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On December 18, 2015, President Barack Obama signed H.R. 2029 – Consolidated Appropriations Act, 2016. The Act extends the Internet Tax Freedom Act (ITFA) through October 1, 2016. Prior provisions that grandfather taxes that existed prior to October 1, 1998 are also extended through October 1, 2016. For our previous news item on this topic, see Internet Tax Freedom Act Extended Until December 11, 2015. (H.R. 2029 – Consolidated Appropriations Act, 2016)


On September 30, 2015 the U.S. House of Representative passed H.R. 719, which includes a provision that would extend the Internet Tax Freedom Act (ITFA) through December 11, 2015. The ITFA was scheduled to expire on October 1, 2015. The bill will now go to President Obama for signature.


To see our previous news item on the ITFA, visit Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.


To see an update on this news item, visit Internet Tax Freedom Act Extended Through October 1, 2016,


(H.R. 719)


A taxpayer’s sales of canned ERP business management software delivered electronically via the internet are not subject to Missouri sales tax. Customers download the software online directly from the taxpayer at the time of purchase and never take possession of any tangible personal property. Therefore, the sales of software delivered electronically to the customer via the internet are not subject to sales tax.(Letter Ruling No. LR 7591, Missouri Department of Revenue, July 1, 2015)


On June 15, 2015, Representative Jason Chaffetz (R-UT) introduced the Remote Transactions Parity Act (RTPA) of 2015 in the U.S. House of Representatives. The bill – similar to the Marketplace Fairness Act (MFA) of 2015 – pertains to sales and use taxcollection obligations for remote sellers, but the RTPA contains some differences and several additional provisions. Unlike the MFA’s $1 million small seller exception, the RTPA’s small seller exception is as follows: first year: $10 million; second year: $5 million; third year: $1 million. The exception goes away in the fourth year. Furthermore, under the RTPA sellers utilizing an electronic marketplace are not considered small sellers and are not entitled to the exception, no matter the year. Under the RTPA, sellers would not be audited by states where they don’t have a physical presence. There would be a three year statute of limitations for assessments on remote sellers. The bill would enable remote sellers to refund over-collected tax to customers. The RTPA also specifies that a state would not be authorized to impose a sales and use tax collection requirement on remote sellers until it has certified multiple software providers that are certified in all states seeking to impose authorization requirements. The RTPA would also allow customers to pursue refunds of over-collected tax from remote sellers. However, RTPA does not preempt states from imposing sales and use taxes on remote sellers that do not have physical presence under this definition. It merely authorizes states to impose sales and use tax on remote sellers without a physical presence. Under the RTPA, if a seller has nexus under existing law, including Quill v. North Dakota, then the state may still impose a sales and use tax collection requirement.  The bill is assigned to the Judiciary Committee just like the MFA.  On July 1, 2015 it was referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law. (H.R. 2775, the Remote Transactions Parity Act of 2015)


UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.


The Missouri Supreme Court has held that a Missouri corporation that designs and builds exhibits for trade shows was liable for state sales tax on its sales of displays to customers that were delivered by common carrier to out-of-state addresses since title transferred in Missouri because delivery was stated as "F.O.B. (free on board) manufacturer."The court looked to the display order language to decide when title passed. The display order provided that title transferred to the purchaser upon delivery of the goods to the shipper.The display order stated that "delivery will be F.O.B. manufacturer" and that "all transportation, handling and insurance costs incurred in delivery will be charged to Purchaser." Additional language in the display order also made it clear that responsibility for the goods transferred to the buyer upon their placement with a shipper. The court found that inspecting the goods on arrival did not delay the transfer of title but rather, this was when the goods could no longer be returned. Under the Uniform Commercial Code, title passed to the buyer when the seller completed its performance, which was when the goods were delivered to the shipper.The Taxpayer argued that Regulation 12 CSR 10-113.200(3)(B) would apply.  This regulation states that for goods delivered to a common carrier or contract carrier for delivery to an out of state location, title does not transfer in Missouri and the sale is not subject to Missouri sales tax, unless otherwise agreed to by the parties.  The Court ruled that this regulation is invalid as it expands the statute which states that title passes to the buyer at the time and place at which the seller completes his or her performance with reference to the physical delivery of the goods.  The Court also stated that the regulation could only apply when the seller actually controls the delivery, not when it transferred responsibility for delivery to the purchaser upon delivery to the common carrier.  Based on this decision, any transaction with FOB Origin terms will be considered a sale in Missouri subject to Missouri sales tax regardless of where the ultimate destination of the goods will be.  Anyone purchasing from a Missouri supplier is advised to review their delivery terms.  It is unclear if other states will recognize the Missouri tax as legally due and provide a credit for tax paid in Missouri against the destination state use tax.  (Visionstream, Inc. v. Director of Revenue, Missouri Supreme Court, No. SC94441, June 30, 2015)



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