McDowell CookSecretary of State
12 CSR 10-4—REVENUE Division 10—Director of Revenue
PURPOSE: This rule interprets and appliessection 144.605(6), RSMo. Deductions arenot allowed for costs of doing business.
(1) The factor for determining whether laborcharges are taxable is, if they become a partof or are incorporated into the agreed pur-chase or selling price of the property. Nodeductions are allowed the vendor for laborwhich is part of the production cost of anyproperty which is to be sold at retail. Thecosts of doing business, such as raw materi-als consumed and labor to assemble, underno circumstances are deductible.
Management Services, Inc. v. Spradling,547 SW2d 466 (Mo. banc 1977). Changes forout-of-state laboratory services were not inci-dental to film production and were thereforenot subject to use tax.
King v. L & L Marine Service, Inc., 647SW2d 524 (Mo. banc 1983). Use tax is a levyon the privilege of using within the taxingstate, property purchased outside the state, ifthe property would have been taxable if pur-chased at home.
12 CSR 10-4.060 Vendor Includes
PURPOSE: This rule indicates what the def-inition of vendor also includes and interpretsand applies section 144.605(11), RSMo.
(1) A vendor also includes bailors, lendersand other persons who sell for a considera-tion the right to use, store or consume tangi-ble personal property through a sale.
PURPOSE: This rule indicates when a usetax license is required and interprets andapplies section 144.650, RSMo.
(1) Persons going into business in Missouri,as stated in section 144.610, RSMo, mustregister with the sales tax bureau and have intheir possession a use tax license beforebeginning business in Missouri.
PURPOSE: This rule aids in the determina-tion of who is a contractor and the Missouriuse tax requirements of the contractor,his/her suppliers and vendors, and interpretsand applies section 144.605(4), RSMo.
(1) The term contractor includes, but is notlimited to, general contractors, prime con-tractors, subcontractors, road contractors,cost-plus contractors and specialized contrac-tors. More specifically, a contractor meansany person entering into an agreement toimprove, renovate, repair, replace, erect oralter real estate. They are not classified asretailers in that they do not generally main-tain a place of business where stock of tangi-ble personal property is sold at retail to thepublic, other than materials kept on hand foruse in the fulfillment of their contracts.
(2) Where use tax is involved, the outstatesupplier or vendor of building materials or
other items is required to collect Missouri usetax from the contractor unless the contractortakes delivery outside Missouri when thematerials are used, consumed or stored andcommingled with the mass properties of thisstate. When the out-of-state supplier fails todo so, the director of revenue will hold thecontractor liable and will require him to remituse tax directly to the Department ofRevenue. A contractor is considered a con-sumer of tangible personal property pur-chased by him/her for the purpose of fulfill-ing his/her contract. Contractors who pur-chase tangible personal property from out-of-state vendors for storage, use or consump-tion, therefore, must register with the salestax bureau, obtain a use tax license and remitconsumer’s use tax to the Department ofRevenue on all such purchases.
(3) Contractors cannot purchase materialsused to fulfill their contracts under a resaleexemption certificate when the materials areto become commingled with real estate asthis does not constitute a sale for resale.When a general or prime contractor subcon-tracts work to a subcontractor, the subcon-tractor becomes liable to remit consumer’suse tax on all materials purchased from out-of-state vendors for use in the fulfillment ofthe contract.
12 CSR 10-4.080 Sales to National Banksand Other Financial Institutions
PURPOSE: This rule indicates the liability ofsellers of tangible personal property tonational banks and other financial institu-tions for Missouri state use tax and interpretsand applies section 144.615(1), RSMo.
(1) Persons selling tangible personal propertyor taxable services to national banks, otherbanks, credit unions or credit institutions, andsavings and loan associations, whether stateor otherwise, are subject to and liable for theuse tax. Federal Reserve Banks and federalLand Banks are not subject to the use tax.
CODE OF STATE REGULATIONS 7Rebecca McDowell Cook (10/31/00)Secretary of State
Chapter 4—State Use Tax 12 CSR 10-4
12 CSR 10-4.085 Liability of Out-of-StateVendors
PURPOSE: This rule indicates the duties andresponsibilities of out-of-state vendors forMissouri state use taxes and interprets andapplies sections 144.620 and 144.635,RSMo.
(1) Out-of-state vendors who have sufficientcontact with Missouri must register with theDepartment of Revenue and submit returns.The extent of the contact with the state andthe nature of business of the vendor willdetermine what tax the vendor is subject to.
(2) The Department of Revenue has estab-lished criteria to be used, but not exclusively,in determining if an out-of-state vendor issubject to the sales tax. If the out-of-statevendor is not subject to the sales tax, s/he issubject to the use tax. A vendor is required topay or collect and remit the tax imposed if,within this state, s/he directly or by any agentor other representatives—
(A) Has or utilized an office, distributionhouse, sales house, warehouse, service enter-prise or other place of business;
(B) Maintains a stock of goods;(C) Regularly solicits orders whether or
not the orders are accepted in this state,unless the activity in this state consists solelyof advertising or of solicitation by directmail;
(D) Regularly engages in the delivery ofproperty in this state other than by commoncarrier or United States mail; or
(E) Regularly engages in any activity inconnection with the leasing or servicing ofproperty located within this state.
(3) Out-of-state vendors who solicit sales inMissouri by television broadcast or otheradvertising media are subject to Missouri usetax on sales of goods delivered to the pur-chaser in Missouri, if one (1) of the follow-ing conditions is met:
(A) The out-of-state vendor has an office,distribution house, sales house, warehouse,service enterprise or other place of businessin Missouri; or
(B) The out-of-state vendor makes thesales through the local television station(s),cable companies or other advertising mediaagents(s) for the out-of-state vendor. Thissection shall not include any sales whichMissouri is prohibited from taxing under theconstitution or laws of the United States ofAmerica.
(4) This state does not seek to impose use taxcollection requirements on any retailer over
whom the previously mentioned standarddoes not confer jurisdiction in this state.
Primary Steel, Inc. v. Director of Revenue,Case No. RS-82-0059 (A.H.C. 9/7/83). Theissue in this case was whether there was suf-ficient nexus between the state of Missouriand the taxpayer to justify imposing upon thetaxpayer the duty of collecting vendor use taxfor sales made to Missouri customers. Thecourt looked to the decision in Miller Bros.Co. v. Maryland, 347 U.S. 340 (1954) whichseemed to establish a standard of a continu-ous local solicitation versus no solicitationother than the incidental acts of generaladvertising. The commission found that theremust be continuous, or at least regular localsolicitation, and that the occasional tripsmade to the state of Missouri by taxpayer’ssalesmen did not constitute regular solicita-tion. For that reason it was found that therewas no nexus in the state of Missouri.
12 CSR 10-4.090 Regulations Under Subs-divisions (2) and (3) of Sections 144.030and 144.040, RSMo
PURPOSE: This rule prescribes whereMissouri state sales tax regulations apply andinterprets section 144.615(3), RSMo.
