Missouri – Accepting Exemption Certificates from Organizations in Good Faith

SALT Report 1944 – The Missouri Department of Revenues issued a ruling regarding whether a Taxpayer can accept an exemption certificate on its sales to an exempt organization in good faith. The Taxpayer sells first aid items, safety supplies, and non-prescription drugs that are kept in a First Aid kit for the customer’s employees to use.

Many of the Taxpayer’s customers have sales and use tax limited exemption certificates for civic, charitable, or religious organizations. The Taxpayer requested guidance regarding the acceptance of exemption certificates from these customers.

In their decision, the Department referenced Section 144.030.2(20), RSMo of the Missouri tax code which provides an exemption for “all sales made by or to not-for-profit civic, social, service or fraternal organizations [for use] in their civic or charitable functions and activities.”

Because Section 144.030.2 (20), RSMo requires that the purchased items be used in the exempt organizations functions or activities, the Department determined that the Taxpayer cannot accept exemption certificates from these clients in good faith. The First Aid kits are for the welfare and benefit of the organization’s employees and do not fall within the organization’s functions or activities.

For Further Information:

Missouri Department of Revenue – Letter Ruling Number LR 7162