Section 47 Use Tax Purpose, Rates, and Base

• Library: Tax Law 2009

The Missouri Compensating Use Tax Law, §§ 144.600–144.761, RSMo 2000 and Supp. 2007, is generally designed to tax out-of-state purchases of tangible personal property by Missouri residents who use the property within the state. These purchases normally are not subject to Missouri sales tax because of constitutional limitations and the express limitation contained in § 144.020.1, RSMo Supp. 2007, restricting the imposition of sales tax to those sales occurring in Missouri. See §9.5 above, which discusses the determination of situs for sales tax purposes. When circumstances prevent the imposition of the sales tax, the use tax may apply.

The Supreme Court of the United States has long recognized that use taxes serve a dual purpose:

2. To augment state revenues

3. To protect in-state merchants against competition from out-of-state merchants who are not subject to a local sales tax or who are taxed at lower rates

See, e.g., Miller Bros. Co. v. Md., 347 U.S. 340, 343 (1954); Henneford v. Silas Mason Co., 300 U.S. 577 (1937). The Supreme Court of Missouri similarly has recognized that, “The primary function of the use tax is to complement, supplement, and protect the sales tax by creating ‘equality of taxation of purchases or use of property purchased outside the state which cannot be reached as sales because of the commerce clause of the federal constitution.’” Mgmt. Servs., Inc. v. Spradling,
547 S.W.2d 466, 468 (Mo. banc 1977) (quoting Farm & Home Sav. Ass’n v....