Missouri: separately stated delivery charges exempt from sales tax
TAX ALERT |
On July 5, 2017, Missouri Gov. Eric Greitens signed Senate Bill 16, providing that separately stated delivery charges are exempt from Missouri sales and use taxes effective Aug. 28, 2017.
Historically, the state of Missouri considered separately stated delivery charges exempt from sales and use taxes until the Alberici Constructors, Inc. v. Director of Revenue decision. The Alberici Constructors decision held separately stated delivery charges were subject to state and local use taxes if the parties to the transaction intended delivery to be part of the sale of the property. Subsequent to that decision, the Missouri Department of Revenue delivered notices to all businesses registered as sellers of tangible personal property to explain the taxability of delivery charges. The notices provided factors to consider when determining whether delivery charges were a part of the sale of tangible personal property. As a result of the Alberici Constructors decision and the department notices, most separately stated delivery charges essentially became subject to sales and use taxes in Missouri.
Beginning Aug. 28, 2017, Senate Bill 16 specifically excludes ‘usual and customary’ separately stated delivery charges from the taxable sales price. However, if shipping charges are part of the sale price, and not separately stated, then the charges will follow the taxability of the sale itself. The bill aims to clarify the treatment of separately stated delivery charges, instead of relying on the parties to examine intent to determine taxability. Taxpayers with questions on when and how the change may impact invoicing should speak to their tax advisors about Senate Bill 16.