Missouri Ruling On Out Of State Retailer Shipments
- Jun 18, 2012 | Susan McLain
A recent Missouri State Ruling, LR 7087 “Taxability of Items Sold by a Retailer & Shipped and/or Installed in Locations in Missouri,” tries to clarify how taxability works with products sold and delivered to Missouri residents under certain circumstances, across state lines.
The retailer requesting the ruling did not have property or business locations in Missouri, but he did have sales representatives physically present in the state. Independent contractors are used for all installation work.
Retail sales without installation are governed under Missouri Code of State Regulation 12 CSR 10-113.200(4)(G):
A seller has no place of business in Missouri. A sales representative who works from a non-Missouri location visits Missouri customers. All orders are accepted outside Missouri and goods are shipped to Missouri customers from outside the state. The seller must collect and remit use tax.
In addition, where a retailer contracts a third party for installation, and delivers the goods to the contractor who performs the installation, the retailer is liable for use tax on the property. “Missouri Code of State Regulations 12 CSR 10-112.010(1) provides,
In general, a contractor is the final user and consumer of the materials and supplies used and consumed in fulfilling a construction contract and which become a part of a completed real property improvement.”
Where an item is drop shipped from the manufacturer or wholesaler, and not direct from the retailer, but the drop shipper does not collect sales tax, the retailer is responsible to collect and remit sales tax. The Ruling states:
All of Applicant’s drop shipment sales to Missouri customers are subject to Missouri sales tax because title to the products always transfers to Applicant when the products are delivered in Missouri. Title of the products then passes within Missouri from Applicant to Applicant’s customers. Therefore, Applicant should collect and remit sales tax on sales that are drop shipped by Applicant’s suppliers from within Missouri or from outside Missouri to Applicant’s customers in Missouri.
This is supported by Missouri Code of State Regulations 12 CSR 10-113.200(1) and 12 CSR 10-113.200(3)(C), as well as Section 144.020.1, RSMo, which states, “…a sale of tangible personal property is subject to sales tax if title to or ownership of the property transfers in Missouri….”
This letter ruling is “…binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of…” the letter, unless a change to the law supersedes the letter ruling. Any additional information should be directed to the General Counsel’s Office in Jefferson City, Missouri.