Section 2 Sales Tax Purpose, Rates, and Base

• Library: Tax Law 2009

Missouri imposes the sales tax for the privilege of engaging in the business of selling tangible personal property or rendering certain services at retail in Missouri. Although § 144.020, RSMo Supp. 2007, nominally imposes the tax on sellers of taxable property or services, it places the economic burden of the tax on the purchaser, § 144.060, RSMo 2000, reducing a seller’s responsibilities to collection, reporting, and remittance, § 144.021, RSMo 2000. Nevertheless, a seller who fails to collect the sales tax due from the purchaser is liable for the sales
tax. Id.; Overland Steel, Inc. v. Dir. of Revenue, 647 S.W.2d 535, 538 (Mo. banc 1983). A person who acts as an agent or broker for either an owner or purchaser of tangible personal property and neither pays valuable consideration for the property nor exercises dominion over it, except as an agent and under the principal’s instructions, is not buying and reselling the property. The person is a mere middleman or conduit and is not liable for sales tax on such transactions. See:

• Newhard, Cook & Co. v. Dir. of Revenue, Nos. RS-86-0561, RS-86-0692, 1988 WL 152909 (Mo. Admin. Hearing Comm’n, Aug. 4, 1988)

• Chase Resorts, Inc. v. Dir. of Revenue, No. RS-85-0780, 1987 WL 51167 (Mo. Admin. Hearing Comm’n, July 30, 1987)

Conversely, one who either orders property on that person’s own line of credit or pays for the property with personal funds and acquires complete dominion over the property is purchasing the property and reselling it and is liable for sales taxes, even though the person acts for another. See:

• Martin Coin Co. of St. Louis v. King, 665 S.W.2d 939 (Mo. banc 1984)

• Barter Sys. Int’l v. Dir. of Revenue, No. RS-84-2357, 1988 WL 152944 (Mo. Admin. Hearing Comm’n, Nov. 9, 1988)

• Exch. Nat’l Bank of Jefferson City v. Dir. of Revenue,
  Nos. RS-84-1079—RS-84-1083, 1988 WL 152917 (Mo. Admin. Hearing Comm’n, Aug. 23, 1988)

Cf. Becker Elec. Co. v. Dir. of Revenue, 749 S.W.2d 403 (Mo. banc 1988) (a “purchaser,” for sales and use tax purposes, is the person who both pays the purchase price and exercises some dominion over the property).

Missouri currently imposes the sales tax at a rate of four percent of the applicable tax base. Section 144.020. Section 43(a) of article IV of the Missouri Constitution imposes an additional sales tax at the rate of one-eighth percent to be expended by the Conservation Commission of the Missouri Department of Conservation, and article IV, § 47(a), of the Missouri Constitution adds one-tenth of one percent to the sales tax rate to be expended by the Missouri Department of Natural Resources. As a result, the aggregate Missouri sales tax rate is currently 4.225%. Cities and counties can and do impose additional sales taxes, as discussed in Chapter 17, Local Tax Systems, of this deskbook.

Section 144.014, RSMo Supp. 2007, reduces the tax rate of all retail sales of food from 4.225% to 1.225%. The term “food” includes only those products and types of food for which food stamps may be redeemed under the federal Food Stamp Program, 7 U.S.C. §§ 2011
et seq., including food dispensed through vending machines. Section 144.014.2. With the exception of vending machine sales, the term “food” does not include food or drink sold for consumption on or off premises by a restaurant, delicatessen, cafe´, or other eating establishment that derives more than 80% of its total gross receipts from sales of food prepared by the establishment. Id.

The sales tax rate is applied to the gross receipts derived from the sale of tangible personal property or the rendering of taxable service. The Missouri Sales Tax Law, §§ 144.010–144.525, RSMo 2000 and Supp. 2007 (Sales Tax Law), assists in applying this general principle to several generic classes of taxable sales transactions. Under the Sales Tax Law, gross receipts include the following:

• Except as otherwise provided by the trade-in rules of § 144.025, RSMo Supp. 2007, the purchase price paid or charged in the sale of tangible personal property, including the fair market value of any property exchanged in the transaction, § 144.020.1(1); see Ortbals v. Dir. of Revenue, 871 S.W.2d 435 (Mo. banc 1993) (the purchase price of a motor vehicle, under § 144.070.2, now RSMo 2000, included not only the trade-in allowance but also the manufacturer’s rebate assigned by the vehicle purchaser to the dealer)

• Fees paid in or to, and the amounts paid for admission and seating accommodations in, any place of amusement, entertainment, or recreation, § 144.020.1(2)

• The basic rate paid or charged on sales of electricity or electrical current, water, and gas, natural or artificial, to domestic, commercial, or industrial consumers, § 144.020.1(3)

• The basic rate paid or charged on sales of local and long distance telecommunications service, § 144.020.1(4)
• The basic rate paid or charged on sales of telegraph services, § 144.020.1(5)

• The amount paid for rooms, meals, and drinks at any hotel, restaurant, tourist camp, “or other place in which rooms, meals or drinks are regularly served to the public,” § 144.020.1(6)

• The amount paid for an intrastate ticket for transportation
  on a railroad, boat, airplane, or licensed bus or truck, § 144.020.1(7)

• Rental or lease of tangible personal property when sales tax has not been paid on the purchase of the property and rental or lease of a motor vehicle by a motor vehicle leasing company, § 144.020.1(8)

A refund received for sales tax erroneously...