(1) All rules under subdivisions (2) and (3) ofsections 144.030 and 144.040, RSMo applyto subdivision (3) of section 144.615, RSMo.
PURPOSE: This rule prescribes that a motorvehicle purchase is not subject to theMissouri compensating use tax law and inter-prets and applies section 144.615(1), RSMo.
(1) A motor vehicle purchased out of the stateof Missouri and brought into Missouri is sub-ject to Missouri’s motor vehicle use tax laws
and not the compensating use tax law asimposed under sections 144.600–144.745,RSMo. Any questions regarding this shouldbe directed to the Motor Vehicle Bureau,P.O. Box 100, Jefferson City, MO 65102.
PURPOSE: This rule indicates the liability ofa person who makes a taxable purchase andtakes delivery in another state and interpretsand applies section 144.615(1), RSMo.
(1) A person who makes a taxable purchaseand takes delivery in any state other thanMissouri where a sales or use tax is imposedand paid to that state in an amount equal to orgreater than the four percent (4%) Missouriuse tax is not subject to the Missouri use tax.If, however, the rate of tax paid is less thanthe four percent (4%) Missouri use tax law,the purchaser is subject to use tax on the dif-ference. If no tax was paid to another state,the purchaser is subject to the use tax on thefull amount. Only the person who has paidthe prior sales or use tax on the item canclaim the credit. Adequate proof that the taxhad been paid, in the form of receipts orinvoices, must be maintained by the purchas-er.
PURPOSE: This rule indicates when tangiblepersonal property is not subject to Missouriuse tax and interprets and applies section144.615(6), RSMo.
(1) Tangible personal property held solely forresale in the regular course of business toother persons is not subject to the use tax.The test is what is to be done with the prop-erty purchased and held by the purchaser.Terminology is not determinative. The pur-chaser and holder of the property can be
8 CODE OF STATE REGULATIONS (10/31/00) Rebecca McDowell CookSecretary of State
12 CSR 10-4—REVENUE Division 10—Director of Revenue
called a wholesaler, but wholesalers are also,at times, consumers themselves.
Wendy’s of Mid-America, Inc. v. Depart-ment of Revenue, Case No. RS-79-0222(A.H.C. 7/22/82). Machinery and equipmentused in fast food restaurants are not entitledto section 144.030(4), RSMo exemptionbecause fast food restaurants clearly do notconstitute manufacturing plants. Section144.615(6), RSMo exemption from use tax isapplicable to foil, wax paper and bags usedin fast food restaurants because they are heldsolely to be incorporated into products whichare resold in the regular course of taxpayer’sbusiness.
Paper bags transferred to customers by retailgrocer were purchased by grocer for resale(see King v. National Super Markets, Inc.,653 SW2d 220 (Mo. banc 1983)). Woodenshipping pallets were not purchased forresale by shipper (see Floyd Charcoal Co.,Inc. v. Director of Revenue, 599 SW2d 173(Mo. banc 1980)); fact that soft drink bottlescould be returned for deposit did not makejobbers liable for use tax on theory that theyhad purchased at retail (see Smith BeverageCo. of Columbia, Inc. v. Reiss, 568 SW2d 61(Mo. En banc 1978)).
Pryor Executive Planes, Inc. v. Director ofRevenue, Case No. RS-82-0463 (A.H.C.8/6/87). The Administrative Hearing Com-mission examined the case under 144.615(6),RSMo which limits the resale exemption togoods held by 1) retailers, 2) solely forresale, 3) in the regular course of business.As a retailer whose regular business was thesale of aircraft, petitioner met two prongs ofthe test. Petitioner failed to meet the secondrequirement because petitioner chartered theaircraft, rented the aircraft to its sharehold-ers and depreciated the aircraft for incometax purposes. The commission stated theseuses were inconsistent with petitioner’s hold-ing of aircraft solely for resale, and insteadconstituted use or consumption sufficient tosubject the acquisition of the aircraft to usetax.
12 CSR 10-4.110 Personal Effects
PURPOSE: This rule indicates when person-al effects which are brought into Missouri are
not subject to the Missouri use tax and inter-prets and applies section 144.615(7), RSMo.
(1) Property, brought into Missouri by a bonafide resident of another state for use, storageor consumption, which is classified as per-sonal effects, is not subject to the use tax.Examples of personal and household effectsinclude, but are not limited to, personalclothing and jewelry, appliances and furni-ture. Examples of farm machinery which maybe classified as personal effects include, butare not limited to, tractors, combines andbalers.
(2) The property when purchased must havebeen intended for use, storage or consump-tion outside Missouri. Initial use of the prop-erty must be outside this state. If the proper-ty is brought into this state for use, storage orconsumption by a nonresident of Missouriwho intends to remain in this state on a tem-porary basis, it is not subject to the Missouriuse tax.
(3) Example: Bob, an out-of-state resident,becomes a resident of Missouri and moves hishousehold goods and furniture into this state.Bob is not subject to the Missouri use taxregardless of whether or not sales or use taxwas paid at the time he purchased his house-hold goods.
PURPOSE: This rule indicates that docu-mentation is necessary for deductions andinterprets and applies section 144.640,RSMo.
(1) Transactions which are deductible underthe compensating use tax law under section144.615, RSMo, can be deducted only if thetransaction is documented so as to be capableof verification on audit.
PURPOSE: This rule interprets and appliessection 144.620, RSMo and there is a pre-sumption that items sold by out-of-state ven-dors which are brought into Missouri are forstorage, use or consumption.
(1) When any out-of-state vendors sell tangi-ble personal property for delivery to thisstate, the property is presumed brought intoMissouri for the purpose of storage, use orconsumption and the receipts from all suchsales are subject to the use tax. When out-of-state vendors sell tangible personal propertyfor delivery to this state which will be storedand which will later be resold, the vendorsare not subject to the use tax on the receiptsfrom such sales when the purchaser furnish-es a resale exemption certificate.
12 CSR 10-4.127 Vendors Use Tax vs.Consumers Use Tax
PURPOSE: This rule interprets the state usetax law as it applies to vendors use tax vs.consumers use tax and interprets and appliessections 144.620 and 144.635, RSMo.
(1) A seller located outside Missouri sellingtangible personal property to Missouri cus-tomers where the property is shipped ordelivered to the customer who stores, uses orconsumes the property in Missouri isrequired to collect and remit to the state ofMissouri vendors use tax on all sales if theseller has sufficient nexus with Missouri (see12 CSR 10-4.085).
