Section 6 General Principles

• Library: Tax Law 2009

By its terms, the Sales Tax Law applies to:

• sales of tangible personal property

• fees paid to or in amounts paid for admission and seating accommodations in, or fees paid to, any place of amusement, entertainment, or recreation; games; and athletic events

• basic rates paid or charged for electricity, water, and gas to domestic, commercial, or industrial consumers

• sales of telecommunications services and sales and rentals of all equipment and services pertaining or incidental to them

• sales of services of telegraph companies for transmitting messages;

• charges for rooms, meals, and drinks in any place in which they are regularly served to the public;

• charges for intrastate transportation by railroad, express car, boat, airplane, and certain buses and trucks engaged in the transportation of persons for hire; and

• rental or lease payments with respect to certain tangible personal property when sales or use tax was not paid at the time of purchase, lease, or rental.

Section 144.020.1(1)–(8), RSMo Supp. 2007.

With the exception of the definition of tangible personal property under § 144.605(11), RSMo 2000, of the Use Tax Law, neither the statutes nor the rules provide a definition distinguishing tangible personal property from intangible personal property or property from services. It is not clear whether in all cases the Missouri
sales tax character of a disputed item will be determined by the state property-law characterization—e.g., the character of a computer software “purchaser’s” rights as a license to use the program, rather than ownership of the program. In Marsh v. Spradling, 537 S.W.2d 402 (Mo. 1976), the Court applied common-law property concepts to determine that cabinets fabricated and installed by the seller became fixtures before the sale was completed. As a result, the cabinets became part of the real estate, avoiding sales tax on the transaction. Citing Marsh, the AHC applied both common-law concepts and the UCC in determining that water softeners installed by the seller remained tangible personal property subject to sales tax. Sims Enters., Inc. v. Dir. of Revenue, No. 92-000042RV, 1992 WL 336405 (Mo. Admin. Hearing Comm’n, Nov. 5, 1992).

The application of the statute requires characterization of the transaction as the sale of tangible or intangible property or of a service, which are not easily classified—e.g., the tangible product of a creative service business such as advertising, see 12 C.S.R. § 10-103.610...