Have a Missouri Seller’s Permit?Sell Online with TaxJarQuestions about sales tax?
A how-to-guide for small businesses, retailers and sellers on the process of understanding sales tax requirements in Missouri including rates, rules of origin and how best to handle its more than 2,000 exemptions.
Understanding Missouri sales tax basics
A state sales tax is imposed on retail sales of tangible personal property and some services in Missouri. The state rate is added to the local rates of cities, special and transportation districts, as well as food/beverage. Online and remote retailers have to collect a customer's local sales tax in their state (where the property is obtained) on all Sales to them.
Determining the proper rate and rules of sourcing
How much does a customer paying depends on the state’s rate plus any local rates that apply based on where the sale occurs. If it’s an in-person sale, the sales tax rate is based on the seller’s point of sale. Sourcing rules typically call for the destination address when a purchase is made remotely and goods are delivered. Selle- rs should ensure the location of sale to apply the correct rate at time of transaction is clearly identified.
Taxable and exempt items
All goods are generally taxable, unless specifically exempt. Some services may be taxable if they are specified in statute. Exemptions often include basic food supplies, prescription drugs, and sales to exempt organizations such as government or religious institutions. Exemption certificates issued by purchasers should be examined by a business and preserved as part of the documentary evidence of a taxable sale. When in doubt the charge is considered taxable and correspond with a jurisdiction or tax professional.
Registration and collection responsibilities
All businesses that have a sales tax liability in Missouri must apply for a sales tax permit from before collecting on the state’s rate. Your responsibility to charge customers for sales tax and remit that amount in a timely manner on time is what registration instigates.
Remote sellers and marketplace considerations
Remote sellers making sales into Missouri must determine if they have a collection responsibility based on economic thresholds. If a seller’s sales into Missouri during a look-back period are greater than a certain threshold or number of transactions, the seller is required to collect and remit state sales tax. Marketplace facilitators that operate market place places with third-party sellers may be responsible for collecting and remitting tax on their market palce sales; those who sell through a third party platform should know what obligations their sale channel assumes off of them.
Nexus, Thresholds of registration and Economic presence
Nexus is the link that causes an out-of-state seller to be subject to Missouri tax law. A physical presence, like an office or employee, establishes nexus, although economic presence — exceeding certain sales or transaction thresholds — can also set off collection obligations. Sellers must monitor sales into Missouri to determine whether they exceed thresholds that demand registration and tax collection.
Determination of taxable amounts: rounding rules
The tax is on the taxable amount of sales, and it may include sale at gross less authorized discounts and other nontaxable charges. Taxability of Shipping 12 Depending on how it is expressed and whether the shipping is included in the sale of taxable property, shipping charges may be nontaxable or subject to tax. Apply the combined applicable tax rate to obtain the amount to be charged (including, if and as applicable, using any rounding conventions prescribed for that jurisdiction).
Documentation and recordkeeping
Always keep accurate information on all sales, tax collected and exemption certificates issued, and the returns you filed. Records of you may be subject to review by the state of Missouri in order to confirm that you have collected and remitted accurately. Proper record-keeping methods require retaining invoices, receipts, signed exempt transactions and points-of-sale reports of shipping records for the time period required by law. Cleas records are helpful for compliance and deductions or adjustments requested on returns.
Returns and payments of collected tax
Sellers who are registered must file regular sales tax returns that report taxable and exempt sales, as well as any taxes collected. Returns shall be made after deducting therefrom allowances for bad-debts, credit memoranda issued to customers, and such other deductions as are allowable. Keep an eye on filing dates and forms of payment that a taxing authority receives. Late filings and late payments result in penalties and interest, so establish reminders or processes to enable compliance by the deadlines.
Handling audits, assessments, and corrections
It can also lead to an audit if a taxing authority questions whether sales or tax collection has really been reported. Respond to examiners and do not obstruct an audit by giving them what they ask for when requested during the process. If you find a mistake after e-filing, many jurisdictions permit you to file amended returns to correct underpayments or overcollections. Participate in any assessments and challenge findings if appropriate through available appeals mechanisms immediately.
Practical compliance tips
Confirm rates at the point of sale: Base total rates for remote transactions on the buyer’s delivery address -Organize exemption certificates: Verify certificates are filled out correctly and store them with their related record of sale -Monitor sales thresholds: Monitor sales into Missouri to see if you need to account for economic nexus or register -Calculate using automation processes: Implement uniform process for calculating tax rates and rounding, reducing errors -Reconcile your collections: Regularly reconcile chance-of-sale reports with filed returns to catch discrepancies early
Keeping up with rate and rule changes
Sales tax rates and rules vary when it comes to sales tax. You should subscribe to official notices, check the state guidance, and seek advice from a tax professional who specializes in such things as interpretation issues for sourcing of service(s), bundled transactions or what is considered an exempt transaction. Regularly revisiting your tax collection processes can keep surprises at bay during audits and help mitigate the chances of noncompliance.
Conclusion
Missouri Sales Tax Guide for Businesses Learn everything you need to know about sales tax in Missouri and how to automate the process and stay compliant with TaxJar! By setting forth the procedures for rate decision, tax collection, exemption document retention and prompt returns filing, sellers may minimize their risk of compliance so they can focus on doing business. When in doubt, get expert advice so that sales are taxed properly and obligations to file returns are satisfied.