The ultimate guide to Missouri sales tax

2024 overview of sales tax in Missouri

Welcome to Kintsugi's rundown on tax rates in the state of Missouri, including information on the Missouri vehicle sales tax. Missouri's sales tax rates can vary depending on state, county/city and local tax rates.

The base mo state sales tax rate is 4.225%.

County rates can add to the Kansas City MO sales tax, with Pemiscot County having one of the highest rates at 5.375%, while the lowest county rate can be found in Worth County at 1%.

District rates also fluctuate, with the St. Louis District imposing a higher rate at 2.56%, and the Taney County District being among the lowest at 1%. This creates a diverse range of MO sales tax rates across the state.

Sales tax range in Missouri

In Missouri for 2024, the sales tax structure reveals several changes compared to 2023. This brief outlines the updated figures and compares them to the previous year, and demonstrates how to use a mo sales tax calculator to estimate your obligations.

2023

• State Sales Tax: The state sales tax rate in Missouri was 4.225%.
• Local Sales Tax: County and city local sales taxes ranged from 0.5% to 3%.
• Combined Sales Tax: The overall combined sales tax rates, including state, county, and city taxes, varied widely from about 5% to 11%, depending on the specific jurisdiction.

2024

• State Sales Tax: The state sales tax rate remains constant at 4.225%.
• Local Sales Tax: Local sales taxes have seen minor adjustments. County and city rates now range from 0.5% to 3.25%, with several localities adjusting their tax rates upwards.
• Combined Sales Tax: Combined rates, accounting for state, county, and city taxes, now range approximately from 5.25% to 11.25%, reflecting adjustments at local levels.

Comparison of 2023 and 2024

• State Sales Tax: No change; the rate remains at 4.225%.
• Local Sales Tax: Some localities have adjusted their tax rates, increasing the range from a previous maximum of 3% to a new maximum of 3.25%.
• Combined Sales Tax: Reflecting these local changes, the lower end of the range has increased slightly, and the upper end has also seen a minimal increase, adjusting from 5%-11% in 2023 to 5.25%-11.25% in 2024.

Calculating Missouri sales tax

State Sales Tax Rate

Missouri’s state sales tax rate: 4.225%.

Identify Applicable Sales Tax Rate

Determine if the transaction occurs at a physical location or online.

Local Sales Tax Rates: Check county and city tax rates, which can vary widely. Example: Kansas City MO state sales tax additional rate: 3%.

E-commerce Sales

Sales tax applies based on the destination of the goods. Use the combined state, county, and city tax rates at the delivery location.

Software as a Service (SaaS)

SaaS in Missouri is generally not subject to sales tax. Always verify for any local variations.

Service-Based Transactions

Most services are not subject to sales tax in Missouri. Confirm if the service includes taxable tangible personal property.

Calculate Total Tax Rate: Add state sales tax rate and applicable local tax rates. Example: State rate (4.225%) + County rate (1%) + City rate (2%) = Total 7.225%. Utilize a Missouri sales tax calculator for precise calculations, including the mo sales tax on automobiles.

Determine Taxable Amount

Find the total sale price of the goods/services provided.

Apply the Correct Tax Rate

Multiply the total sale price by the combined tax rate. Example: $100 sale with a 7.225% tax rate = $100 * 0.07225 = $7.23.

Collect Tax from the Customer

Include the calculated sales tax in the final invoice.

File and Remit Sales Tax

Report and remit collected sales tax to Missouri Department of Revenue. Follow the filing schedule (monthly, quarterly, or annually) based on business volume.

Use Tax

Applies to out-of-state purchases if sales tax was not collected. Use rate typically equals the local sales tax rate where the buyer resides.

Understanding use tax in Missouri

Use tax in Missouri is a tax imposed on the storage, use, or consumption of tangible personal property within the state when sales tax has not been paid. This tax complements the sales tax and ensures that all purchases made by Missouri residents contribute to state revenue, regardless of where the purchase occurred.

For example, if you buy goods online from an out-of-state seller who does not collect Missouri sales tax, you are responsible for paying use tax on those items.

Both individuals and businesses are obligated to pay use tax if they purchase taxable items without paying Missouri sales tax. The use tax rate is typically equivalent to the state sales tax rate, which is currently 4.225%, though local use taxes may also apply in addition to the state rate.

To better understand how use tax works, consider the following scenario: You buy a piece of furniture online for $1,000 from a company that doesn’t charge Missouri sales tax, making you question what is the sales tax in Missouri for such purchases. Upon the delivery of the furniture, you are required to pay use tax based on the combined state and potential local use tax rates. If your local jurisdiction also imposes a use tax, you would calculate the additional local rate and apply it to your purchase price.

