The Missouri Department of Revenue (Department) recently issued Letter Ruling LR 8408, confirming that certain digital gaming items and online software subscription are not subject to Missouri sales or use tax. The ruling involves a Missouri based company that operates an online marketplace where users buy and sell digital cosmetic items used in the video game Counter-Strike. The company also offers paid subscriptions that give users access to additional online software features. The company requested guidance on whether these transactions were taxable and whether it was required to collect and remit sales tax as a marketplace facilitator.
The Department determined that transfers of digital cosmetic items are not subject to sales tax because they are electronically stored information rather than personal property. Under Missouri law, sales tax applies to tangible personal property and specifically taxable services. Because these digital items do not fall into either category, their transfers are not taxable. The Department also determined that the company’s paid software subscriptions were not subject to sales or use tax, explaining that the software subscription service was not among the specifically listed taxable services under Missouri law.
Additionally, the Department concluded that the company did not have to act as a marketplace facilitator for these transactions. The ruling explained that the underlying transfers were not taxable. It also noted that the company did not control the transfer of the digital items or collect and transmit the payments between users in the manner required under Missouri’s marketplace facilitator rules.
The ruling provides helpful guidance for businesses offering digital products, online software subscriptions, or marketplace services in Missouri. It highlights the distinction between taxable physical products and certain nontaxable digital products and online services. It also reinforces that not all products and services sold online are subject to sales tax. While the decision provides useful guidance, it applies specifically to the requested company and the facts presented, Businesses with similar offerings should review their products and services before figuring out whether sales tax applies.
(Letter Ruling LR 8408, Taxability of Digital Cosmetic Items, Missouri Department of Revenue, September 24, 2026)