Missouri Sales Tax
Missouri Sales Tax At a Glance
State rate: 4.225%
Maximum combined rate: 10.975%
Tax Holidays: Energy Star, Back to School
Governing Body: Missouri Department of Revenue
If you run a business that makes sales to customers in Missouri, you may be responsible for collecting and remitting sales taxes to the state, county or city. The regulations governing this process are sometimes difficult to understand, but for the most part, you must charge sales tax on purchases by Missouri residents if you have a business based in the state or one that has a significant presence or makes a significant number of sales there.
Sales Tax Requirements in Missouri
Like most states, Missouri requires that you charge sales tax on purchases to Missouri customers if you have a significant presence, or tax nexus, in the state. You are considered to have a nexus in Missouri if you:
- Have an office, warehouse, distribution house, sales house, or service enterprise in the state
- Maintain a stock of goods in the state
- Solicit orders from Missouri customers on a regular basis, unless this is only through advertising or direct mail campaigns
- Regularly lease property into or service property in the state
- Have an affiliate relationship with a vendor in the state
The inclusion of the affiliate relationship is most directly connected to the use of Amazon fulfillment services. While Amazon does not yet have a warehouse open in Missouri, it will soon. It recently began collecting Missouri state sales tax on direct purchases, and so if you use Amazon to fulfill orders in Missouri, you will be responsible for collecting sales tax as well. Of course, this applies if you use a Missouri-based affiliate other than Amazon to help solicit orders and fulfill purchases in Missouri also.
If you don’t have a significant presence in the state, and so are not required to collect Missouri sales tax, but you want to be eligible to receive Missouri state contracts, you must collect and remit use tax to the state. This is generally charged at the same rate as sales tax, and while taxes like these are usually the responsibility of the purchaser, this is a special situation in which it applies to the seller as well.
Sales Tax Economic Nexus
Missouri is the last state in the union to adopt an economic nexus law requiring out-of-state sellers to collect sales tax. Signed into law on June 30, 2021, SB 153 and 97 creates new provisions for economic nexus that will go into effect on January 1, 2023. When the new law goes into effect, small businesses that make $100,000 or more in sales into Missouri in a calendar year will be required to collect and remit sales tax.
Missouri Sales Tax Rates
The state rate for sales tax in Missouri is 4.225%, and some localities add their own taxes onto this as well. The rate that you will collect depends on the physical location of your business or the location of the warehouse the goods ship from, so you will always charge the same rate to your customers no matter where in the state they live. Guidance for economic tax nexus of out-of-state sellers will be provided by the state in advance of implementation of the new requirements in 2023.
One exception to this is goods that are shipped from out of state but that still require sales tax to be collected. For these purchases, sales tax rates from the destination location should be applied. To determine the total tax due, simply add the local rate to the state rate and multiply that by the purchase price. A complete listing of all local tax rates can be found on the Missouri Department of Revenue website. There is also a separate sales tax rate for food in Missouri, which is 1.225% and applies to all food not meant to be immediately consumed unless purchased with food stamps or WIC coupons.
What is Taxable in Missouri?
Most sales of tangible personal property in Missouri are taxable, as are many services. The state defines tangible personal property as “any type of property that can be moved, touched or felt.” This includes things like household appliances, furniture, office supplies, tools, clothes, and machinery. Taxable services in Missouri include those related to:
- Amusement, recreation, and entertainment
- Fabrication of a product for sale at retail
- Selling of a product at retail
- Mandatory gratuities
- Providing rooms, meals, and drinks to guests in a hotel, restaurant, or similar place of business
Shipping, handling, and delivery charges are also generally taxable when they are intended to be part of the sale. This is true whether they are listed separately on the invoice or receipt or not.
There are exceptions to all of these instances of taxable goods and services as well. These often relate to a special status of the purchaser, as any educational, civic, religious, or social organization can apply for an exemption. They must present proof of exemption for the sales tax to be waived.
Exemptions also exist for certain types of products when they’re used for specific purposes. These include machinery, equipment, and appliances purchased for the sole purpose of controlling air and water pollution. Also covered under a specific exemption is equipment used in agriculture, as is the sale of livestock.