(2) A Missouri customer who purchases tan-gible personal property from an out-of-statevendor and who uses, consumes or stores theproperty in Missouri is required to report and
CODE OF STATE REGULATIONS 9Rebecca McDowell Cook (10/31/00)Secretary of State
Chapter 4—State Use Tax 12 CSR 10-4
remit consumer use tax. A Missouri cus-tomer will not be required to report and remitconsumers use tax until his/her untaxed pur-chases exceed two thousand dollars ($2,000)in a calendar year. Once the Missouri cus-tomer’s untaxed purchases exceed two($2,000) in a calendar year, the customermust report and remit consumers use tax onall untaxed purchases for the entire calendaryear. The Missouri customer is relieved fromliability if s/he receives a receipt showing thetax was paid from the out-of-state vendorauthorized by the director of revenue to col-lect the tax.
(A) Example: Mr. Brown, a Missouri con-tractor, purchases a truck load of materialsfor two thousand five hundred dollars($2,500) from a supplier in Kansas. TheKansas supplier does not charge or collectsales tax from Mr. Brown. Mr. Brown isrequired to report and remit consumers usetax to the Department of Revenue on his pur-chase price of two thousand five hundred dol-lars ($2,500) for the materials.
(B) Example: Mr. Green, a Missouri resi-dent, purchases a necklace for one thousandfive hundred dollars ($1,500) from a vendorlocated in Oklahoma. Mr. Green does notpurchase anything else during the calendaryear from a vendor located outside the stateof Missouri. The Oklahoma vendor does notcharge or collect sales tax from Mr. Green.Mr. Green is not required to report and remitconsumer use tax to the Department ofRevenue on his purchases for the calendaryear because they did not exceed two thou-sand dollars ($2,000).
PURPOSE: This rule indicates the require-ments that a vendor collect the tax and sepa-rately state the tax.
(1) The vendor is required to collect the taxon the selling price of the commodity sold orservices rendered. The vendor is also re-quired, when billing customers, to set outseparately on the billing the appropriateamount of tax collected on the purchase.
PURPOSE: This rule provides that the ven-dor is responsible for filing any suit to collectuse taxes from a purchaser and interprets andapplies section 144.635, RSMo.
(1) When a purchaser refuses to pay the usetax, the vendor shall be responsible for filingany suit to collect the amount due.
PURPOSE: This rule indicates the record-keeping and other requirements necessary fora vendor in order to substantiate deductionsand interprets and applies sections 144.620and 144.640, RSMo.
(1) All vendors making sales of tangible per-sonal property or services subject to theMissouri use tax are liable for determiningwhether the purchase is for storage, use orconsumption or for resale. All vendors arerequired to keep adequate records of salesand transactions, where the use tax is appli-cable to support reports filed with the direc-tor of revenue. The director will not recog-nize any deductions on a vendor’s tax returnunless the vendor has adequate supportingevidence in his/her records to verify thedeductions. Vendors must also keep in theirrecords signed resale exemption certificatessupporting deductions taken as sales forresale. Those certificates are to be kept in thetaxpayer’s files and must be made availablefor inspection by the director of revenue orhis/her agents, during all business hours ofthe day. Those resale exemption certificatesshall be only prima facie evidence that theproperty or services described were sold forthe purpose of resale and the director has theright to examine all facts relative to the pur-chase and sale before the resale exemptioncertificates will be honored.
(2) The resale exemption certificate shouldstate that all of the purchases made by the
purchaser for a certain definite period or fora certain transaction will be purchased fromthe seller for resale and that the purchaserassumes liability for the tax from the ultimateuser or consumer. A complete detailed recordof such purchases must be kept by the tax-payer. Where the goods purchased are for useor consumption, and not for resale by thepurchaser, the vendor shall also be heldresponsible for the use tax on the goods.
Op. Atty. Gen. No. 149, Murray (10-6-76).The director of revenue does not have theright or duty to grant a use tax exemption inthe case in which an individual transfersmotor vehicles to a corporation in which s/heowns 100% of the stock and the corporationassumes the outstanding liability on saidmotor vehicle.
12 CSR 10-4.145 Audit, No Credit(Rescinded November 30, 2000)
PURPOSE: This rule clarifies the statute oflimitations on assessments and interprets andapplies section 144.670, RSMo.
(1) The limitation on assessment for a tax-payer who is registered and files a return withor without payment is three (3) years fromthe date the return was filed. There is no lim-itation on assessment for the taxpayer whofails to file a return.
10 CODE OF STATE REGULATIONS (10/31/00) Rebecca McDowell CookSecretary of State
12 CSR 10-4—REVENUE Division 10—Director of Revenue
12 CSR 10-4.155 Vendor’s Responsibility
PURPOSE: This rule aids in determining theresponsibilities of a vendor regarding Mis-souri use tax and interprets and applies sec-tions 144.615(6) and 144.635, RSMo.
(1) The burden of proving a sale of tangiblepersonal property was made for resale andnot at retail shall be upon the vendor. Thevendor is required to secure and retain asigned exemption certificate from the pur-chaser as evidence that the sale is made forresale and, therefore, exempted from the usetax.
(2) When the director of revenue has reasonto believe the vendor acted not in good faithin the acceptance of an exemption certificate,s/he is empowered to make an additionalassessment of tax due from the vendor. Whenthe vendor has been determined to have actednot in good faith, both vendor and purchaserwill be held liable until all liabilities havebeen satisfied.
(3) The vendor must indicate on each invoiceor bill of sale the name of each purchaserfrom whom an exemption certificate has beensecured or be subject to the use tax upon thesale. Exemption certificates must be availableat the establishment of the vendor for readyinspection and comparison with the deduc-tions claimed.
(4) Exemption certificates may not be used toobtain tangible personal property or taxableservices to be used by the purchaser and notfor resale. It is a crime to misuse the use taxidentification number and exemption certifi-cate for the purpose of obtaining tangible per-sonal property or taxable services without thepayment of the sales or use tax when it is due.
(5) If a vendor sells tangible personal proper-ty or taxable services free of the use tax on anexemption certificate when s/he knows orshould know in the use of ordinary care, thatthe property or service which s/he is sellingis not for resale by the purchaser, but is forthe purchaser’s own use or consumption inbusiness or otherwise, the vendor shall beliable for the use tax.
12 CSR 10-4.160 Effect of Saturday,Sunday or Holiday on Payment Due
PURPOSE: This rule establishes the due datefor payment of taxes where the original duedate falls on certain days and interprets andapplies section 144.655, RSMo.
(1) If the last day for payment of the taxesfalls on a Saturday, Sunday or legal holiday,the payment shall be considered timely if it ispostmarked or filed in person the next suc-ceeding day, which is not a Saturday, Sundayor legal Missouri or national holiday.
PURPOSE: This rule establishes when a tax-payer is entitled to request a credit forcharged-off items and interprets and appliessection 144.660, RSMo.
(1) A person filing on the basis of gross salesis entitled to request a credit of charged-offitems upon which the tax has already beenpaid to the director of revenue. Charge-offitems are not allowable deductions whenreturns are made on a gross receipts basis.
