Mo. Code Regs. tit. 12 § 10-107.100
Current through Register Vol. 49, No. 24, December 16, 2024
Section 12 CSR 10-107.100 - Use of and Reliance on Exemption CertificatesPURPOSE: This amendment adds definitions under section (2) for Good Faith and Burden, removes (3)(C)(1), and updates RSMo authority.
(1) In general, a seller that receives and accepts an exemption certificate in good faith is not required to collect and remit tax on a sale covered by the exemption certificate. If the exemption certificate accepted in good faith is not valid, the purchaser is liable for the tax.(2) Definition of Terms. (A) Exemption certificate-A certificate signed by the purchaser and provided to the seller that specifies the basis for the purchaser's claim of exemption. A copy of a letter of exemption issued by the department to an exempt entity and delivered to a seller is equivalent to an exemption certificate for purposes of this rule.(B) Good faith - Honesty of intention and freedom from knowledge of circumstances which ought to put the holder upon inquiry.(C) Burden of Proof - Burden of persuading the finder of fact that the existence of a fact is more probable than the nonexistence.(3) Application of Rule. (A) The seller must obtain and maintain exemption certificates for any exempt sales. If the seller does not have an exemption certificate for a sale it claims was exempt, the seller may be held liable for the tax.(B) The seller must indicate on each invoice or bill of sale the name of the purchaser claiming the exemption.(C) If a seller has an exemption certificate from the purchaser on file, the seller may rely on the certificate on file for future sales unless- 1. The certificate, by its terms, does not apply to the transaction; or2. The seller can no longer rely in good faith on the certificate.(D) A document issued by the purchaser stating that a specific transaction is subject to tax requires the seller to collect tax on the transaction, even if it contradicts the purchaser's prior claim of exemption. A claim of exemption issued by the purchaser relating to a specific transaction applies only to that transaction and is not a general claim of exemption.(E) If a purchaser gives the seller an exemption certificate claiming an exemption that the purchaser is not entitled to claim, or if the purchaser subsequently uses the tangible personal property in a manner inconsistent with the purchaser's claim of exemption, then the purchaser is liable for the tax. If sales tax should have been paid on the original purchase, then the purchaser should report and remit sales tax based on the location of the seller. If use tax should have been paid on the original purchase, then the purchaser should report and remit use tax based on the location of the purchaser. If the purchaser cannot determine whether the goods are subject to sales or use tax, the goods are subject to the sales tax rate at the location of the purchaser.(F) If a seller does not act in good faith when accepting an exemption certificate, the seller and purchaser are jointly liable for the amount due.(4) Examples. (A) A Joplin grocery store buys two (2) dozen mops for resale from a seller in St. Joseph, Missouri and delivers an exemption certificate. The grocery store then removes six (6) of these mops from stock for use in cleaning the store. The grocery store is subject to sales tax on the actual cost of the six (6) mops removed from stock based on the rate in effect at the seller's St. Joseph location.(B) A Missouri seller has an exemption certificate on file from a Missouri purchaser. Therefore, the seller should not collect tax from the purchaser. On a future purchase, the purchaser issues a purchase order stating that the purchase is taxable. The seller must collect and remit tax on the transaction.(C) A seller claims a number of sales are exempt from tax. The seller's invoices do not identify the purchasers. Unless the seller can otherwise establish the validity of the exemptions, the seller must remit tax on these sales.(D) A retailer has an unsigned exemption certificate from a customer. The retailer does not charge tax on the sales it makes to that customer. The retailer is liable for tax on the sales to that customer, because an unsigned exemption certificate is not valid.(E) An out-of-state seller sells to a Missouri customer. The Missouri customer issues an exemption certificate, which is taken in good faith. The out-of-state seller should not collect or remit Missouri tax. The Missouri buyer must report and remit tax if the items are not exempt. AUTHORITY: section 144.270, RSMo 2000.* Original rule filed Oct. 25, 2004, effective May 30, 2005. Amended: Filed May 10, 2005, effective Nov. 30, 2005. 'Original authority: 144.270, RSMo 1939, amended 1941, 1943, 1945, 1947, 1955, 1961. Amended by Missouri Register February 1, 2024/volume 49, Number 03, effective 3/31/2024.