SALT Report 1409 – The Missouri Department of Revenue ruled that an out-of-state contractor’s purchases of items in Missouri that were subsequently used in the installation, repair, and upgrade of heating, ventilation, air conditioning, and refrigeration systems in Missouri are subject to sales tax.
Missouri Code of State Regulations 12 CSR 10-112.010(1) provides that:
“A contractor is the final user and consumer of the materials and supplies used and consumed in fulfilling a construction contract and which become a part of a completed real property improvement. Consequently, persons selling materials and supplies to a contractor are subject to tax on the gross receipts from all such sales because the purchase is not for resale as tangible personal property.”
The Department determined that the taxpayer is a contractor under 2 CSR 10-112.010(2)(A) and the HVAC & R systems that he installs, repairs, and upgrades are improvements to real property. Therefore, the taxpayer’s purchases of HVAC & R systems in Missouri are subject to Missouri sales tax because the taxpayer’s contracting services are not subject to sales tax and title to these items transfers to the taxpayer in Missouri.
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