A recent ruling by the Missouri Supreme Court adds some clarity to the calculation of a Missouri dealership’s taxable income.
Many businesses are able to pay Missouri income tax on only a portion of their taxable income. The income that they pay tax on in Missouri is calculated using the ratio of Missouri sales to total sales. A sale is considered a Missouri sale if it is delivered to the customer in Missouri. Since vehicles are typically delivered at the dealership, most dealerships do not use this apportionment method and report all their taxable income as Missouri income.
The Missouri Supreme Court recently ruled that a dealership’s sales to out-of-state customers must be considered Missouri sales when calculating its Missouri taxable income.
The dealer had considered sales to customers with out-of-state addresses as not having been delivered in Missouri. As a result of this ruling they were assessed additional tax, interest and penalties.
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