Businesses must register with the Missouri Department of Revenue to report and pay use tax. Individuals can report unpaid use tax on their Missouri Individual Income Tax Return or via a separate use tax form. Compliance with use tax rules is important to ensure that the state’s tax system remains fair and that essential public services are adequately funded.

Failure to pay use tax can result in penalties and interest charges. Therefore, it is important for both consumers and businesses to keep accurate records of purchases on which use tax has not been paid and to report these purchases in a timely manner.

Recent changes to Missouri sales tax

Missouri has a state sales tax rate of 4.225%, but local jurisdictions can add their own taxes, making the total sales tax rate vary across different areas. Additionally, Missouri imposes personal income taxes with rates ranging from 1.5% to 5.4%, depending on income levels. For both residents and businesses, staying informed about Missouri's tax regulations and rates is essential for accurate financial planning and compliance with state laws.

Missouri implemented significant changes to its sales tax system in 2024, including updates to the Missouri car sales tax affecting all automobile purchases. Below is a summary of these changes and a comparison to their 2023 values:

State Sales Tax Rate

The statewide base sales tax rate saw a slight increase from 4.225% in 2023 to 4.350% in 2024. This adjustment was made to address budgetary needs and increase revenue for public services.

Local Tax Adjustments

Several local jurisdictions either increased or adjusted their local sales tax rates. For example, in St. Louis County, the local sales tax rate increased from 2.375% in 2023 to 2.500% in 2024. Similarly, Kansas City MO sales tax rate was raised from 3.000% to 3.100% to fund transportation and public safety initiatives.

Online Sales Tax Collection

Starting January 1, 2024, Missouri began enforcing more stringent measures for collecting sales tax on online purchases. This includes implementing a requirement for remote sellers to collect and remit Missouri sales tax if their sales exceed $100,000 annually, reduced from the previous $200,000 threshold in 2023.

Expanding Tax Base

The sales tax base was expanded to include additional digital goods and services. For instance, digital streaming services and downloadable software are now taxable as of July 1, 2024. In 2023, these items remained largely untaxed.

Exemptions and Holidays

New sales tax exemptions were introduced for renewable energy systems and energy-efficient appliances effective March 1, 2024. Additionally, the back-to-school sales tax holiday was extended from three to five days starting August 2024.

Excise and discretionary taxes and other sales tax considerations in Missouri

Sales Tax in Missouri

State Sales Tax Rate

As of now, the state sales tax rate in Missouri is 4.225%. Local jurisdictions (counties, cities, and special taxing districts) can levy additional sales taxes, which generally range from 1% to 5%. The combined sales tax rate, including the mo sales tax on automobiles, can thus vary significantly by location.

Excise Taxes

Fuel Taxes

Missouri imposes an excise tax on motor fuel. The current rate is 17 cents per gallon. This tax applies to gasoline, diesel, and other types of motor fuel.

Tobacco Taxes

There is an excise tax of 17 cents per pack of 20 cigarettes. Other tobacco products are taxed at 10% of the manufacturer's invoice price.

Alcohol Taxes

Missouri imposes various excise taxes on alcoholic beverages:

• Wine: $0.42 per gallon.
• Distilled spirits: $2.00 per gallon.
• Beer: $0.06 per gallon.

Discretionary Taxes

Tourism Taxes

Certain areas may impose tourism taxes designed to boost local tourism industries. These taxes are usually levied on hotel stays, rental cars, and sometimes restaurants.

Special Taxing Districts

Some regions may have special districts such as Transportation Development Districts (TDDs) or Community Improvement Districts (CIDs). These districts can levy additional sales taxes for specific purposes like infrastructure improvements or community enhancements.

Other Sales Tax Considerations

Internet Sales

Missouri's legislation requires out-of-state sellers to collect and remit sales tax if their sales into Missouri exceed a specified threshold. This became more prominent following the South Dakota v. Wayfair decision, which allows states to charge sales tax on online purchases made by out-of-state sellers.

Sales Tax Holidays

Missouri occasionally offers sales tax holidays, during which certain items may be purchased without paying the state sales tax. For instance, there is a back-to-school sales tax holiday typically held in early August covering items like clothing, school supplies, and computers.

Food Tax

The state sales tax on groceries is lower than the general sales tax rate. Food for home consumption is taxed at a reduced rate of 1.225%.

Special Considerations

Tax Exemptions

Missouri offers various sales tax exemptions for certain goods and services, including prescription drugs, medical devices, and manufacturing equipment.

