There are many “exemptions” (specified by statute) and “exclusions” (not within the defined taxable classes) from sales and use tax.
Merchants are not taxable on their purchase of goods as a “sale for resale” to a merchant’s customers (“wholesale”).
Goods “exported” (delivered out of state) by the merchant or common carrier are not subject to sales tax. If the out of state purchaser picks up goods from a merchant’s in-state location and transports them out of state themselves or arranges for delivery by “contract” carrier (arranged and paid for by the purchaser and considered the purchaser’s agent), the purchaser pays sales tax to the merchant’s state because the sale was completed in the state.
The merchant may be liable for collecting another state’s sales or use taxes for the purchaser’s state because the sale was completed in the other state by the merchant delivering the goods there (e.g., delivery by the merchant’s own truck or other facts establishing nexus, i.e., the merchant has sufficient contacts with the purchaser state).
Missouri Department of Revenue list of exemptions 8/11/17
- property returned by customers for a full refund or credit [§ 144.010.1(3)].
- “Livestock” raised in confinement for human consumption (cattle, calves, sheep, swine, ratite birds,e.g., ostrich and emu, aquatic products defined in section 277.024, R.S.Mo, legal domestic elk, goats, horses, other equine, or rabbits) [§ 144.010.1(4), definition, & § 144.030]
- The isolated or occasional sale of tangible personal property, service, substance, or thing, by a person not engaged in such business, unless there are multiple sales exceeding $3,000 in a single calendar year [§ 144.010.1(2)].
- property sold in the course of the partial or complete liquidation of a household, farm or non business enterprise [§ 144.010.1(2)]
- trade-in allowance is excluded in computing sales tax: 1) if sales or use tax was paid on the traded article or it was exempted or excluded; and 2) a bill of sale or other record shows the trade-in allowance [§ 144.025.1]
- trade-in treatment applies to a motor vehicle, boat or trailer sold (rather than traded directly) if the seller purchases or contracts for purchase of a subsequent motor vehicle or boat within 180 days [§ 144.025.1]
- motor vehicle rebates are not included in the purchase price to determine tax due [§ 144.025.1]
- computer printouts, output and computer-assisted photo compositions, or microfilm or microfiche enabling the purchaser to obtain the desired information contained for his or her own use are a non-taxable service [§ 144.010.1(10)]
- those products and types of food for which food stamps may be redeemed pursuant to the provisions of the Federal Food Stamp Program as contained in 7 U.S.C. § 2012 are taxed at 1% [§ 144.014 ]
- manufacturing equipment and replacement parts used to manufacture goods and services to be ultimately sold at retail
- sales to the government (federal or state) or charities
- property used for 90 days outside the state before use in Missouri (persons moving to the state)
- R.S.Mo § 144.011 – “Sale at retail” does not include certain transfers of tangible personal property [Transferee’s assumption of transferor’s liabilities incident to transactions in paragraphs 1 to 6 below do not disqualify the transfer if related to the property transferred and the assumption does not have as its principal purpose the avoidance of Missouri sales or use tax. § 144.011.2]
- From one corporation to another corporation by merger;
- Incident to the liquidation or cessation of a taxpayer’s trade or business, and NOT made in the ordinary course of the taxpayer’s trade or business;
- To a corporation solely in exchange for its stock or securities or as a contribution to capital;
- To a partnership solely in exchange for a partnership interest or as a contribution to the capital;
- By a corporation to its shareholders as a dividend, return of capital, liquidating distribution or in redemption of the shareholder’s interest;
- By a partnership to its partners as a current distribution, return of capital or liquidating distribution of the partnership or of the partner’s interest;
- Reusable containers for which a deposit is required and refunded on the containers return;
- Restaurant purchases of non reusable items furnished with retail sales of food or beverage, e.g., wrapping or packaging materials, containers, trays, napkins, dishes, silverware, cups, bags, boxes, straws, sticks and toothpicks;
- Hotel purchases of non reusable items furnished to guests and included in the room charge made, e.g., soap, shampoo, tissue and other toiletries and food or confectionery items offered to the guests without charge;
- Transfer of a manufactured home OTHER than:
- the initial retail sale (delivery of “manufacturer’s statement of origin” or “MSO”);
- delivery of “Repossessed Title” to a state resident IF tax was NOT paid on the initial transfer;
- The first transfer after December 31, 1985, IF tax was NOT paid on any transfer before December 31, 1985; or
- Charges for initiation fees or dues to:
- Fraternal societies, orders or associations operating under the lodge system where a substantial part of the activities are devoted to religious, charitable, scientific, literary, educational or fraternal purposes; or
- Organizations of past or present United States armed forces members or an auxiliary unit or society of, or a trust or foundation for such organization, and substantially all of the members are past or present United States armed forces members or cadets, spouses, widows, or widowers, and no part of the net earnings inure to the benefit of any private shareholder or individual.