(2) The two (2) tests as to whether or not thatrequest will be granted are, first, whether ornot the tax has been remitted on the itemsand, second, whether or not the charge-offcredit would be deductible in making state orfederal income tax returns. The applicationfor credit on charged-off items should bemade immediately after discovery that thedebt must be charged-off if within the two(2)-year statute of limitations as prescribed bysection 136.035, RSMo.
PURPOSE: This rule defines the term aggre-gate amount for Missouri use tax purposesand interprets and applies section 144.660,RSMo.
(1) For the purpose of the compensating usetax law, aggregate amount is defined as onlythe amount of state compensating use taxdue.
(2) When a vendor is unable to file a returnby the due date, the vendor may estimate theamount of tax due for the first two (2) monthsof a quarter based on the best informationavailable such as the same month the previousyear with a modifier for business or econom-ic conditions.
(3) A return must be filed and completed inits entirety even if a taxpayer is filing an esti-mated return (see section 144.660, RSMoand 12 CSR 10-3.458).
PURPOSE: This rule prescribes the require-ments for an amended return of any vendor.
(1) If any vendor subject to the Missouri usetax determines s/he has not filed a correctreturn for any given period, s/he is requiredto immediately file an amended return identi-fying additions, supplements, deletions orany other corrections or alterations. Thedirector, upon review, may demand anamended return if it is determined that thevendor has erroneously filed the originalreturn.
PURPOSE: This rule establishes the due datefor a final return and sets forth the assumedliability of a purchaser of a business.
(1) Any vendor terminating or selling his/herbusiness, stock, furnishings or fixtures isrequired to file, within fifteen (15) days afterterminating, a final return to be furnished bythe director upon specific request. The returnshould be forwarded to the director of rev-enue with an accompanying remittance for
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Chapter 4—State Use Tax 12 CSR 10-4
taxes, interest and penalty if applicable, tothe date of termination.
(2) Should an obligation exist, the purchasershall withhold a sufficient amount from thepurchase price of the business to defray anyliability until the former owner provides thedirector of revenue with satisfactory evidencethat the liability has been satisfied and no fur-ther liability exists or until the former ownerobtains a certificate of no tax due from thedirector of revenue. If the person acquiringthe business fails to accomplish the previous-ly mentioned, s/he shall become liable forany taxes, interest or penalty charges madeagainst the former owner.
12 CSR 10-4.185 Filing Returns When NoLiability Exists
PURPOSE: This rule prescribes that a returnshall be filed even though no liability exists.
(1) Every business, making sales of tangiblepersonal property or rendering a taxable ser-vice, is required to file a combined sales/usetax return even though no (zero) (0) saleswere made during the period covered by thereturn.
PURPOSE: This rule prescribes the place forpaying the tax, the provisions regardingreturned checks and cash payments, andinterprets and applies sections 144.655 and144.660, RSMo.
(1) Vendors are to make remittance at thetime the return is filed with the director ofrevenue. Checks, drafts or money ordersshould be made payable to and forwarded tothe Sales Tax Bureau, P.O. Box 840, Jeffer-son City, MO 65105.
(2) Checks returned from the bank for anyreason will be charged against the vendor’saccount, at which time, notification of the
change will be given to the vendor. Uponreceipt of a returned check, the vendor relin-quishes his/her claim for a two percent (2%)discount for a timely payment and subjectshim/herself to the provisions regarding delin-quency.
(3) In the event payment is made by cash, areceipt should be obtained identifying thename and address of the taxpayer, code num-ber and the period for which the payment isintended. The receipt should be retained bythe vendor as proof of payment.
12 CSR 10-4.200 Filing of Returns andPayment of Tax
PURPOSE: This rule provides that uponproper application the time for filing a returnand paying the tax may be extended, andinterprets and applies section 144.660,RSMo.
(1) The time for filing the tax may be extend-ed for good cause for up to sixty (60) daysupon proper application to the departmentprior to the due date. The postmark date isprima facie evidence of timely request.
(2) An approved extension does allow a per-son to take the two percent (2%) timely pay-ment discount and does stop the interestcharges for the time of the extension.
PURPOSE: This rule clarifies the director ofrevenue’s authority to issue jeopardy assess-ments and interprets and applies sections144.290 and 144.690, RSMo.
(1) Any time the director may have reason tobelieve a taxpayer is about to discontinuebusiness or dispose of assets or for any otherreason the director feels may jeopardize the
payment of use tax due the state, s/he mayascertain the amount of tax to be paid anddemand the tax payment which becomes dueand payable immediately upon notice to thetaxpayer. If the taxpayer provides the directorwith reasonable security as may be requiredby the director, s/he may request a hearingand, if approved, the director will specify thetime and place of the hearing. The directormay continue the previously mentioned pro-cedures from time-to-time if deemed neces-sary.
PURPOSE: This rule prescribes the preferen-tial treatment required for outstanding taxesand the liability of trustees, assignees,receivers, and the title and interprets andapplies section 144.610, RSMo in conjunc-tion with Chapter 11 U.S.C.A., BankruptcyCodes.
Editor’s Note: The secretary of state hasdetermined that the publication of this rule inits entirety would be unduly cumbersome orexpensive. The entire text of the material ref-erenced has been filed with the secretary ofstate. This material may be found at theOffice of the Secretary of State or at the head-quarters of the agency and is available to anyinterested person at a cost established bystate law.
(1) All outstanding use tax, interest andpenalties due the state from a bankrupt debtormaking an assignment for creditors are to begiven preference and the liabilities satisfiedto the state before all general creditors.
(2) The trustee in bankruptcy or the assignee,in the case where an assignment has beenmade for and in behalf of creditors, shouldimmediately remit any outstanding taxes,interest charges or penalties to the directorbefore a general distribution of funds is madeand will be held liable for the taxes if they arenot paid prior to the distribution. When thecourts appoint any person, whether trustee,assignee, receiver, to take over any businessand operate or liquidate it, those persons arerequired to collect and remit the use tax andwill be held personally liable. Every personshould immediately notify the director when
12 CODE OF STATE REGULATIONS (10/31/00) Rebecca McDowell CookSecretary of State
12 CSR 10-4—REVENUE Division 10—Director of Revenue
appointed by the court to take over said busi-ness or to liquidate the business.
PURPOSE: This rule relates to interestimposed on late payment of taxes and inter-prets and applies section 144.665, RSMo.
(1) All taxes not paid to the director of rev-enue on the date these taxes become due andpayable shall bear interest at the rate of onepercent (1%) per calendar month or fraction,a calendar month from and after the date dueuntil paid, if paid prior to January 1, 1983.All taxes remaining unpaid as of January 1,1983 and all taxes not paid to the director ofrevenue which become due and payable afterJanuary 1, 1983 shall bear interest at thesame rate as established by the director ofrevenue in 12 CSR 10-41.010 Annual Ad-justed Rate of Interest, published under theauthority of section 32.065, RSMo.