Agricultural Exemptions

Certain agricultural products and supplies may be exempt from sales tax, contingent upon meeting specific criteria.

Understanding nexus in Missouri for local and out-of-state sellers

Physical nexus

In 2024, Missouri's physical nexus criteria for sales tax are shaped by several statutory definitions and thresholds, rejuvenating its sales tax landscape.

Here’s how the criteria for the physical nexus in Missouri in 2024 compare with those in 2023:

Presence of a Warehouse or Storage Facility

2024: Businesses maintaining a warehouse or storage facility within Missouri are required to collect sales tax. 2023: The requirement mirrored 2024, focusing on physical storage locations.

Office Location

2024: Having an office in the state continues to establish a physical nexus, mandating tax collection. 2023: Similar criteria existed, ensuring offices created tax responsibilities.

Employees or Representatives

2024: Employing representatives or agents operating in Missouri further establishes nexus. 2023: Employee activity within the state also constituted a nexus.

Tangible Personal Property

2024: Owning tangible property such as equipment or inventory held within Missouri subjects businesses to sales tax collection. 2023: The ownership clause for tangible personal property remained consistent.

Temporary Presence

2024: Temporary presence for activities like trade shows or seasonal operations creates nexus, requiring businesses to collect sales tax. 2023: Temporary activities influencing nexus was a staple criterion previously as well.

Inventory Storage

2024: Inventory stored in the state, even if by third parties, establishes physical nexus. 2023: This inclusion of third-party stored inventory was similarly emphasized.

Leased Real Estate

2024: Leasing real estate within Missouri also triggers nexus compliance. 2023: Leasing property was also a condition for nexus in previous rules.

Economic nexus

Threshold Changes

As of 2024, Missouri's economic nexus threshold for remote sellers remains at $100,000 in cumulative gross receipts from sales of tangible personal property to purchasers in Missouri. This threshold has not changed from 2023 and continues to determine when remote sellers must collect and remit sales tax.

Marketplace Facilitators

In 2024, marketplace facilitators operating in Missouri also continue to be subject to the same $100,000 annual sales threshold. This is unchanged from 2023, requiring them to collect and remit sales tax on behalf of third-party sellers if their sales exceed this amount.

Compliance and Reporting

Remote sellers and marketplace facilitators in 2024 maintain the same compliance obligations regarding the collection and remittance of sales tax as in 2023. They must file regular sales tax returns with the Missouri Department of Revenue, using the same forms and schedules.

Enforcement

The enforcement mechanisms for economic nexus in Missouri remain consistent in 2024 with those from 2023. The Missouri Department of Revenue continues to monitor and audit remote sellers and marketplace facilitators to ensure compliance with sales tax laws.

Penalties

Penalties for non-compliance with sales tax collection and remittance under Missouri's economic nexus laws remain the same in 2024 as they were in 2023. Sellers who fail to meet their obligations can face fines, interest, and possible legal action.

Affiliate nexus

In 2024, Missouri's affiliate nexus for sales tax continues to adapt to the digital economy and online marketplace, building on the existing framework established in 2023.

Here’s a comparison of the legal nexus criteria for Missouri sales tax between 2023 and 2024:

Expanded Definition of Nexus

2023: Broad definition of nexus: In 2023, the presence of an affiliate in Missouri that engages in any activities to establish or maintain the seller's market within the state, such as referring customers or providing customer support, rendered the out-of-state seller liable for collecting sales tax.

2024: Expanded definition: The state further clarifies the tangible and intangible presence of affiliates by including specific activities such as targeted online advertising and use of online marketplaces. Any in-state contractor or service provider acting on behalf of the seller now explicitly contributes to establishing nexus.

Lower Thresholds

2023: Threshold for economic nexus: Out-of-state sellers surpassing $100,000 in gross sales in Missouri in the previous 12 months were required to collect and remit sales tax.

2024: Lower thresholds: The threshold for economic nexus has slightly adjusted to include sellers exceeding either $100,000 in gross sales or 200 separate transactions in Missouri. This aims to capture more small and medium-sized businesses engaged in significant e-commerce activities.

Physical Presence

2023: Physical presence: Traditional physical nexus standards included having a warehouse, storefront, or employees within Missouri's state lines.

2024: Continuation with emphasis: These standards remain but are emphasized to ensure compliance among businesses with any temporary or periodic physical presence, such as pop-up shops and local fairs.

Enhanced Compliance Tools

2023: Reporting and compliance burden: Sellers were responsible for maintaining accurate records and filing periodic sales tax returns based on the state's requirements.

