A 2015 Missouri Supreme Court decision raised taxes on Missouri businesses that charge or pay for shipping fees. Now, Missouri Senate Bill 16 might change that.
Senate Bill 16 prohibits the Department of Revenue from assessing sales tax on delivery fees. The Missouri Senate passed the legislation unanimously and a Missouri House Committee approved the bill, as well. The bill now awaits review by Governor Greitens. If Governor Greitens either signs or does not veto the bill, it will become law effective August 28, 2017.
Historically, shipping charges were not subject to sales/use tax if they were optional and separately stated on the invoice. But in January 2015, the Missouri Supreme Court’s decision in Alberici Constructors, Inc. v. Director of Revenue held that shipping charges for the transaction at issue in the case were subject to tax.
Based on the Department’s interpretation in the Alberici decision, shipping charges related to a taxable transaction are currently subject to sales/use tax. Because the decision was inconsistent with prior interpretations regarding the taxability of shipping charges, increased sales tax audit activity has been a risk that businesses in Missouri face.
Stay tuned for the latest updates. If you have any questions in the meantime, please contact Bernie Ottenlips, Principal, State and Local Tax, at 314.687.2375 or firstname.lastname@example.org, or Amy Jackson, Manager, State and Local Tax, at 314.983.1336 or email@example.com.