Labor and Materials Used in Real Property Improvements Taxable to Contractor, Not Owner in Missouri

The Missouri Director of Revenue has issued a letter ruling to a taxpayer in regards to charges for labor and materials used in improving real property. The Director stated that when materials were integrated into real property, they were no longer considered to be tangible personal property and were not subject to tax. The contractor performing the work is considered to be the final user and consumer of the materials used in the improvements and is responsible for paying appropriate sales and use tax on the items used in the fulfillment of the real-property improvement contract. (Missouri Letter Ruling No. LR3685, March 12, 2007)

Posted on April 1, 2008