United States

Missouri court rules use tax does not apply to direct mail


On April 5, 2016, the Missouri Supreme Court issued its decision in  Office Depot v. Director of Revenue, holding that Office Depot, a national retailer of office products, was entitled to a use tax refund on catalogs shipped to Missouri residents when the catalogs were printed and mailed from outside of Missouri by a third party.

Office Depot, which has its headquarters in Florida and multiple physical retail locations in Missouri, used a third party vendor to print and mail their catalogs to Office Depot’s customers in Missouri identified on an address list that Office Depot had provided. The catalogs were delivered for shipment by the vendor to a post office outside of Missouri. 

Office Depot accrued and paid Missouri use tax based on the cost of the printed catalogs shipped to their customers in Missouri, and subsequently filed for refund with the Missouri Director of Revenue based on the Missouri Supreme Court’s prior decision in May Department Stores Co. v. Missouri Director of Revenue. The Director denied the refund, and Office Depot appealed the decision to the Commssioner. The Comssioner ruled in in favor of Office Depot based on Missouri Revised Statutes section 144.605(13), stating that the taxpayer was not subject to use tax on the catalogues because it did not exercise any right or power over the tangible personal property incident to the ownership or control over that property.  The Director of Revenue appealed the decision to Missouri Supreme Court. 

Following the approach of the Commissioner, the Missouri Supreme Court relied on section 144.605(13), stating the question of whether use tax applies depends on whether Office Depot exercised a right or privilege of ownership or control over the catalogs at the time they entered the state. The court then looked to its prior decision in May Department Stores Co. v. Missouri Director of Revenue for guidance, and found that the facts and circumstances in that case were substantively similar to the present case.  May Department Stores contracted with a non-Missouri printer to print and ship their catalogs into the state via common carrier, and transfer to the common carrier occurred outside of the state. The court ruled in May that there was no taxable “use”, or exercise control over, the catalogs at any time in Missouri, and, therefore, May did not owe use tax on the catalogs. The court determined that there was no legal distinction between the two cases, and awarded Office Depot the refund. 

This ruling offers an opportunity for Missouri retailers who hire third-party printers to print and mail their direct mail items (e.g., catalogues, mailers, etc.) from outside of Missouri to file for refunds if they have paid Missouri sales or use tax on their direct mail items.   


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