Source: https://cecb.com/sales-tax-exemptions/
Timestamp: 2020-07-07 03:48:17
Document Index: 79097446

Matched Legal Cases: ['§\u2009010', '§\u2009144', '§\u2009144', '§\u2009010', '§\u2009010', '§\u2009025', '§\u2009025', '§\u2009025', '§\u2009010', '§\u20092012', '§\u2009144', '§\u2009144', '§\u2009144', '§\u2009144', '§\u2009144', '§\u2009144']

Sales Tax Exemptions - Carnahan, Evans, Cantwell & Brown, P.C.
Sales tax is imposed by states for “the privilege of selling tangible property” and certain taxable services “at retail,” i.e., to the ultimate consumer of the property or service.
The financial burden of the tax is normally passed on to customers, but sellers are required to collect, report, and pay over the tax. Sellers need to keep apprised of changes in the laws and their application and make sure they comply, because they may be required to pay sales tax not collected on transactions and be unable to recover those taxes from the original purchaser because of the effort required and possible damage to ongoing relationships with customers.
Sellers’ purchase of items to sell to customers are not taxable as a “sale for resale” (“wholesale”).
Five states (Alaska, Montana, New Hampshire, Delaware, and Oregon) do not impose sales taxes, but most American sellers must collect and report sales tax.
States normally also have a “compensating use tax” system in place requiring in-state purchasers to pay a tax comparable to sales tax on items purchased without being subject to sales tax, e.g., purchased outside the state or on the internet, which the purchaser stores, uses, or consumes in the state.
States are actively working to enhance their sales tax collection, both by limiting exemptions and expanding application to out-of-state sellers, especially online activity. Out-of-state and online sellers with a physical presence in a state (a store, office, warehouse, employees, agents, etc.) must collect sales tax from customers in that state. In addition, states can require out-of-state sellers that don’t have a physical presence but do have “nexus” (i.e., significant connections or contacts with the state) to collect that state’s sales tax from sales in that state. States ideally want to expand the application of their sales tax to out-of-state sellers who merely “exploit” that state’s economy, i.e., make money from the state’s residents.
A related issue beyond this article is the requirement to file returns and pay income or business activity taxes related to sales in other states.
There is also an effort to enact a national “Streamlined Sales Tax Act,” which would require vendors (including out-of-state vendors) to collect and pay over sales tax based on the purchaser’s location (destination sourced) rather than the vendor’s location.
Companies that conduct business across state lines must be familiar with and follow all sales tax laws that apply to their products and services as they transact business in various states. Sales tax laws vary from state to state as each state’s statutes differ. Each state’s administrative agencies and courts interpret and enforce the state’s laws, even if seemingly similar, in different ways. The laws and their interpretations can change over time, so companies need to stay informed of changes.
Certain items or transactions are not subject to sales tax due to “exemptions” (specified by statute) and “exclusions” (not being within the defined taxable classes) from sales and use tax.
To avoid paying sales tax that does not apply, sellers and purchasers need to check for exemptions and exclusions. This article does not include every exemption offered in Missouri, and sellers and purchasers should consult with an attorney to be sure that they are taking advantage of all the exemptions and exclusions that apply to their situation.
Property returned by customers for a full refund or credit [§ 010.1(3)].
“Livestock” raised in confinement for human consumption (cattle, calves, sheep, swine, ratite birds,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 [§ 010.1(2)].
Property sold in the course of the partial or complete liquidation of a household, farm or non business enterprise [§ 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 [§ 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 [§ 025.1]
Motor vehicle rebates are not included in the purchase price to determine tax due [§ 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 [§ 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 ]
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]
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
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;
S.Mo § 144.030 – Various (in part)
S.Mo § 144.034 – Advertising sales bylegal newspapers pursuant to R.S.Mo Chapter 493, advertising agencies, broadcast stations, andstandardized outdoor billboard advertisingare a service and not the sale of tangible personal property. Tangible personal property purchased by the advertiser for use in producing advertising is for use or consumption and not for resale (i.e., subject to sales tax).
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:
Sales and use tax laws are complex, differ from state to state, and do not always apply in the way that you might imagine. Small details can completely change the application of sales and use taxes, and can result in a company failing to pay the correct sales taxes. To be sure that you follow your state’s tax laws and regulations, discuss the details and your specific situation with a tax lawyer.
Contact the attorneys at Carnahan, Evans, Cantwell & Brown, P.C. if you need help managing sales tax exemptions. It is easier for an attorney to represent you if you are both in the same geographic area, but we may still be able to assist you even if do you not live in southwest Missouri. Let us provide you with the sound legal counsel you need to manage the situation and navigate the regulations of the IRS or Missouri Department of Revenue. To get started, telephone us at 417-447-4400 or contact us online. We look forward to hearing from you!
Portions of this article are © Frank C. Carnahan, www.carnahanlaw.com, included by permission.