PURPOSE: This rule clarifies the definitionof calendar month and interprets and appliessection 144.655, RSMo.
(1) Calendar month, for the purposes of sec-tions 144.600–144.745, RSMo, means thetime from any day of any month as adjudgedin the calendar to a corresponding day of thenext month. Since a taxpayer is required tomake returns and remittances on varyingdays, the month is to be an approximate thir-ty (30)-day interval.
(A) Example: “C”, a retail business, isrequired by section 144.655, RSMo to file amonthly return for the period ending Januarythirty-first. The return and payment are dueon the twentieth day of February, the suc-ceeding month.
(B) Example: “C” is also required by sec-tion 144.655, RSMo to file a monthly returnfor the period of December which is due onthe thirty-first day of January, the succeedingmonth.
PURPOSE: This rule clarifies the procedureand requirements where a taxpayer desires toprotest the payment of tax assessed againstthe taxpayer and interprets and applies sec-tion 144.700, RSMo.
(1) Overpayments resulting from clerical,mathematical or similar errors should berecovered by following the refund proceduresoutlined in section 144.695, RSMo. If anytaxpayer, in good faith and for just cause,feels the imposition of Missouri use tax hasbeen improperly charged against him/her,s/he, when making his/her payment, maydenote the payment as a protest payment andexecute a protest payment affidavit specifical-ly stating the grounds upon which the protestis being made. The claim must be madeunder oath within thirty (30) days after pay-ment. If this procedure is not followed, allpayments will be accepted by the director asproper payments. Protest payment claims areavailable through the director upon request(see section 144.700, RSMo and 12 CSR 10-4.280).
PURPOSE: This rule indicates the time peri-od a taxpayer has to file a written complaintwith the Administrative Hearing Commissionconcerning a final decision by the director ofrevenue and interprets and applies section621.050, RSMo.
(1) A taxpayer affected by a final decision ofthe director of revenue may request a hearingby the Administrative Hearing Commissionby filing a written complaint with the com-mission within sixty (60) of the date of thedirector of revenue’s final decision (see sec-tion 621.050, RSMo).
(A) The sixty (60)-day period begins onthe date when the director of revenue’s finaldecision is mailed or delivered to the taxpay-er, whichever is later.
(B) A complaint is considered to be filed atthe time it is date stamped as received andfiled by the Administrative Hearing Commis-sion, unless sent by registered or certifiedmail. A complaint filed by registered or cer-tified mail is considered to be filed with thecommission on the date it is mailed by thetaxpayer.
State ex rel. Thompson-Stearns-Roger v.Schaffner, 489 SW2d 207 (1973). The legis-lature’s repeal of old section 144.261 andenactment of new section 144.261 abolishedthe need for review by the tax commissionbefore judicial review could be sought. Actcan only properly be held to have intended torestore the prior system of direct judicialreview, without intervening administrativereview, of the director’s (of revenue) decisionin sales tax matters. Therefore, after thedirector had rejected claimant’s request forrefund of sales and use tax, claimant was
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Chapter 4—State Use Tax 12 CSR 10-4
entitled to direct judicial review by man-damus, without need to seek review of deci-sion by State Tax Commission.
12 CSR 10-4.245 Interest Payment
PURPOSE: This rule indicates when interestwill or will not be credited or paid to the tax-payer and interprets and applies section144.695, RSMo.
(1) Only in the case where the taxpayer isgranted a judgment after judicial review isany interest to be credited or paid to the tax-payer for the overpayment of the Missouri usetax.
International Business Machines v. StateTax Commission, 362 SW2d 635 (Mo. 1962).As to sales tax improperly collected, there isa provision for refund, but there is no provi-sion that refunds bear interest.
12 CSR 10-4.250 Liens
PURPOSE: This rule indicates the procedurefollowed by the director of revenue in filingliens for use taxes and interprets and appliessections 144.380 and 144.690, RSMo.
(1) In any case in which any tax, interest orpenalty imposed under the use tax statutes isnot paid when due, the director of revenuemay file or record with the recorder’s officeof the county in which the person owing usetax, interest or penalty resides or has theplace of business, a Notice of Lien specifyingthe amount of tax, interest or penalty due andthe name of the person liable for the same.
(2) A lien may be released by filing for recordin the office of the county recorder a releaseexecuted by the director of revenue.
12 CSR 10-4.270 Allowance for DefectiveMerchandise
PURPOSE: This rule indicates to what extentan allowance for defective merchandise willaffect state use taxes and interprets andapplies section 144.610, RSMo.
(1) Where an allowance is made for defectivemerchandise, the vendor is subject to the usetax upon the amount due after subtracting theallowances from the sales price. When the taxhas been paid on the full selling price by thevendor, a credit or refund of the taxattributable to the allowance must be request-ed on an application for refund/credit (see 12CSR 10-4.275).
(2) If a purchaser returns defective merchan-dise to the vendor and, in connection with thereturn, new merchandise is furnished, thevendor is subject to the use tax only on thecost of the new article less the allowance formerchandise returned.
PURPOSE: This rule prescribes the require-ments of a protest payment return and inter-prets and applies section 144.700, RSMo.
(1) A taxpayer filing a protest payment returnmust submit a notarized protest payment affi-davit with the return reflecting the specificamount of tax being paid under protest (see12 CSR 10-3.552). The tax must be brokendown as state tax, city tax and transportationtax. Three (3) checks must also be remitted:one (1) for the amount of state sales tax beingpaid under protest; another for the amount oflocal tax being paid under protest; and a thirdcheck for any amount of state and local taxnot being protested.
PURPOSE: This rule clarifies the intent ofrules issued with respect to the Missouri com-pensating use tax law.
(1) Rules are to interpret and exemplify, foradministration and enforcement, the compen-sating use tax laws. If a particular taxpayer’squestion or problem is considered and cov-ered by these rules, it is not necessary that thetaxpayer be issued a ruling on that questionor problem after January 10, 1976 (see 12CSR 10-3.002).
(2) All rules issued by the Department ofRevenue are intended only to be generalguidelines. Particular facts and circumstancessurrounding any given taxpayer’s businesstransactions may vary greatly from the factsand circumstances intended to be describedin the published rules (see 12 CSR 10-4.295).
AUTHORITY: section 144.705, RSMo 1994.*U.T. regulation 705-2 originally filed Oct.
14 CODE OF STATE REGULATIONS (10/31/00) Rebecca McDowell CookSecretary of State
12 CSR 10-4—REVENUE Division 10—Director of Revenue
PURPOSE: This rule indicates the lack ofauthority for the director of revenue to waiveoutstanding use tax.
(1) There are not provisions in Missouri lawwhere the director of revenue has the author-ity to waive or release a claim against out-standing use tax nor is s/he empowered tosettle for a lesser amount of tax than theappropriate amount due the state.
State ex rel. St. Louis Shipbuilding & SteelCo. v. Smith, 201 SW2d 153 (Mo. 1947).The director may not extinguish a lawfulindebtedness to the state.
