Taxation Law in Missouri
Editor:John P. Barrie, Esquire
Premium tax - administrative charges and reinstatement fees are part of "direct premiums received" subject to tax. Shelter Mutual Insurance Company v. Director of Revenue, No. 09-1317 RG (Mo. AHC, December 23, 2010). Winn, C.
The Taxpayer, a mutual insurance company, charged its policy holders,
in addition to premiums for insurance, various administrative fees,
including monthly payment plan fees, filing charges and reinstatement
fees, and, in refund claims, submitted that these administrative fees
were not part of the "direct premiums received" and therefore were not
subject to the premium tax. The refund claims were denied and the
taxpayer appealed to the administrative hearing commission.
Held: Refund claims denied. The
commission found that the administrative charges were part of the
"direct premiums received" - being part of the actual consideration
paid by an insured for a contract of insurance - and therefore subject
to tax. The commission also found that the fees paid by the taxpayer
to Ernst & Young were not deductible "examination fees" since the
fees were not required under the statute and not paid at the direction
of the department.
Sales tax - reduced rate for food did not apply to sales of donuts. Krispy Kreme Doughnut Corporation v. Director of Revenue, No. 06-1044 RS (Mo. AHC, December 23, 2010), Winn, C.
Taxpayer, an operator of premium donut stores, filed refund claims
seeking a refund of sales tax collected on the basis that its sales
were subject to the lower rate of tax on food. The director denied the
refund claims. The taxpayer appealed to the administrative hearing
Held: Refund claims denied. The commission, while agreeing
with the taxpayer that the donuts (and certain related items)
constituted eligible food for home consumption (eligible for food
stamps), found that the taxpayer failed to establish that more than 20%
of its products were not derived from the sale of food prepared for
"immediate consumption." The comission further found that the term
"immediate consumption" meant "without further preparation" and not
"immediately consumed", as argued by the taxpayer.
The Missouri Bar Courts Bulletin, 11-Jan