Detailed Missouri Development
On the last day of its regular session, the Missouri legislature passed Senate Bill 153, which now awaits Governor Mike Parson’s signature. If enacted, the bill would make several changes to Missouri’s sales and use tax code. Significantly, Missouri is currently the only state that has not updated its sales and use tax nexus standard post-Wayfair. Senate Bill 153 would repeal the state’s click-through nexus law and would implement an economic nexus threshold effective January 1, 2023. Specifically, a person would be engaged in business in Missouri provided that the seller’s gross receipts from taxable sales of tangible personal property exceeded $100,000 in the previous or current calendar year.
Also effective January 1, 2023, a marketplace facilitator that meets the economic nexus threshold would be required to collect and remit use tax on sales made through its marketplace on behalf of a marketplace seller. A marketplace facilitator is defined as “a person that (a) facilitates a retail sale by a marketplace seller by listing or advertising for sale by the marketplace seller, in any forum, tangible personal property or services that are subject to [use] tax . . . and (b) either directly or indirectly through agreements or arrangements with third parties collects payment from the purchaser and transmits all or part of the payment to the marketplace seller.” Certain types of entities are excluded from the definition of a marketplace facilitator, including a person who provides internet advertising services and does not collect and transmit payment; a person that provides travel agency services (as defined); and a third party financial institution appointed by a merchant or a marketplace facilitator to handle various forms of payment transactions, such as processing credit cards and debit cards. Although a marketplace facilitator is required to collect and remit the use tax, the bills would also permit a marketplace facilitator and a marketplace seller to enter into agreements regarding the fulfillment of the requirements of the statute. A marketplace facilitator’s sales would be deemed to be consummated at the destination of the shipment. A marketplace facilitator, similar to any retailer, would be eligible for the state’s vendor discount.
In addition to the obligations of remote sellers and marketplace facilitators, Senate Bill 153 would allow certified service providers (CSPs) to collect and remit sales taxes on behalf of sellers. While statutes that permitted participation in the Streamlined Sales and Use Tax Agreement would be repealed, the bill includes provisions that illustrate an attempt to align Missouri with the Agreement’s direction. For example, Missouri would be authorized to work with the Streamlined Governing Board to allow sellers to use the Board’s CSP and central registration system services. The Department of Revenue would be required to maintain a database of boundary changes for all localities in the state, and a database for assigning taxing jurisdictions and rates based on street addresses. In addition, similar to Streamlined states, it would be required to publish a taxability matrix and provide relief to sellers and CSPs that rely on the taxability matrix to their detriment.
Various other sales and use tax changes are included in Senate Bill 153, such as amending an exemption for certain purchases that are used or consumed in manufacturing, processing, compounding, mining, or processing of any product so that the exemption applies to local sales taxes, not just state sales tax and state and local use tax. The bill would modify the back-to-school and Show-Me-Green sales tax holidays so that localities cannot opt out of the holidays beginning in 2023. All of these amendments will be effective January 1, 2023.
The legislature has also passed Senate Bill 226, which would exempt the purchase of food or other products that are intended for resale but cannot be resold because of theft, damage, or spoilage rendering the item unsaleable; exempt certain medical devices that use electric fields for the purpose of treating cancer; and permit certain retailers to retain the full amount of state sales or use tax collected on sales of tickets or admissions to a movie or film, to a musical performance, or concessions sold on-site at certain venues through June 2023. For more information on these Missouri sales and use tax changes, please contact John Griesedieck.
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