Missouri has enacted a law to allow the enforcement of tax collection on remote sellers/retailers of taxable product and services through catalog or internet sales.
Remote sellers/retails are generally those companies that solicit and/or make sales through catalogs, third party sales force or the internet. Examples of such companies would include L.L. Bean, Lands’ End and Amazon.
The new law, Senate Bill 23, goes into effect August 28, 2013 and enacts ways that certain online retailers may now have nexus, or connection, to Missouri.
Prior to August 28, 2013, remote sellers/retailers were not required to collect sales/use tax from their Missouri customers unless they had a location or sales people in this state, also known as nexus, because they did not meet the legal definition of "engaging in business" or "maintaining a business" in Missouri.
If you are a remote seller/retailer selling goods and services into Missouri you may now have to collect sales/use tax from your customers. This will require you to determine the taxability of the products/services being sold and the applicable rate of tax to charge.
Detail Discussion of the Law
The law, which contains both remote seller affiliate nexus and click-through nexus provisions, is very similar to other nexus laws passed in New York, Illinois and many other states. These laws have been called “Amazon” nexus laws because the original law passed in New York was designed to require those using Amazon to sell products to collect New York sales taxes.
Under SB 23, a vendor (seller) is presumed to “engage in business activities” within Missouri if any person associated with the vendor in certain enumerated fashions (other than a common carrier acting in its capacity as such) has substantial nexus with the state.
- Substantial nexus can be achieved in a variety of ways that include, but are not limited to:
- Selling a similar line of products under the same or similar business name as the vendor
- Maintaining a physical structure in Missouri to facilitate delivery of property or services sold by the vendor
- Providing follow-up services to the vendor’s customers such as installation or maintenance within the state
- Facilitating the vendor’s delivery of property to customers in the state
- Conducting similar activities significantly associated with the vendor’s ability to establish and maintain a market in Missouri for the sales
SB 23 also provides that a vendor is presumed to engage in business activities within Missouri if the vendor enters into an agreement with one or more Missouri residents under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website, an in-person oral presentation, telemarketing, or otherwise, to the vendor, if the cumulative gross receipts from sales by the vendor to customers in Missouri who are referred to the vendor by all residents with this type of an agreement with the vendor is in excess of $10,000 during the preceding twelve months.
This click-through nexus presumption may be rebutted by demonstrating that the person’s activities in the state are not significantly associated with the vendor’s ability to establish or maintain a market in Missouri for the vendor’s sales or that the residents with whom the vendor has an agreement did not engage in any activity within Missouri that was significantly associated with the vendor’s ability to establish or maintain the vendor’s market in Missouri during the preceding twelve months.
Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.