Prescription medications that can only legally be dispensed by a pharmacist are exempt from sales tax, as are hearing aids, hearing aid supplies, and insulin. Some other types of medical equipment qualify for exemptions as well, including hemodialysis equipment, prosthetic limbs, medical grade oxygen, and pacemakers.
Missouri Sales Tax Holidays
Missouri provides two sales tax holidays a year, and both relate to specific types of goods and services. Tax compliance changes during these periods. These are:
- Back to School Sales Tax Holiday: This runs from the first Friday in August through the first Sunday in August, and it eliminates sales tax on certain items including school supplies, clothing, computers, and others that may be necessary for students to acquire as they prepare to return to school.
- Show-me Green Tax Holiday: This runs from April 19th through April 25th, and it covers sales of qualifying Energy Star certified new appliances. In this case, the state sales tax will not apply, but local jurisdictions can make their own determination about whether to impose their customary tax rates or not.
In both instances, you need to make sure that you only eliminate sales tax on purchases made during the holiday period, and that all items purchased qualify for special status.
Registration and Tax Filing
Before you can collect Missouri state sales tax, you need to be registered with the state. This can be done online, but for your application to be complete, you will also have to remit a bond. The amount of the bond will depend on the total tax you’ve collected over the last several months, or the total you expect to collect.
The state offers a bond tax calculator tool to help you determine the proper amount to pay, and you must mail this payment along with the appropriate bond form to complete the registration process and receive your state tax ID number. You should receive that number within 10 days of the receipt of all parts of your completed application unless there is additional information the state needs from you. In that case, they will contact you by mail. When you’re ready, you can file your return and make payments using the state website as well.
Deadlines and Penalties
The frequency with which you need to file will be based on the total amount of tax you collect over a given period. Regulations require:
- Annual filing for tax liability of less than $100 per quarter
- Quarterly filing for tax liability of more than $100 per quarter but less than $500 per month
- Monthly filing for tax liability more than $500 per month but less than $15,000 per month
- Quarter-monthly filing for tax liability above $15,000 per month
Although due dates for filing apply to both state and local sales tax, local taxes will never be paid more frequently than monthly. If you must file and pay your state sales tax quarter-monthly, you will still only pay the local taxes once a month, and the local tax due is not included in the total when determining how frequently you must file.
For those filing annually, returns are due by January 31st of the following year. For those filing quarterly, the following due dates apply:
|January – March (Q1)||April 30|
|April – June (Q2)||July 31|
|July – September (Q3)||October 31|
|October – December (Q4)||January 31|
For those filing monthly, the following due dates apply:
If you have to file quarter-monthly, payments are due within 3 business days of the end of the previous period. These periods are structured as follows:
|1: 1st – 7th of the month||10th of the month|
|2: 8th – 15th of the month||18th of the month|
|3: 16th – 22nd of the month||25th of the month|
|4: 23rd – end of month||3rd of following month|
If these due dates fall on a weekend or holiday, payments will be considered on time when postmarked or received by the next business day. Zero returns are required for any business with a Missouri state sales tax license.
A failure to make a timely payment when you have filed a return on time will result in a 5% penalty assessed on the total amount of tax due. Failure to file a return will result in a 5% penalty for each month you are late, with a maximum of 25%. Interest is also charged on late payments at a rate of 4% annually, and the interest is only applied to the original amount of tax due.
Missouri Sales Tax Software
There are quite a few details to keep track of when determining if you need to collect and remit Missouri state sales tax, and at what rate. This can be particularly burdensome if you do business in multiple states and must keep track of these details for each state separately. Fortunately, you can take advantage of special software designed specifically to help you manage these types of situations and requirements. TaxTools is just such a program, and it will significantly streamline your accounting processes.
The tax calculator and TaxTools program can keep track of changes to local tax rates, accurately compute appropriate rates for purchases, keep track of tax filing deadlines, and ensure timely payments. It also integrates with any eCommerce platform, allowing you to keep doing business your way without having to worry about the details of sales tax collected on each individual sale you make in Missouri and elsewhere. When you do need to access data on this, however, you’ll find it organized by state and up to date, helping to significantly streamline your sales process.
If you’re ready to see what TaxTools can do for your business, click here to learn more or to sign up for a free trial today.
Last updated May 2022