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Sales and use tax exemptions and exclusions

There are many "exemptions" (specified by statute) and "exclusions" (not within the defined taxable classes) from sales and use tax.

Merchants are not taxable on their purchase of goods as a "sale for resale" to a merchant's customers ("wholesale").

Goods "exported" (delivered out of state) by the merchant or common carrier are not subject to sales tax. If the out of state purchaser picks up goods from a merchant's in-state location and transports them out of state themselves or arranges for delivery by "contract" carrier (arranged and paid for by the purchaser and considered the purchaser's agent), the purchaser pays sales tax to the merchant's state because the sale was completed in the state.

The merchant may be liable for collecting another state's sales or use taxes for the purchaser's state because the sale was completed in the other state by the merchant delivering the goods there (e.g., delivery by the merchant's own truck or other facts establishing nexus, i.e., the merchant has sufficient contacts with the purchaser state).

Exemptions include:

  1. From one corporation to another corporation by merger;
  2. Incident to the liquidation or cessation of a taxpayer's trade or business, and NOT made in the ordinary course of the taxpayer's trade or business;
  3. To a corporation solely in exchange for its stock or securities or as a contribution to capital;
  4. To a partnership solely in exchange for a partnership interest or as a contribution to the capital;
  5. By a corporation to its shareholders as a dividend, return of capital, liquidating distribution or in redemption of the shareholder's interest;
  6. By a partnership to its partners as a current distribution, return of capital or liquidating distribution of the partnership or of the partner's interest;
  7. Reusable containers for which a deposit is required and refunded on the containers return;
  8. Restaurant purchases of non reusable items furnished with retail sales of food or beverage, e.g., wrapping or packaging materials, containers, trays, napkins, dishes, silverware, cups, bags, boxes, straws, sticks and toothpicks;
  9. Hotel purchases of non reusable items furnished to guests and included in the room charge made, e.g., soap, shampoo, tissue and other toiletries and food or confectionery items offered to the guests without charge;
  10. Transfer of a manufactured home OTHER than:
    • the initial retail sale (delivery of "manufacturer's statement of origin" or "MSO");
    • delivery of "Repossessed Title" to a state resident IF tax was NOT paid on the initial transfer;
    • The first transfer after December 31, 1985, IF tax was NOT paid on any transfer before December 31, 1985; or
  11. Charges for initiation fees or dues to:
    • Fraternal societies, orders or associations operating under the lodge system where a substantial part of the activities are devoted to religious, charitable, scientific, literary, educational or fraternal purposes; or
    • Organizations of past or present United States armed forces members or an auxiliary unit or society of, or a trust or foundation for such organization, and substantially all of the members are past or present United States armed forces members or cadets, spouses, widows, or widowers, and no part of the net earnings inure to the benefit of any private shareholder or individual.

Note that the "highway use tax" on use of vehicles on Missouri roads under § 144.440 may apply to vehicles transferred e.g., from a corporation to a shareholder on corporate dissolution in spite of the exemption under § 144.011.