SALT Report 1937 – The Missouri Department of Revenue issued a letter ruling regarding a Taxpayer’s purchases of packaging materials. The Taxpayer is in the trucking business however; on request the Taxpayer will provide warehousing and packaging services for its customers who are primarily distributors and retailers. To provide the packaging services the Taxpayer must purchase cardboard boxes, lids, and box liners. The Taxpayer requested guidance as to the taxability of the packaging materials.
The Department based their decision on the Supreme Court of Missouri’s ruling in Brambles Industries, Inc. v Director of Revenue. In this case, the Supreme Court ruled that packaging materials are considered resold if there is, “a transfer, barter or exchange, of the title or ownership of tangible personal property or the right to use, store or consume the same, for a consideration paid or to be paid.”
Based on that ruling, the Department determined that the Taxpayer resells the packaging materials to its customers, who then sell the product to the end user. As a result, the Taxpayer’s purchases of packaging materials are not subject to sales tax.
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