State of Missouri
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Known as the “Show Me” state, Missouri has a population of 5,988,927, give or take a few since the last official census, and each resident pays sales tax at the average rate of 7.58 cents-on-the-dollar to 1,242 different sales tax jurisdictions (WOW, "did you say 1,242 jurisdictions) which just happens to be the 2nd most in the country. The Missouri Department of Revenue is charged with responsibility to manage Sales and Use taxes.
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series. Yes, I said (50 parts), covering sales tax issues associated with each and every state tax jurisdiction in the United States. We will be publishing an article essentially every Tuesday, thus the series name "Sales Tax Tuesday" over the entire year of 2015. Who knows, by the end of this year there could be sufficient changes to just start the whole series over again with updated information.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
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Missouri Sales tax facts1:
- Sales and Use tax managed by the Department of Revenue.
- Not an SST (Streamlines Sales Tax) state.
- There are 1,242 different Sales Tax Jurisdictions (2nd most in the country) with an average rate 7.58%.
- Missouri is an origin based state. Interstate transactions are still charged on a destination basis, but intrastate transactions are sourced at the origin address.
- Missouri has two sales tax holidays: Back to School from August 1-3 for school related products such as clothes and supplies; Show Me Green from April 19-25 for Energy Star certified appliances. For both holiday’s some but not all of the local jurisdictions apply.
- A common nexus creating activity is sales solicitation by an agent or representative of your company. This includes business activities by independent contractors.
- Trade show attendance is only a nexus creating activity if orders for goods are taken. Attendance alone does not create nexus.
- Missouri exemptions include resale, manufacturing, agricultural, environment, medical, and not for profits. These exemptions are not all-inclusive to their industries. There are exceptions and occasions where items are only partially exempt (manufacturing related to television and media are eligible for a partial manufacturing rate, while newsprint used in newspapers is eligible for a full manufacturing rate exemption.
- Sales tax returns in Missouri require the sourced location, gross sales, taxable sales, and aggregate rate (combined of state, conservation, parks and soils, and any applicable transportation or local sales tax rate).
Missouri apparently takes sales tax collection very seriously as evidenced by the following case study:
“Missouri sent a local business a notice for an outstanding balance of 10 cents. The notice was in response to 1 return, for 1 month. The business offered to come down to a local office and pay cash, but the state wouldn’t accept cash. They also wouldn’t accept a check for $50 and leave a credit balance on the account. As a result, the business almost lost their liquor license.” 2
So how do you feel about keeping track of sales taxes for 1,242 jurisdictions? Sounds kind of like a full time job for a lot of small businesses. "Avalara' seems like the perfect solution to me. (Murph)
Manual sales and use tax management is prone to error and consumes staff time in pass-through rather than revenue-generating activities. Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity.
1 - State by State Sales Tax - Missouri, Patrick Neu, Avalara - January 6, 2015
2- 12 Sales Tax Tips for Small Businesses: #9, Notices, Will Frei, Avalara, January 10, 2012.