12 CSR 10-4.305 Collection Allowance
PURPOSE: This rule indicates that lateremitters do not receive the two percent col-lection fee and interprets and applies section144.710, RSMo.
(1) All vendors required to remit Missouriuse tax to the director of revenue, who shallfail to do so on or before the due date, willnot be entitled to the two percent (2%) col-lection fee.
PURPOSE: This rule refers to the postmarkbeing prima facie evidence in determining thedate a return is filed and interprets andapplies section 144.655, RSMo.
(1) Returns must be filed as stated in section144.655, RSMo. The postmark date of theenvelope will be prima facie evidence of thedate of filing the return.
PURPOSE: This rule provides that rulesissued under certain sections of the sales taxlaw apply to use taxes and interprets andapplies section 144.720, RSMo.
(1) All sales tax rules pertaining to the statesales tax sections 144.170, 144.220 and144.230, RSMo apply to the use tax.
PURPOSE: This rule indicates when a con-tractor is considered a dual operator and setsforth the procedures to be used by the dualoperator to determine when purchasesbecome subject to use tax. Examples aregiven for clarification purposes.
(1) A Missouri contractor who purchasesmaterials and supplies from an out-of-statevendor for both consumption and resale isoperating as a dual operator. For use taxpurposes, a dual operator shall adopt the fol-lowing procedures:
(A) For items which the Missouri contrac-tor purchases from an out-of-state vendor andfor which s/he has not been charged tax equalto or greater than the Missouri state tax andwhich the contractor uses in his/her opera-tion, the contractor is subject to use tax;
(B) For items which the Missouri contrac-tor purchases for both consumption andresale, the contractor should present anexemption certificate to the out-of-state ven-dor for items purchased. Subsequently, whenan item is removed from the contractor’sinventory, for personal use by the contractoror in fulfillment of a contract, at that point,the contractor should remit use tax on thattransaction. If an item is removed frominventory as part of a sale at retail, the con-tractor should charge sales tax on the grossreceipts of the sales; and
(C) For items which the Missouri contrac-tor purchases from an out-of-state vendor fora contract job which is out-of-state and wherethe item never enters Missouri, no Missouriuse tax is due.
(2) Example: Handy Contracting, a Missouricontractor, purchases a stairway lift elevatorfrom Hi-Flite Corporation, an out-of-statecompany. This purchase by HandyContracting is solely for use in the operationas a contractor and will be installed inMissouri. If Hi-Flite Corporation has not col-lected Missouri use tax on this lift, HandyContracting must pay use tax.
(3) Example: Handy Contracting, a Missouricontractor, purchases five (5) stairway liftelevators from Hi-Flite Corporation, an out-of-state company. Handy Contracting main-tains these lifts in inventory. HandyContracting should give Hi-Flite Corporationa resale exemption certificate. As part of acontract, Handy Contracting removes a liftfrom the inventory and installs it in a build-ing. Handy Contracting should self-assessuse tax on the lift. The next day HandyContracting sells a lift to Alex Contracting,also a Missouri contractor. Handy
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Chapter 4—State Use Tax 12 CSR 10-4
Contracting is subject to sales tax upon thegross receipts from the sale.
(4) Example: Handy Contracting, a Missouricontractor, purchases a stairway lift elevatorfrom Hi-Flite Corporation, an out-of-statecompany, with delivery to an out-of-stateconstruction site. Handy Contracting doesnot owe Missouri use tax on this purchase,however, it may owe use tax to the state inwhich the contract is being performed.
PURPOSE: This rule interprets the use taxlaw as it applies to use tax return filingrequirements and interprets and applies sec-tions 144.655, and 144.660, RSMo.
(1) A use tax return must be filed and com-pleted in its entirety.
(2) If the state use tax collections exceed twohundred fifty dollars ($250) in any one (1)calendar month, the business is required toreport and remit tax for this month by thetwentieth of the following month. Eachmonth stands on its own and the two hundredfifty dollars ($250) is not a cumulative total.In completing the return for a calendar quar-ter in which a monthly return has been filed,tax should be computed and shown only forthe months not previously filed. The monthscovered by the return and the month previ-ously filed must be clearly stated on thereturn.
PURPOSE: This rule interprets the use taxlaw as it applies to the annual filing of use taxreturns and interprets and applies sections144.655 and 144.660, RSMo.
(1) Any person whose state use tax liability isless than forty-five dollars ($45) in each cal-endar quarter may file an annual return forthat calendar year on or before January 31 ofthe succeeding year.
PURPOSE: This rule clarifies the use tax lawas it applies to purchases of aircraft.
(1) Any business, interstate or intrastate, thatis not a common carrier, which makes an out-of-state purchase of an airplane to be stored,consumed or used in Missouri is liable forMissouri use tax on the purchase price of theairplane, pursuant to Director of Revenue v.Superior Aircraft Leasing Company, Inc., 734SW2d 504 (1987) and Complete Auto Transitv. Brady, 430 U.S. 274, 97 S. Ct. 1076, 51L. Ed. 2nd 326 (1977). A credit will be givenfor any sales or use tax paid to another statewhich is less than or equal to the Missourisales/use tax liability. If this out-of-state taxis less than the use tax which would be dueMissouri, Missouri imposes a tax equal to thedifference.
12 CSR 10-4.622 Marketing OrganizationsSoliciting Sales Through Exempt EntityFund-Raising Activities
PURPOSE: This rule interprets the use taxlaw applicable to marketing organizationssoliciting sales through exempt entity fund-raising activities.
(1) Sales by marketing organizations throughrepresentatives or members of elementaryand secondary schools, religious and charita-ble organizations and other not-for-profitentities exempt from sales or use tax are sub-ject to Missouri use tax on the marketingorganizations’ net receipts from those sales.Use tax is not due or required to be collectedon the amount retained by the exempt organi-zation or that portion of the sales proceedswhich will be returned to the exempt organi-zation.
(2) Use tax shall be collected on each itemsold in accordance with sections 144.610.2.and 144.635, RSMo and the tax may be col-lected by exempt organizations’ members by
a separate statement of the tax due on eachsales slip or other evidence of sale.
(3) The marketing organization should in-struct the exempt organization that use taxmust be collected on the portion of grossreceipts returned to the marketing organiza-tion.
(4) The tax due may be calculated on the pro-ceeds to be returned to the marketing organi-zation and then added to the original sellingprice (Example 1) or calculated on the pro-ceeds to be returned to the marketing organi-zation and included as part of the sellingprice (Example 2).