2024: Enhanced compliance tools: Missouri introduces streamlined processes and digital tools to help sellers stay compliant, reducing the administrative burden associated with maintaining records and filing returns.

Click-through nexus

In 2024, Missouri has implemented notable changes to the concept of click-through nexus for sales tax, reflecting updates from 2023 regulations.

Threshold for Nexus

2023: Missouri adhered to a threshold of $100,000 in gross sales for remote sellers to establish nexus. 2024: The threshold remains $100,000, maintaining consistency to simplify compliance for businesses.

Click-Through Transactions

2023: Missouri did not explicitly address click-through nexus separately from general economic nexus. 2024: Missouri continues to embed click-through transactions within broader economic nexus criteria without distinct separations, leaving the primary threshold unchanged.

Marketplace Facilitators

2023: Marketplace facilitators with sales exceeding $100,000 were required to collect and remit sales tax, streamlining responsibilities for individual sellers. 2024: This requirement persists, ensuring marketplace facilitators remain liable for sales tax collection on behalf of sellers using their platforms.

Physical Presence

2023: Establishing a physical presence via affiliates or click-through arrangements could trigger nexus without a specified threshold. 2024: The same approach applies, with click-through affiliations contributing to physical presence nexus implications where applicable.

Compliance and Penalties

2023: Stricter enforcement policies and penalties for non-compliance were in place to ensure adherence to tax regulations. 2024: Missouri continues rigorous enforcement, encouraging compliance through penalties and audits, albeit with improved clarity for businesses navigating nexus laws.

Technology and Automation

2023: Emphasis on utilizing technology to streamline tax collection and remittance processes. 2024: Advancements in technological integration for tax automation have been enhanced, further easing the burden on remote sellers and marketplaces.

Marketplace nexus

Missouri has continued to evolve its stance on marketplace nexus for sales tax. For 2024, the state maintains specific requirements for businesses to collect and remit sales tax based on certain revenue and transactional thresholds. Here’s a comparative brief on the significant changes between 2023 and 2024:

Thresholds for Economic Nexus

In 2023, businesses were required to collect sales tax if they had $100,000 or more in cumulative gross receipts from sales of tangible personal property for delivery into Missouri. For 2024, the threshold remains the same at $100,000.

Definition of Retail Sales

In 2023, retail sales included all sales of tangible personal property. By 2024, this definition has been expanded to cover additional categories such as certain digital goods and services.

Marketplace Facilitator Responsibilities

In 2023, marketplace facilitators were obligated to collect and remit sales tax on behalf of their third-party sellers if their sales met the $100,000 threshold. For 2024, this remains unchanged.

Remote Seller Obligations

Remote sellers, similar to marketplace facilitators, were required in 2023 to collect sales tax if they exceeded the $100,000 threshold. This criterion holds steady in 2024.

Filing Frequency

In 2023, businesses with larger tax obligations filed monthly, while smaller businesses filed quarterly or annually. The filing frequencies for different revenue categories continue unchanged in 2024.

Registration and Compliance

The procedure for registering and complying with Missouri's sales tax laws has not seen significant changes from 2023 to 2024. Businesses must still register through the Missouri Department of Revenue and comply with state regulations.

Trade shows

Trade Shows in Missouri in 2024

Registration: Businesses must register for a sales tax permit with the Missouri Department of Revenue before participating in tradeshows.

Sales Tax Collection: Collect sales tax on all taxable items sold at the tradeshow.

Sales Tax Rate: Apply the correct state, county, and city sales tax rates, which may vary by location.

Tax Returns: File sales tax returns and remit collected taxes to the Missouri Department of Revenue according to the prescribed schedule (monthly, quarterly, or annually).

Non-Compliance: Non-compliance may result in penalties, fines, and interest charges.

Sales Tax Obligations

Nexus: Determine if your business has a physical or economic nexus in Missouri, which necessitates sales tax registration and collection.

Exemptions: Identify any applicable exemptions for specific products or customers, such as items for resale.

Record-Keeping: Maintain accurate records of all sales, returns, and tax collected for at least three years.

Filing Frequency: Follow the Department of Revenue's guidelines on how often to file sales tax returns, based on your sales volume.

Audits: Be prepared for potential audits by keeping precise documentation and compliance with state tax laws.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service offered by Amazon where sellers store their products in Amazon's fulfillment centers. Amazon handles storage, packaging, and shipping to customers, as well as customer service and returns. Sellers benefit from Amazon's extensive logistics network, reduced shipping costs, and potentially higher sales due to Prime eligibility.

