MO sales tax letters: delivery charges
Posted On: 8-24-2016 | Posted By: Katie Barthel, CPA
The Taxation Division of the Missouri Department of Revenue recently began to issue alerts to all Missouri taxpayers registered for sales tax collection, indicating they might have an obligation to charge and remit sales taxes on delivery charges that were previously thought to be exempt from taxation.
These notices are being generated pursuant to Senate Bill 18, which was passed in 2015. This bill now requires the Department of Revenue to notify taxpayers when a decision or order of the director of revenue, the administrative hearing commission, or the courts changes the Department’s interpretation or position on sales or use tax law.
The alerts being generated by the Department assert that delivery charges may be taxable if delivery is intended to be part of the sale. The Missouri Supreme Court ruled in Alberici Constructors, Inc. v. Director of Revenue, 452 S.W.3d 632 (Mo. banc 2015) that intention is a key factor; if delivery was intended to be part of the sale of personal property, the seller would be expected to collect and remit sales taxes on the delivery fee, even if the delivery fee is separately stated on the invoice.
Knowing how and when to assess sales and use taxes can a tricky chore for small business owners, which is why the Department is now required to issue these alerts. However, it’s important to note that the state’s new interpretation of the sales tax laws might or might not apply to your business. For help determining whether your delivery fees should be taxable or exempt, please contact your WK advisor at (573) 442-6171 or (573) 635-6196.
You are likely to get more of these letters in the future! As always, please let your WK advisor know if you are concerned about how they might apply to you.