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A printing company’s charges for scanning and imaging customer documents onto CDs for distribution to its customers were services not subject to Missouri sales tax. The true object of the transaction was not to obtain the CDs, but to obtain access to the customer’s own documents in a paperless format. The CD was merely a medium of transmission for the intangible product and incidental to a nontaxable service. Furthermore, the taxpayer’s charges per CD were not separated from the cost of the labor used in processing the scanned information and replicating the CDs. The production of the CDs was deemed a service rather than a taxable sale at retail. Since there was no sale of tangible personal property at retail, the taxpayer was not liable for sales tax on it production and distribution of the CDs. (Western Blue Print Co. v. Director of Revenue, Missouri Supreme Court, No. SC90172, April 20, 2010)


Enacted Missouri legislation clarifies the sales tax treatment for sales for resale. Purchases of tangible personal property or services for resale are exempt if the subsequent sale is any of the following: subject to tax in Missouri or another state, for resale, excluded from tax, subject to tax but exempt, or exempt in another state where the subsequent sale occurs. Two exceptions to the general rule are created for charges for admission or seating accommodations at places of amusement, entertainment, or recreation, and for charges for rooms, meals and drinks. In the case of the two exceptions, operators of such places must remit tax on the gross receipts received by such operators, and subsequent sales will not be subject to tax if they are an arm’s length transaction for fair market value with an unaffiliated entity. The purchase of tangible personal property by a taxpayer will not be considered to be for resale if such property is used or consumed by the taxpayer in providing a service on which tax is not imposed, except for purchases made in fulfillment of any obligation under a defense contract with the U.S. government. (S.B. 928, Laws 2010, effective May 12, 2010).


According to a Letter Ruling issued by the Missouri Director of Revenue, a company that maintains a warehouse should not charge Missouri sales tax on its sales of gloves. The taxpayer drop ships gloves that are ordered from a seller of gloves (Company A) to a separate purchaser (Company B). The taxpayer invoices and collects payment from Company A for the cost of the gloves and shipping, that in turn invoices Company B for the contract price. Since the taxpayer’s sale of gloves to Company A is considered a resale to a third party and not a sale at retail, the taxpayer should not be liable for sales tax. The fact that the taxpayer actually ships the product to the end user did not change the letter ruling analysis. (Letter Ruling No. LR5797, Missouri Department of Revenue, July 16, 2009)


A Missouri restaurant’s purchases of equipment used in the restaurant’s operations were not exempt from Missouri state sales and use tax as manufacturing equipment under Section 144.054, RSMo. To qualify for the manufacturing exemption, equipment must be used or consumed in the manufacturing process. Missouri takes the position that a restaurant does not manufacture products, but is in the business of selling and merchandising food and drinks, therefore not eligible of the manufacturing exemption (Letter Ruling No. LR5609, Missouri Department of Revenue, April 20, 2009)


Purchases of newsprint, ink and other articles of tangible personal property used to produce newspapers are exempt from sales tax, whether the newspaper is sold at retail or given away free. However, the taxpayer’s purchases of printed copies of its publication are subject to sales tax. (Letter Ruling No. LR5988, Missouri Department of Revenue, November 24, 2009)



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