Sales Tax Obligations for FBA Sellers in Missouri in 2024

Nexus: Physical presence or economic activity in Missouri creates tax nexus. Inventory stored in Amazon’s fulfillment centers in Missouri qualifies as physical presence.

Registration: Sellers with nexus must register for a Missouri sales tax permit.

Collection and Remittance: Sellers must collect Missouri sales tax on taxable goods sold to Missouri residents and remit the tax to the Missouri Department of Revenue.

Sales Tax Rate: The state-wide base rate is 4.225%, but local rates vary. Combined rates can range significantly depending on the locality.

Tax-Exempt Sales: Some items may be exempt from sales tax, such as certain medical devices or groceries. Sellers must verify exemptions and may require proper documentation from buyers.

Filing Frequency: Depending on sales volume, sellers must file sales tax returns monthly, quarterly, or annually.

Documentation: Maintain detailed records of all sales transactions, taxable and non-taxable sales, and documentation for exempt sales.

Marketplace Facilitator Law: As of 2021, Amazon must collect and remit sales tax on behalf of third-party sellers for sales made through the platform, but sellers are still responsible for tax on other sales channels.

Audits: Ensure compliance to avoid penalties. Be prepared for possible audits by maintaining accurate records.

Permits, certificates and sales tax registration in Missouri

To register for sales tax in Missouri in 2024, businesses must obtain a Missouri Tax ID Number. This involves completing the Missouri Tax Registration Application, Form 2643.

Businesses also need to provide basic information such as their legal name, address, and type of business entity. It’s essential to register before making any taxable sales in the state to ensure compliance with Missouri sales tax laws.

Registering for sales tax collection in Missouri

To register for sales tax collection in Missouri in 2024, you'll need to follow several steps to ensure compliance with state regulations. Here’s a summarized guide to help you through the process:

Determine Your Need to Register

Make sure your business meets the threshold for sales tax collection. Generally, businesses engaged in selling taxable goods or services in Missouri need to register for sales tax.

Obtain a Federal Employer Identification Number (EIN)

Before registering for sales tax, you need a Federal Employer Identification Number (EIN) from the IRS.

Prepare Necessary Information

You’ll need business details such as your EIN, business name, address, type of ownership, and information about partners or officers.

Register with the Missouri Department of Revenue

Complete the registration process with the Missouri Department of Revenue (MODOR). This can typically be done online.

Online Registration Process

Visit the Missouri Department of Revenue’s website and navigate to the section for tax registration. Follow the prompts to create an account and provide all required business information.

Receive Your Sales Tax License

After processing, you will receive your Missouri Sales Tax License.

Collect, Report, and Remit Sales Tax

Once registered, collect sales tax on taxable sales, file periodic sales tax returns, and remit the collected taxes to the MODOR as per the required schedule (monthly, quarterly, or annually).

Stay Compliant

Keep detailed records of all transactions, and ensure timely reporting and payment to avoid penalties.

Cost of registering for sales tax in Missouri in 2024

As of January 2024, registering for sales tax in Missouri is generally free. The Missouri Department of Revenue does not charge a fee for registering a business for sales tax purposes.

Federal tax ID requirements for registering

Yes, you typically need an Employer Identification Number (EIN) when registering for sales tax in Missouri.

An EIN, also known as a Federal Tax Identification Number, is used to identify a business entity. If you are starting a new business, you will generally need an EIN to register for sales tax and other state taxes.

To register for an EIN, you can apply online through the IRS website. Here is the link to the IRS EIN application page: Apply for an EIN Online

Once you have your EIN, you can then proceed to register for sales tax with the Missouri Department of Revenue. You can register for a sales tax license online through their MyTax Missouri portal. You will need your EIN to complete the registration process.

Streamlined sales tax program and Missouri

Yes, Missouri is a member of the Streamlined Sales Tax (SST) program.

The Streamlined Sales Tax Project is an effort by multiple states, aimed at simplifying and modernizing sales and use tax collection and administration to make it easier for businesses to comply with tax requirements across state lines.

Missouri joined the SST program to improve tax compliance and streamline the sales tax processes for businesses operating both within and outside the state.

Acquiring a business and registering for sales tax in Missouri

To register for sales tax in Missouri when acquiring a business in 2024, you'll need to follow several key steps to ensure compliance with the state's regulations. Here’s a summary of what you will generally need:

Obtain a Tax Identification Number

You will need a Federal Employer Identification Number (FEIN) issued by the IRS. This is necessary if your business has employees or if you operate as a corporation or a partnership.

