Missouri Code of State Regulations › Title 12 - DEPARTMENT OF REVENUE › Division 10 - Director of Revenue › Chapter 4 - State Use Tax › Section 12 CSR 10-4.622 - Marketing Organizations Soliciting Sales Through Exempt Entity Fund-Raising Activities

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule interprets the use tax law
				  applicable to marketing organizations soliciting sales through exempt entity
				  fund-raising activities.
(1)
				Sales by marketing organizations through representatives or members of
				elementary and secondary schools, religious and charitable organizations and
				other not-for-profit entities exempt from sales or use tax are subject to
				Missouri use tax on the marketing organizations' net receipts from those sales.
				Use tax is not due or required to be collected on the amount retained by the
				exempt organization or that portion of the sales proceeds which will be
				returned to the exempt organization.
(2) Use tax shall be collected on each item
				sold in accordance with sections 144.610.2. and 144.635, RSMo and the tax may
				be collected by exempt organizations' members by a separate statement of the
				tax due on each sales slip or other evidence of sale.
(3) The marketing organization should
				instruct the exempt organization that use tax must be collected on the portion
				of gross receipts returned to the marketing organization.
(4) The tax due may be calculated on the
				proceeds to be returned to the marketing organization and then added to the
				original selling price (Example 1) or calculated on the proceeds to be returned
				to the marketing organization and included as part of the selling price
				(Example 2).
(5) Example 1:
				Marketing organization "A" agrees to provide widgets to the band at school "B"
				to be sold by band members to raise funds for a band trip. The widgets are to
				be sold for ten dollars ($10) each, with "A" to receive six dollars ($6) and
				"B" four dollars ($4) per widget. School "B" should collect twenty-five cents
				(250) use tax in addition to the ten dollar ($10) sales price. The twenty-five
				cents (250) represents use tax at the hypothetical rate of 4.225% on the
				six-dollar ($6) taxable receipts and should be remitted by school "B" to
				organization The four dollars ($4) received by school "B" is exempt from tax.
				"A" is required to remit twenty-five cents (250) to the Department of Revenue
				for use tax on its six dollar ($6) net receipts. It makes no difference whether
				school "B" (which collects ten dollars and twenty-five cents ($10.25) from each
				customer) sends the ten dollars and twenty-five cents ($10.25) to marketing
				organization "A" which then returns four dollars ($4) to band "B" or sends only
				six dollars and twenty-five cents ($6.25) to marketing organization
(6) Example 2: Using the same facts as
				Example 1 in section (5), school "B" could charge ten dollars ($10) for the
				widget with the express understanding that the ten dollars ($10) charged
				includes the use tax. The tax would be computed on the six dollars ($6)
				received by "A". The tax would still be twenty-five cents (250) ($6 X 4.225%).
				"A" would be required to remit twenty-five cents (250) per widget to the
				Department of Revenue. School "B" would receive three dollars and seventy-five
				cents ($3.75) per widget sold which would not be subject to tax.
*Original authority: 144.705, RSMo
					 1959.