(5) Example 1: Marketing organization “A”agrees to provide widgets to the band atschool “B” to be sold by band members toraise funds for a band trip. The widgets areto be sold for ten dollars ($10) each, with “A”to receive six dollars ($6) and “B” four dol-lars ($4) per widget. School “B” should col-lect twenty-five cents (25˘) use tax in addi-tion to the ten dollar ($10) sales price. Thetwenty-five cents (25¢) represents use tax atthe hypothetical rate of 4.225% on the six-dollar ($6) taxable receipts and should beremitted by school “B” to organization “A”.The four dollars ($4) received by school “B”is exempt from tax. “A” is required to remittwenty-five cents (25¢) to the Department ofRevenue for use tax on its six dollar ($6) netreceipts. It makes no difference whetherschool “B” (which collects ten dollars andtwenty-five cents ($10.25) from each cus-tomer) sends the ten dollars and twenty-fivecents ($10.25) to marketing organization “A”which then returns four dollars ($4) to band“B” or sends only six dollars and twenty-fivecents ($6.25) to marketing organization “A”.
(6) Example 2: Using the same facts asExample 1 in section (5), school “B” couldcharge ten dollars ($10) for the widget withthe express understanding that the ten dollars($10) charged includes the use tax. The taxwould be computed on the six dollars ($6)received by “A”. The tax would still be twen-ty-five cents (25¢) ($6 × 4.225%). “A”would be required to remit twenty-five cents(25¢) per widget to the Department ofRevenue. School “B” would receive threedollars and seventy-five cents ($3.75) perwidget sold which would not be subject totax.
16 CODE OF STATE REGULATIONS (10/31/00) Rebecca McDowell CookSecretary of State
12 CSR 10-4—REVENUE Division 10—Director of Revenue
12 CSR 10-4.624 Change of State Use TaxRate
PURPOSE: This rule clarifies which tax rateto use in computing use tax liability on grossreceipts when there has been a change in thestate use tax rate.
(1) Use tax is calculated at the tax rate ineffect on the date of the sale.
(2) When a change in the Missouri state usetax rate becomes effective, all gross receiptsfrom cash or charge sales made by a vendoron or after the effective date of the ratechange are subject to the new use tax rate.
(3) Gross receipts from charge sales madeprior to the effective date of the rate changeare subject to the tax rate in effect at the timethe charge sale was made.
(4) A vendor of tangible personal property inMissouri may report and remit a use tax lia-bility based upon either the gross salesmethod or the gross receipts method. If thevendor elects to report under the gross salesmethod, the vendor must report the sale inthe month in which the sale is made and paythe use tax rate in effect at the time the saleis made. If the vendor elects to report underthe gross receipts method, the vendor mustreport and remit use tax based upon the usetax rate in effect at the time the sale wasmade (see 12 CSR 10-3.164 Installment Salesand Repossessions for reporting of use tax oninstallment sales). A vendor may not changehis/her reporting method without permissionfrom the director of revenue.
PURPOSE: This rule lists the requirements abusiness or corporation must satisfy to enterinto a use tax direct pay agreement with theDepartment of Revenue.
(1) A business or corporation may apply tothe department for a use tax direct pay agree-ment. The application must be submitted inwriting. The direct pay agreement is anagreement by which the department allows abusiness or corporation to pay consumer’suse tax on its purchases directly to the depart-
ment rather than vendor’s use tax to the sell-er.
(2) The following requirements must be satis-fied before the department will consider abusiness or corporation for a direct payagreement:
(A) Submission of an application signed bythe applicant business owner or an officer ofthe applicant corporation;
(B) The applicant business or corporationagrees to accrue and pay all taxes imposedunder sections 144.600–144.745, RSMo andArticle IV, Sections 43A and 47A of theMissouri Constitution on the purchases of alltaxable items made by the applicant businessor corporation which are stored, used or con-sumed by the applicant, excluding itemswhich are exempted under section 144.617,RSMo;
(C) The accrued taxes will be paid inaccordance with the applicant business’ orcorporation’s filing status as determined bythe Revised Statutes of Missouri. The appli-cant business or corporation will be assessedpenalties and interest in accordance with sec-tions 144.665 and 144.720, RSMo for failureto file and to pay the accrued taxes in accor-dance with their filing status;
(D) The applicant business or corporationwill not qualify for the timely filing discountprovided in section 144.710, RSMo; and
(E) Records to support that the business orcorporation annually purchases taxable itemsin excess of seven hundred fifty thousand dol-lars ($750,000), excluding the value of tax-able items for which exemption certificateswere given.
(3) The department has sole authority todecide whether the applicant qualifies for adirect pay agreement.
(4) An applicant who has been denied a directpay agreement may reapply. The applicantwill be required to meet the qualifications fora direct pay agreement.
(5) The holder of a direct pay agreement mustfurnish a copy of the direct pay certificate toall sellers from whom they make purchases oftaxable items. The direct pay certificaterelieves the seller of any obligation to collectvendor’s use tax imposed by Chapter 144,RSMo and Article IV, Sections 43A and 47Aof the Missouri Constitution from the holder.This certificate will apply to all purchases oftaxable items from the date of the certificate.
(6) A direct pay agreement and direct paycertificate will remain valid and enforceableuntil the department issues a cancellation
notice. The department may cancel a directpay agreement at any time.
(7) The department will send notice of can-cellation to the holder of the direct pay cer-tificate by certified or registered mail.
(8) The holder of a direct pay certificate maynotify the department that the direct pay cer-tificate will be voluntarily relinquished.
(9) Upon receipt of a notice of cancellationfrom the department, the business or corpo-ration, within ten (10) days from the date ofthe cancellation letter, shall notify each sellerin writing that the direct pay certificate is nolonger valid.
(10) The holder of a direct payment certifi-cate will be required to provide proof of qual-ification every two (2) years from the date ofthe original authorization.
(11) Any seller who accepts a direct paymentcertificate in good faith from a purchaser canrely on the certificate until s/he receives writ-ten notice of cancellation from the purchaser.
PURPOSE: This rule defines gross receiptsand clarifies how vendors are to report usetax when their accounting method approxi-mates gross receipts.
(1) Section 144.655, RSMo requires vendorsto file returns with the director of revenueshowing the amount of gross receipts fromtaxable sales and services. Gross receipts, asdefined in section 144.010.1(3), RSMo, isthe total amount received by the vendor forthe sale or lease of property or taxable ser-vices, less refunds for returned property.
(2) In order to conform with generally ac-cepted accounting principles, many business-es recognize and account for sales on anaccrual basis for financial reporting and fed-eral income tax purposes. Under the accrualbasis of accounting, sales are recognized inthe period in which the transaction is com-pleted, rather than the period in which pay-ment is actually received.
CODE OF STATE REGULATIONS 17Rebecca McDowell Cook (10/31/00)Secretary of State
Chapter 4—State Use Tax 12 CSR 10-4
(3) Vendors may report sales on an accrualbasis for the vendors’ administrative conve-nience, if that method materially equals grossreceipts over several reporting periods.Accrual basis reporting must meet the follow-ing criteria:
(A) The difference between accrual andgross receipts basis reporting shall be limitedto changes in accounts receivable balancesand refunds to purchasers during the report-ing period;
(B) Periodic adjustments for bad debtsmust be reasonable and verifiable, must notexceed the bad debts expense claimed on thefederal income tax return and may not exceedthe taxable sales reported for the period inwhich the adjustment is taken; and
(C) The taxpayer must use a consistentbasis of reporting. Any taxpayer changing thebasis of reporting shall notify the director ofrevenue of the change and its effective date.