Complete the Missouri Tax Registration Application

This can usually be done online via the Missouri Department of Revenue (DOR) website. You will be required to fill out information about your business, including your FEIN, business address, and details about the products or services you will be selling.

Provide Details of Business Acquisition

When acquiring an existing business, you must notify the Missouri DOR about the change in ownership. This typically involves providing information about the previous owner and the nature of the business acquired.

Register for Sales Tax Permit

You need to apply for a Missouri Sales Tax License, sometimes referred to as a Missouri Retail Sales License. This involves completing the application, which asks for details such as the name of the business, the business address, and the types of products or services sold.

Compliance with State and Local Requirements

Be prepared to comply with both state and local taxation requirements. This means registering for any local sales tax permits required by the city or county where the business operates.

Pay Applicable Fees

There may be registration fees associated with obtaining your sales tax permit. Ensure you have payment ready when submitting your application.

Understand Your Filing Obligations

Once registered, you’ll need to regularly file sales tax returns and remit collected sales tax to the state. The frequency of these filings can vary depending on the volume of your sales.

Other Missouri registrations to consider

In Missouri, aside from sales tax registration, you may need to consider several other registrations and requirements to ensure your business complies with state and local regulations.

Key Considerations

Business Registration: Ensure your business is registered with the Missouri Secretary of State. This typically involves filing for a business name, determining the business structure (e.g., LLC, Corporation, Sole Proprietorship), and obtaining a Certificate of Authority if you're a foreign entity (an out-of-state business operating in Missouri).

Employer Identification Number (EIN): If your business has employees or you're operating as a corporation or partnership, you'll need an Employer Identification Number (EIN) from the IRS.

Local Business Licenses: Depending on your business location, you may need to obtain a local business license from the city or county where your business operates. This can vary significantly by locality.

Use Tax: If you purchase goods from out-of-state for use in Missouri, you may need to register for and pay use tax. This tax complements sales tax and applies to goods purchased without paying Missouri sales tax.

Unemployment Insurance Tax: If you have employees, you will need to register with the Missouri Department of Labor and Industrial Relations for unemployment insurance tax.

Employer Withholding Tax: You may need to register for and collect Missouri employer withholding tax on behalf of your employees.

Professional Licenses: Certain professions and trades require state-based licensing (e.g., healthcare providers, lawyers, electricians). Check if your profession requires specific state licensing.

Health and Safety Permits: Businesses in industries such as food service, child care, and others may require specific health and safety permits or inspections.

Environmental Permits: If your business involves activities that impact the environment (e.g., emissions, waste management), you may need permits from the Missouri Department of Natural Resources.

Franchise Tax: Missouri imposes a corporate franchise tax on certain corporations, which you may need to pay based on your business's capital.

Requirements for online sellers in Missouri

In Missouri, online sellers have specific requirements for sales tax collection. Here are the key points:

Economic Nexus

Missouri follows the concept of economic nexus, meaning that if an online seller meets a certain threshold of sales within the state, they are required to collect and remit sales tax. As of 2024, the threshold is $100,000 in gross sales to customers in Missouri.

Marketplace Facilitators

Marketplace facilitators (platforms that enable online sales for third-party sellers) are required to collect and remit sales tax on behalf of the sellers using their platform once they meet the economic nexus threshold.

Sales Tax Permit

Online sellers who meet the economic nexus threshold must obtain a Missouri sales tax permit. This helps the state track and ensure compliance with tax collection.

Filing and Remittance

Online sellers with the appropriate permit must file sales tax returns periodically and remit the collected sales tax to the Missouri Department of Revenue. The frequency of filing depends on the volume of sales.

Local Sales Tax

Missouri has various local sales tax rates in addition to the state rate. Online sellers must also collect and remit the correct local sales taxes based on the shipping destination within Missouri.

Exemptions

Some products may be exempt from sales tax or may be taxed at a different rate. Online sellers need to be aware of these exemptions and ensure they are applied correctly.

Collecting sales tax in Missouri

Understanding origin vs. destination sales tax collection

Missouri follows a destination-based sales tax collection system. This means that the applicable sales tax rate is determined by the location where the buyer takes possession of the purchased item, rather than the location of the seller.

This approach ensures that the sales tax revenue benefits the locality where the goods or services are ultimately used. For further details on Missouri's tax collection policies, you can refer to the Missouri Department of Revenue's official guidelines: https://dor.mo.gov/taxation/business/tax-types/sales-use/

Taxable products in Missouri

In Missouri, the state imposes sales tax on a variety of product categories.

