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A taxpayer’s purchases of machinery, equipment, materials, and supplies for use in its construction-related activities involving concrete are not exempt from Missouri sales and use tax. The taxpayer engages in various construction-related activities involving concrete that has already been poured and cured. These activities include cutting into concrete slabs and sealing the slabs after cutting, drilling or coring into large concrete slabs, and sawing into concrete to create openings.Missouri sales tax statutes exempt machinery and equipment and materials and supplies used solely to establish either a new or a replacement manufacturing, mining, or fabricating plant only if the machinery and equipment is used directly in the manufacturing of a product for final use or sale. The taxpayer does not create a final product that will be sold for final use or consumption. Therefore, the taxpayer’s purchases of machinery, equipment, materials, and supplies are not exempt.

 

Section 144.054.2, RSMo provides an exemption from state sales and use taxes and local use taxes for: [E]lectrical energy and gas, whether natural, artificial, or propane, water, coal, and energy sources, chemicals, machinery, equipment, and materials used or consumed in the manufacturing, processing, compounding, mining, or producing of any product[.] The Missouri Supreme Court recently decided Ben Hur Steel Worx, LLC v. Director of Revenue and determined that materials and supplies purchased to be used in construction activities are not exempt under Section 144.054.2. The taxpayer is using the machinery, equipment, materials and supplies in its construction related activities. Therefore, its purchases of the building machinery and supplies are not exempt from tax under this statute. (Letter Ruling No. LR 7531, Missouri Department of Revenue, April 10, 2015)

(05/20/2015)

Equipment used to test new formulations of architectural and industrial coating products is not subject to Missouri state sales and use tax and local use tax but is subject to local sales tax. The taxpayer performs research and development to create new formulations and improve existing formulations of its coatings. The relevant statute exempts from state sales and use tax and local use tax, but not local sales tax, sales of “machinery, equipment, and materials … used in research and development related to manufacturing, processing, compounding, mining, or producing any product.” The use of the equipment qualifies as a research or development activity related to manufacturing. Also, equipment used to test existing formulations to improve the formulations of the coating products is not subject to state sales and use tax and local use tax, but is subject to local sales tax. The improvement of the formulation of an existing product produces a new product. (Letter Ruling No. LR 7414, Missouri Department of Revenue, September 12, 2014)

(05/13/2015)

On March 10, 2015, a bipartisan group of senators introduced the Marketplace Fairness Act of 2015. Similar legislation – the Marketplace Fairness Act of 2013 – was previously introduced in February 2013 and passed by the Senate on May 6, 2013. That legislation failed to be enacted. If passed, the Marketplace Fairness Act of 2015 would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. For more information on the previous legislation, visit Federal Government Introduces New Remote Seller Bill. (Marketplace Fairness Act of 2015, March 10, 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.

(03/16/2015)

On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.

 

On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.

 

For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.

 

For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.

 

(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)

(02/12/2015)

President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.

 

For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.

 

(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)

(09/26/2014)

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