Recently, the Missouri Supreme Court ruled in the Department of Revenue’s favor in a case addressing whether a sales and use tax refund claim was timely filed. The taxpayer, a plumbing equipment supplier, sold components of two water heating systems to a Missouri customer for use in Florida. The taxpayer charged Missouri sales tax on the three separate invoices/shipments and remitted the tax collected from the customer on the first two transactions to the Department on April 26, 2013. It remitted tax on the third invoice in December 2013. Later, it was determined—and agreed to by all involved— that Florida sales tax was due on the items. On May 11, 2016, the taxpayer requested a refund of the Missouri sales tax. The Department denied the refund related to the taxes remitted on April 26, 2013 on the basis that the refund claim was outside the statute of limitations. After the Administrative Hearing Commission ruled in the Department’s favor, the taxpayer appealed to the state’s highest court.
Under Missouri law, a refund will be allowed if the claim is filed “within three years from date of overpayment.” The Director’s position, which was supported by case law, was that the “date of overpayment” was the date that the taxpayer remitted the sales tax to the Department. Because that date (April 26, 2013) was more than three years from the date the refund claim was filed (May 11, 2016), the Director argued that the claim was barred by the statute of limitations. The taxpayer, on the other hand, argued that although it remitted the tax to the Department on April 26, 2013, it was not actually due until December 20, 2013 because the sale was not complete until the last component necessary for utilization of the water heating system was shipped in June 2013. In other words, in the view of the taxpayer, the three separate transactions were a single sale and only when the final shipment was made was the sale considered complete and sales tax due. The court noted that if the transactions were treated as a single sale, a regulation (promulgated after the case interpreting the phrase “date of overpayment”) defined the date of overpayment as the “due date of the original return or the date paid, whichever is later.” Thus, if all the transactions were a single sale for which tax was due in December 2013, under the regulation the sales tax refund claim would be timely for all the transactions. The court, however, concluded that under Missouri’s definition of a “sale at retail” each shipment was its own sale because each shipment was a transfer of tangible personal property for consideration. The court rejected the taxpayer’s position that the definition of a sale in the Missouri Uniform Commercial Code governed the outcome. As such, it was not necessary for the court to determine whether the regulation exceeded the scope of the statute. Please contact John Griesedieck at (312) 665-3024 with questions on Crescent Plumbing Supply Co. v. Director of Revenue.