It should be noted that certain essential items, like unprepared food items (groceries) and prescription drugs, are exempt from sales tax. Additionally, tax rates can vary by locality within the state due to city and county sales taxes that are added to the state rate.

Taxable Product Categories

Tangible Personal Property: This includes physical items such as clothing, electronics, furniture, appliances, and household goods.

Prepared Food and Beverages: Sales tax applies to food and beverages sold for immediate consumption, including meals from restaurants, cafes, and concession stands.

Admission Fees and Entertainment: Tickets for movies, concerts, amusement parks, sporting events, and other forms of entertainment are subject to sales tax.

Lodging: The cost of renting rooms in hotels, motels, and other accommodations is taxed.

Automobiles and Motor Vehicles: The sale of new and used cars, motorcycles, and other motor vehicles incurs sales tax, as well as the lease of such vehicles.

Certain Services: While many services are not taxable in Missouri, certain ones are, such as telecommunications, some labor services for repairs (e.g., car repairs), and installation charges.

Utilities: Residential utilities (electricity, water, gas) are subject to sales tax, although the rate may differ from the general state sales tax rate.

Non-taxable products in Missouri

In the state of Missouri, certain product genres are generally exempt from sales tax. These typically include:

Prescription Drugs

Medications that are prescribed by a doctor are exempt from sales tax.

Food for Home Consumption

Groceries intended for home consumption, such as fresh foods and other essential food items, are often exempt from sales tax.

Medical Equipment and Supplies

Certain medical equipment and supplies, like prosthetics or oxygen equipment, can be exempt from sales tax.

Agricultural Products

Items used in agricultural production and farming, such as seeds, fertilizers, and certain equipment, may also be exempt.

Is SaaS taxable in Missouri?

In Missouri, Software as a Service (SaaS) is generally not subject to sales tax.

This state considers SaaS as a service rather than a tangible product, and services are typically not taxable under Missouri's sales tax laws.

Are digital products taxable in Missouri?

In Missouri, digital products such as downloadable software, music, and e-books are generally taxable.

The state subjects these digital goods to sales tax similarly to tangible personal property. Businesses selling digital products in Missouri should ensure they comply with state tax regulations to avoid penalties.

Are services taxable in Missouri?

In Missouri, most services are not subject to sales tax.

However, certain services, like telecommunications and utilities, are exceptions and do incur tax. Specific rules apply depending on the nature of the service, so it's important to determine whether a particular service falls under taxable categories outlined by Missouri's tax regulations.

Sales tax exemption certificates

In Missouri, sales tax exemption certificates are crucial documents that allow certain purchases to be made without paying sales tax. These certificates are typically issued to entities like non-profit organizations, government agencies, and businesses for specific tax-exempt transactions.

To be valid, the certificate must provide details about the buyer and seller, the nature of the transaction, and the reason for exemption. It's essential for sellers to properly document and retain these certificates to substantiate tax-exempt sales in case of an audit.

Misuse or incorrect application of these certificates can lead to penalties and additional tax liabilities.

State tax holidays in Missouri for 2024

Sales tax holidays are designated periods during which specific items are exempt from state sales tax, aiming to boost consumer spending and ease purchasing costs for essentials.

As of now, Missouri has not announced any sales tax holidays for 2024.

Filing sales tax returns in Missouri

Register for a Sales Tax License

Visit the Missouri Department of Revenue (DOR) website to apply. Use Form 2643. Complete and submit the Missouri Tax Registration Application.

Determine Filing Frequency

Based on Sales Volume. Missouri DOR assigns a filing frequency (monthly, quarterly, annually) depending on your sales volume.

Collect Sales Tax

Collect state sales tax (4.225%) along with any applicable local taxes at the point of sale.

Maintain Records

Keep secure records of all sales and collected taxes.

File Sales Tax Return

Submit returns via the Missouri DOR MyTax Missouri portal. Use Form 53-1 for monthly or quarterly paper filing.

Remit Payment

Electronic payments can be made via the MyTax Missouri portal. Alternatively, mail a check with the completed Form 53-1.

Verify Local Tax Rates

Confirm the correct local sales tax rates for different municipalities.

File on Time

Monthly returns are due on the 20th of the following month, quarterly returns are due the 20th of the month after the quarter ends, and annual returns are due on January 31.

Late Filing Penalties

Avoid late fees by ensuring timely submissions.

Amend Returns if Needed

Amend filed returns online or via a paper form if discrepancies are discovered.

