3/20/19
LR 8007December 21, 2018
Applicant is a Missouri corporation that specializes in selling packaging supplies, equipment used for packaging, and providing packaging consulting services. Applicant sells its packaging products to its customers wholesale, shipping all of its orders to its customers via common carrier. Applicant has two different invoices: (1) lists a separately stated freight charge to ship the order via common carrier; and (2) lists a charge that combines the common carrier freight charge, and a handling charge for the packaging and labeling the order and processing the freight bill from the common carrier.
The taxability of a service is determined by whether or not the parties intended the service to be part of the transaction. Alberici Constructors, Inc. v. Dir. of Revenue, 452 S.W.3d 632, 639 (Mo. banc 2015). Missouri Code of State Regulations 12 CSR 10-103.600(3)(A) provides “[i]f the purchaser is required to pay for the service as part of the sale price of tangible personal property, the entire sale is subject to tax.
If the common carrier freight charge is separately stated, it is not subject to Missouri sales tax, but the handling charge is subject to Missouri sales tax.
The handling fee is intended to be part of the sales price so is subject to sales tax. Because Applicant combines the freight charge with the handling fee on the second form of invoice, the common carrier freight charge cannot be separated from the handling charge, so the total separately stated shipping/handling charge is subject to sales tax.