(4) The director of revenue reserves the right,upon written notification, to require any tax-payer to report future periods on a grossreceipts basis with no accrual provision.
PURPOSE: This rule explains the circum-stances under which the purchases of elec-tricity and gas by basic steel-makers areexempt from use tax and the procedure forobtaining a basic steelmaking exemption.
(1) The sale of electricity or gas, whethernatural, artificial or propane, which is ulti-mately consumed in connection with basicsteelmaking in Missouri is exempt from usetax (see section 144.036, RSMo). Theexemption includes sales of electricity andgas consumed in the processing and fabricat-ing of steel in addition to basic steelmaking ifthe processing or fabricating are part of thetaxpayer’s integrated plant that performsbasic steelmaking.
(2) Basic steelmaking refers to smelting andrefining molten pig iron or other metals toproduce steel or steel products by rolling,drawing, casting and alloying metals. It doesnot include the mere melting of scrap steelwhich is cast into a new steel product. Inorder for the melting of scrap steel to qualifyas basic steelmaking, the molten metal must
be altered to meet customer specifications byadding additional raw material or alloys andthus changing the composition of the steel.
(3) Example: Purchases of electricity or gasused in smelting and refining molten pig ironto produce steel products by casting areexempt. However, purchases of electricity orgas used in secondary processing of steel,which is not performed at the taxpayer’s inte-grated plant that performs basic steelmakingare not exempt under section 144.036,RSMo. For example, if a taxpayer engages inbasic steelmaking at location A and operatesa stamping plant at location B which is notphysically connected with, or part of, thebasic steelmaking facility, the taxpayer’s pur-chases of electricity and gas for the samplingplant at location B would not be exempt undersection 144.036, RSMo.
(4) All consumers of electrical energy or gaswho desire to qualify for this exemption mustrequest a steelmaking exemption authoriza-tion from the director of revenue. Afterauthorization is issued by the director of rev-enue, the recipient shall file, on or before thedue date, a return with the director, identify-ing the amount of electrical energy purchasedtax exempt and remit the appropriate tax onelectrical energy or gas consumed which isnot covered by this exemption. An example ofelectrical energy or gas that would not quali-fy for the exemption would include energyused in office, storage or warehousing opera-tions.
(5) Sellers making sales of electricity or gasto purchasers claiming the steelmakingexemption are required to obtain letters ofexemption from the purchasers as evidence ofthe exempt sales claimed (see section144.210, RSMo). Purchasers may purchaseall electricity and gas exempt and then self-accrue tax on the portion not covered by theexemption as provided in section (4).
PURPOSE: This rule sets forth guidelines forthe submission, acceptance and proceedingsupon a Certificate of Deposit that has beensubmitted in lieu of a Missouri Use Tax CashBond.
(1) A Certificate of Deposit (CD) issued by astate- or federally-chartered financial institu-tion may be submitted to the MissouriDepartment of Revenue in lieu of a Use TaxCash Bond.
(2) The CD shall be for a period of not lessthan five (5) years (sixty (60) months).Interest shall be compounded and paid atmaturity.
(3) The CD shall be in the names of theMissouri Department of Revenue and of thetaxpayer submitting the document. The CDshall be a new CD which is assigned to theDepartment of Revenue. The Certificate ofDeposit shall be delivered to the Departmentof Revenue along with the registration appli-cation form and assignment of Certificate ofDeposit form in order to obtain a Use TaxLicense.
(4) The CD may be released by theDepartment of Revenue upon completion of afive (5)-year period of satisfactory tax com-pliance. Satisfactory tax compliance shallmean that for a period of five (5) consecutiveyears immediately preceding application forrelease of the bond, the taxpayer has filed allreturns and paid all taxes, additions and inter-est due on a timely basis. The CD may alsobe released when the taxpayer ceases to dobusiness, files a final return with the directorof revenue and owes no tax, additions orinterest. The taxpayer shall file an application(on forms provided by the Department ofRevenue) to obtain a release of the CD. Therelease application should be filed with thedirector of revenue sixty (60) days prior tothe maturity date of the CD.
(5) If a delinquency occurs, the Departmentof Revenue may redeem the CD. If the pro-ceeds from the CD exceed the delinquency,any remainder shall be converted to a cashbond and shall be held by the director of rev-enue. Interest proceeds for the CD shallbecome part of the new cash bond. The cashbond may be returned to the taxpayer uponcompletion of a five (5)-year period of satis-factory tax compliance.
(6) The Department of Revenue shall notreinvest proceeds from a CD after it has beenconverted to a cash bond.
(7) The Department of Revenue shall not beresponsible for any penalties or forfeitedinterest as a result of cashing a CD prior tomaturity or for any other reason.
(8) The taxpayer shall be liable for all taxeson the interest or other earnings derived from
18 CODE OF STATE REGULATIONS (10/31/00) Rebecca McDowell CookSecretary of State
12 CSR 10-4—REVENUE Division 10—Director of Revenue
CODE OF STATE REGULATIONS 19Rebecca McDowell Cook (10/31/00)Secretary of State
Chapter 4—State Use Tax 12 CSR 10-4
the CD. This is the case even if theDepartment of Revenue seizes the CD (andaccumulated interest) for payment of a delin-quency incurred by the taxpayer. The taxpay-er shall provide its federal tax identificationnumber to the banking institution and aninformation return for the interest earningsshall be issued under the taxpayer’s federalidentification number.
AUTHORITY: sections 144.625 and 144.705,RSMo 1994.* Original rule filed Dec. 4,1990, effective April 29, 1991. Amended:Filed Feb. 4, 1991, effective June 10, 1991.
PURPOSE: This rule interprets the use taxlaw as it applies to delivery, freight and trans-portation charges and interprets and appliessection 144.605(6), RSMo.
(1) Delivery costs, including postage andtransportation costs, are subject to sales tax ifthe parties intend for delivery to be part ofthe sale.
(2) Delivery costs, including postage andtransportation costs, are not subject to use taxif the parties do not intend for delivery to bepart of the sale.
(3) Some factors relevant to the determinationof the parties’ intent are—
(A) When title passes to the purchaser; (B) Whether delivery charges are separate-
ly stated on sales invoices; (C) Whether the method of delivery is
entirely up to the purchaser; (D) Whether the purchaser has the option
to take the tangible personal property, hire acarrier or use a carrier selected by the seller;
(E) Whether the seller derives any finan-cial benefit from the delivery and undertakesany risk for damage or loss during delivery;and
(F) Whether there is a written agreementbetween the parties.