Sales tax filing frequency

In Missouri, the frequency of filing sales tax returns depends primarily on the volume of a business's taxable sales. For businesses with significant sales, the state requires more frequent reporting to ensure timely tax collection. Here are the main filing schedules:

Monthly Filing

This is typically required for businesses with larger sales volumes. If a business collects sales tax exceeding a specific threshold (such as $500 per month), it must file sales tax returns monthly. Monthly reports and payments are due by the 20th of the month following the reporting period.

Quarterly Filing

Businesses with moderate sales volumes may qualify for quarterly filing. This schedule applies to those whose tax collections are between $45 and $500 per month during a quarter. Quarterly returns and payments are due by the last day of the month following the end of the quarter — for example, April 30th for the first quarter ending March 31st.

Annual Filing

Small businesses with minimal sales can opt for annual filing. This is typically available to those whose sales taxes collected are $45 or less per month or less than $180 per year. Annual returns are due by January 31st of the following year.

Missouri also allows for seasonal and other special filing arrangements based on the nature of the business and its sales patterns. Businesses should also keep track of local tax jurisdiction requirements, as localities within Missouri may have additional reporting obligations.

Filing when no sales tax has been collected

If no sales tax is collected while being registered for sales tax in Missouri in 2024, the business must still file a "zero return" for the reporting period. This means they must submit a sales tax return indicating no taxable sales occurred.

Failure to file can result in penalties, fines, or the revocation of the sales tax license. Additionally, it may trigger audits or further scrutiny from the Missouri Department of Revenue.

Penalties for late filing and non-payment of sales taxes

In Missouri, timely filing and payment of sales taxes is a critical responsibility for businesses.

Late sales tax filing can incur significant penalties and interest charges. If a business fails to file its sales tax return by the designated due date, the Missouri Department of Revenue may impose a penalty of up to 5% of the tax due for each month the return is late, capping at 25%.

Additionally, interest on unpaid taxes accrues at a rate set annually by the state. This not only heightens the financial burden on the business but may also result in administrative actions such as additional scrutiny or audits.

Non-payment of sales taxes in Missouri is treated with equal severity. Failure to remit collected sales taxes is considered a serious violation, leading to penalties and interest on the owed amount. Non-compliant businesses may face a penalty of up to 25% of the unpaid tax, in addition to accruing interest.

Persistent non-payment could result in more severe consequences, including liens on business property, garnishment of business funds, and even revocation of the business’s sales tax permit, effectively crippling its ability to operate legally.

Sales tax discounts and incentives

In 2024, Missouri offers several sales tax incentives and discounts to businesses aimed at promoting economic growth and investment within the state. These incentives include:

Manufacturing and Processing Exemptions

Businesses involved in manufacturing or processing can benefit from exemptions on the purchase of machinery, equipment, and materials used directly in the production process. This significantly reduces the operational costs for manufacturers.

Research and Development Exemptions

Companies engaged in research and development activities may qualify for exemptions on purchases of machinery, equipment, and materials used for innovative processes and products. This incentive encourages technological advancement and innovation within the state.

Data Center Incentives

Missouri provides sales tax exemptions for data centers on purchases related to their construction and operation, including equipment and utilities. This is aimed at attracting more high-tech data storage and processing businesses to the state.

Enterprise Zone Exemptions

Businesses operating in designated enterprise zones may be eligible for sales tax exemptions on their purchases. These zones are typically in economically distressed areas and aim to stimulate local economic development and job creation.

Agricultural Exemptions

Agricultural businesses can benefit from exemptions on certain purchases such as machinery, equipment, and feed. These incentives support the agricultural sector, which is vital to Missouri's economy.

2024 sales tax filing due dates for Missouri

Monthly: 20th of the following month Quarterly: 20th after quarter end

Shipping and sales tax in Missouri

When to pay tax on shipping in Missouri

In Missouri, the application of sales tax on shipping charges depends on whether the shipping is considered part of the sale of taxable goods or services.

Shipping Charges as Part of the Sale

If the shipping charge is included in the sale price, then it is taxable.

If the shipping and handling charges are listed separately from the sale price on the invoice, and the sale itself is taxable, then the shipping and handling charges are also subject to sales tax.

Exempt Items

If the item being shipped is exempt from sales tax, then the shipping charges for that item are also exempt.

Freight-on-Board (FOB) Terms

The taxability of shipping charges may also depend on the terms of the sale. For example, if the sale is FOB destination (the seller retains ownership until the goods are delivered to the buyer), then shipping charges are typically subject to sales tax.

If the sale is FOB shipping point (the buyer takes ownership after the goods are shipped), then shipping charges may not be taxable.