Note that the “highway use tax” on use of vehicles on Missouri roads under § 144.440 may apply to vehicles transferred e.g., from a corporation to a shareholder on corporate dissolution in spite of the exemption under § 144.011.
- R.S.Mo § 144.027 – Replacement of a stolen or destroyed (casualty loss) motor vehicle, trailer, boat or outboard motor:
- purchased or contracted to be purchased within 180 days of payment by the insurance company,or date of loss if no insurance;
- up to the amount of insurance proceeds plus deductible; or
- fair market value if not insured determined by the Kelly Blue Book, NADA Used Car Guide, Abos Blue Book or the average of 2 appraisals from licensed motor vehicle or boat dealers
- IF all sales or use tax was been paid on the lost unit
- R.S.Mo § 144.030 – Various (in part)
- Materials, manufactured goods, machinery and parts used in manufacturing becoming a component part or ingredient of the new personal property resulting from such manufacturing
- Materials, replacement parts and equipment purchased for use directly on, and for the repair and maintenance or manufacture of, motor vehicles, watercraft, railroad rolling stock or aircraft engaged as common carriers of persons or property
- Replacement machinery, equipment, and parts and the materials and supplies solely required for the installation or construction used directly in manufacturing, mining
- Machinery and equipment, and parts and the materials and supplies solely required for the installation or construction of such machinery and equipment, purchased and used to establish new or to expand existing manufacturing or mining or fabricating plants in the state if such machinery and equipment is used directly in manufacturing or mining
- Animals or poultry used for breeding or feeding purposes
- Electrical energy used in the actual primary manufacture or mining
- Machinery, equipment, appliances and devices purchased or leased and used solely for the purpose of preventing, abating or monitoring air or water pollution
- insulin and prosthetic or orthopedic devices … including hearing aids and hearing aid supplies and all sales of drugs … medical oxygen, home respiratory equipment and accessories, hospital beds and accessories and ambulatory aids, … manual and powered wheelchairs, stairway lifts, Braille writers, electronic Braille equipment and, if purchased by or on behalf of a person with one or more physical or mental disabilities to enable them to function more independently, … scooters, reading machines, electronic print enlargers and magnifiers, electronic alternative and augmentative communication devices, and items used solely to modify motor vehicles to permit the use of such motor vehicles by individuals with disabilities or sales of over-the-counter or nonprescription drugs to individuals with disabilities
- aircraft to common carriers for storage or for use in interstate commerce
- sales made by or to not-for-profit civic, social, service or fraternal organizations, including fraternal organizations which have been declared tax-exempt organizations pursuant to Section 501(c)(8) or (10) … in their civic or charitable functions and activities and all sales made to eleemosynary and penal institutions and industries of the state, and all sales made to any private not-for-profit institution of higher education not otherwise excluded
- sales made to any private not-for-profit elementary or secondary school
- sales of feed additives, medications or vaccines administered to livestock or poultry in the production of food or fiber
- sales of pesticides used in the production of crops, livestock or poultry for food or fiber
- sales of bedding used in the production of livestock or poultry for food or fiber
- sales of propane or natural gas, electricity or diesel fuel used exclusively for drying agricultural crops
- natural gas used in the primary manufacture or processing of fuel ethanol
- sales of handicraft items made by the seller or the seller’s spouse if the seller or the seller’s spouse is at least 65 years of age, and if the total gross proceeds from such sales do not constitute a majority of the annual gross income of the seller
- livestock sales when either the seller is engaged in the growing, producing or feeding of such livestock, or the seller is engaged in the business of buying and selling, bartering or leasing of such livestock
- grain bins for storage of grain for resale
- feed which are developed for and used in the feeding of pets owned by a commercial breeder when sold to a commercial breeder
- purchases by a contractor on behalf of an entity located in another state exempt from sales and use taxes on purchases pursuant to the laws of the state
- R.S.Mo § 144.034 – Advertising sales by:
- legal newspapers pursuant to R.S.Mo Chapter 493;
- advertising agencies;
- broadcast stations; and
- standardized outdoor billboard advertising,
are a service and not the sale of tangible personal property. Tangible personal property purchased by the advertiser for use in producing advertising are for use or consumption and not for resale (i.e., subject to sales tax).
- R.S.Mo § 144.070.5
– Persons, companies, or corporations in the business of renting or
leasing motor vehicles, trailers, boats, or outboard motors (used
exclusively for rental or lease purposes, and not held for resale) may
IF approved to operate as a leasing company:
- pay the tax due at registration (and not chare on rentals); or
- in lieu thereof may pay a sales tax on the rental charged.