Senate Bill 16 has been sent to the Governor for signature after it was passed through the Missouri House. If signed, this bill will reinstate the sales and use tax exemption of delivery charges which were called into question after the Missouri Supreme Court ruling on Alberici Constructors, Inc. v. Director of Revenue.
Prior to the court ruling, Missouri allowed separately stated shipping/delivery fees to be exempt from the tax base. Last year the Missouri Department of Revenue mailed nearly 100,000 letters to taxpayers, notifying them of the court decision and the potential obligation to remit tax on delivery charges. The letters indicated if delivery was intended to be a part of the sale of tangible personal property, the charge was subject to tax even when separately stated. A number of factors were presented to determine whether delivery is intended to be part of the sale.
Senate Bill 16 will allow usual and customary delivery charges that are stated separately from the sales price of taxable tangible personal property to be exempt from tax. If signed, the bill will go into effect August 28, 2017. It is important to note the bill does not define “usual and customary” delivery charges. Until such time as the Missouri Department of Revenue issues guidance, either through a regulation or letter rulings, we advise discussion of this matter with your tax advisor.
If the taxability of delivery charges in Missouri or other states raise concerns for your business, as either a purchaser or retailer, RubinBrown’s State and Local Tax professionals can assist in resolving those concerns.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
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