Missouri Discusses the Taxability of Countertop Sales and Installations

An out-of-state retailer was found liable for Missouri sales and use tax on its sales of uninstalled countertops. Conversely, the taxpayer was not required to collect tax on its sales of installed countertops to Missouri customers. The taxpayer sells home improvement products, such as countertops, both uninstalled and installed. Since an uninstalled countertop is tangible personal property, the taxpayer should collect sales tax on its sale to a Missouri customer. For the installed countertop sales, the fabrication and installation is subcontracted to other companies (Missouri supplier and out-of-state supplier). The suppliers bill the taxpayer for the fabrication and installation of the countertops. Therefore, the taxpayer is a contractor making improvements to the real property and should not collect sales tax from the customer. However, when the taxpayer subcontracts the installation to the third party suppliers, they are considered the final user of the countertop prior to it becoming part of the real property. As the final user of the item, the suppliers should self-remit sales or use tax on their cost of materials to manufacture and install the countertop. (Letter Ruling No. LR5820, Missouri Department of Revenue, August 7, 2009)

Posted on November 8, 2009