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Focus on Taxation: New Missouri Law on the “Resale” Exemption Enacted

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On May 12, 2010, Governor Nixon signed into law Missouri Senate Bill 928. The law became effective immediately.
May 27, 2010

On May 12, 2010, Governor Nixon signed into law Missouri Senate Bill 928. The law became effective immediately.


This law was enacted to legislatively correct and overrule two recent Missouri Supreme Court decisions: ICC Management vs. Department of Revenue and Music City Management vs. Department of Revenue. At issue in both cases was Missouri’s exemption for the purchase of items to be “resold” to others. These decisions held there must be a ‘taxable retail sale’ to an end user in order for the resale exemption to apply.

Accordingly, these decisions shifted the burden for remitting tax onto the seller for sales made to tax exempt entities such as schools, governments, and not-for-profits. Based on these decisions the Department of Revenue began to assert the sellers would be required to remit use tax on sales to tax exempt entities.

New Law

SB 928 specifically addressed the issues raised by the Supreme Court in both cases and returned the application of the resale exemption to its prior interpretation.

This act provides that a sale for resale will not be subject to sales tax provided such subsequent sale is taxed in this or another state, for resale, or exempt from tax.

Exceptions were made to the resale rule for those who operate jails for state or local governments and for charges for admission or seating accommodations at places of amusement, entertainment, or recreation, and for charges for rooms, meals, and drinks. Operators of such places must remit tax on the gross receipts received by such operators, however subsequent sales will not be subject to tax if they are an arms length transaction for fair market value with an unaffiliated entity.

Additionally, the act exempts sales of sporting clays, wobble, skeet, and trap targets to any shooting range or similar places of business for use in the normal course of business. Money received by a shooting range or similar places of business from patrons and held for redistribution to its patrons at the conclusion of a shooting event are exempt from state and local sales and use taxes.

A similar bill was filed in the House, but it was not voted on during this legislative session. HB 1442 is virtually the same bill, but does include some technical differences including language to address the time period between the courts ruling and the governor’s signature.

You can view both the passed Senate and House bills here: HB 1442  |  SB 928


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