Taxation Law in Missouri

John P. Barrie, Esquire

Use Tax – Purchaser liable for use tax with respect to airplane purchased in Missouri.  Featherston v. Director of Revenue, No. 93048 (Mo. banc, October 15, 2013), Teitelman, J.

Taxpayer purchased an airplane in Missouri in a transaction that constituted an occasional sale not subject to sales tax. The director of revenue determined that the transaction was subject to use tax because the airplane was stored in Missouri. The Administrative Hearing Commission held that because the taxpayer did not purchase the airplane out of state, he was not subject to the Missouri use tax.

Reversed.  The Supreme Court of Missouri held that the commission’s decision that the use tax only applies to goods that are purchased outside the state and then used or stored within the state was incorrect, finding that the plain language of § 144.610, RSMo. provides that the use tax applies to all tangible property used or stored in the state unless an exemption applies. The Court noted that while most in-state sales are exempt from use tax, it did not mean that all in-state purchases are exempt from use tax and since there was no evidence of an exemption, use tax applied in this instance.

Sales Tax – Refunds approved with respect to credit sale bad debts. Circuit City Stores, Inc. v. Director of Revenue, No. 10-2239 RS (Mo. AHC, August 21, 2013) and Dillard’s, Inc. v. Director of Revenue, No. 11-0382 RS (Mo. AHC, October 4, 2013), C. Dandamudi

Taxpayer, in each case, sold it taxable merchandise in Missouri and collected sales tax on same, including on credit sales at the time of purchase.  PLCC Bank was the owner of the credit sales receivables. With respect to credit sales that became uncollectable, taxpayer filed for a refund of the sales tax paid on the uncollectable portion of such sales.  The director denied the refund claims on the basis that the taxpayer was not the entity that incurred the bad debt from the sales that were written off by PLCC Bank.

Held: Refund claims allowed.
  The administrative hearing commission, after reviewing the case law of other states, determined that even though the credit sale accounts receivables were assigned to PLCC Bank, when the bank wrote off some of the credit sales as bad debts, because the commission determined that the taxpayer and PLCC Bank were “acting as a unit”, they were, together, a seller entitled to a sales tax refund on overpaid sales tax under 12 CSR 10-102.100(3)(A).