Missouri – Taxability of Additive Used to Reduce Exhaust Emissions

SALT Report 2625 – The Missouri Department of Revenue issued a letter ruling regarding a Taxpayer’s sales of a chemical additive used to reduce exhaust emissions in diesel engines so the vehicle will comply with current EPA emissions requirements. The Taxpayer requested a ruling as to whether sales of the chemical additive to the general public, to trucking companies, or to common carriers were subject to sales tax.

In its response, the Department stated that sales to the general public were subject to tax because the additive does not qualify for the exemption found in Section 144.030.2(15), RSMo. The regulation states that, “Machinery, equipment, appliances and devices purchased or leased and used solely for the purpose of preventing, abating, or monitoring air pollution…”

The Department noted that although the additive is used to control diesel emissions for compliance with EPA emissions requirements; it does not qualify as machinery, equipment, appliances and devices as required by Section 144.030.2(15).

As for sales to trucking companies and common carriers, the Department referred to the following regulations:

Section 144.030.2(3), RSMo which provides an exemption for, “Materials, replacement parts and equipment purchased for use directly upon, and for the repair and maintenance or manufacture of, motor vehicles, watercraft, railroad rolling stock or aircraft engaged as common carriers of persons or property.”

Section 144.030.2(4), RSMo, which provides an exemption for, “Motor vehicles registered in excess of fifty-four thousand pounds, and the trailers pulled by such motor vehicles, that are actually used in the normal course of business to haul property on the public highways of the state, and that are capable of hauling loads commensurate with the motor vehicle’s registered weight; and the materials, replacement parts, and equipment purchased for use directly upon, and for the repair and maintenance or manufacture of such vehicles…”

Based on the above regulations the Department determined that when the chemical additive is purchased by a trucking company for use in motor vehicles that are in excess of fifty-four thousand pounds or purchased by a common carrier they are not subject to sales tax.

For Further Information

Missouri Department of Revenue – Letter Ruling LR 7266