Opinion ID: 1423852
Heading Depth: 2
Heading Rank: 3

Heading: Sales and Use Tax Payments and Refund Claims.

Text: Additionally, like other companies doing business in Missouri, President is subject to sales tax and use tax. These two types of taxes are part of a system of taxation of tangible personal property that focuses on sales at retail. Sipco, Inc. v. Dir. of Revenue, 875 S.W.2d 539, 541 (Mo. banc 1994). Retail sales that occur within Missouri are subject to a sales tax under section 144.020, RSMo Supp.2006, which imposes a tax upon all sellers for the privilege of engaging in the business of selling tangible personal property . . . at retail in this state. Out-of-state purchases are subject to a compensating use tax under section 144.610, which imposes a tax for the privilege of storing, using or consuming within this state any article of tangible personal property. During the period in question, President collected and paid sales tax on the meals it sold to customers at its restaurant and deli. Sec. 144.020, RSMo Supp.2006. It paid use tax on the comps it provided to special customers. Additionally, President paid use tax on slot machines and other gaming equipment it purchased from out-of-state vendors. Sec. 144.610. In 1998, the Director began an audit of President's sales and use tax returns for the years 1995 through 2002. In 2001, [3] the auditor discovered two problems related to the tax reported on comps. First, President erred in paying use tax on the food and drink purchased for these comps; it should have paid sales tax because the food and drink were purchased within Missouri. Second, President had erroneously computed the use tax at the higher rate of tax applicable to non-food purchases. After receiving the results of the audit, President filed a refund claim for the use tax it paid on its comps purchases for the period from January 1998 to September 2000. After the auditor offset the use tax President had incorrectly paid against the sales tax that it should have paid and applied the correct lower rate of tax, President received a $115,547.33 refund. Later, President filed claims for refund of all sales and use taxes it paid on the food purchased for comps for the period from January 1995 to February 2003. It noted that both the sales tax and use tax statutes contain exclusions and exemptions that eliminate taxation of the sale or use of property that is to be resold (collectively the resale exemption). Sec. 144.010.1(10), RSMo Supp.2006 (sales tax resale exclusion); sec. 144.615(6), RSMo Supp.2006 (use tax resale exemption). These sections avoid multiple taxation of the same property as it passes through the chain of commerce from producer to wholesaler to distributor to retailer. Sipco, 875 S.W.2d at 541. President argued that this resale exemption applied to the food it provided on a complimentary basis to certain customers, and so it should not have paid either sales tax or use tax of any amount on these purchases. At around the same time, President filed two refund claims for use tax it had paid on its purchases of gaming equipment [4] from out-of-state vendors for the periods from January 1995 to December 1997 and January 2000 to December 2002. President claimed that these purchases qualified for the use tax resale exemption. See sec. 144.615(6), RSMo Supp.2006. Additionally, President claimed that an exemption afforded to coin-operated amusement businesses applied to its purchases of slot machines. See sec. 144.518, RSMo Supp. 2006.