Missouri – Determining When Title Transfers to Out-Of-State Customers

SALT Report 2720 – The Missouri Department of Revenue issued a letter ruling regarding the taxability of engines, generators, and equipment when sold to a customer who arranges for a third party common carrier to pick up the equipment from the seller’s facility and delivered to an out-of-state location.

In this case, the Taxpayer’s sales agreement does not include provisions regarding transfer of title and delivery.  Because of this, the Taxpayer requested a ruling as to whether its sales of equipment to out-of-state customers are subject to Missouri sales tax if the customer independently arranges the shipping.

In its response, the Department referred to section 144.020 RSMo, which provides that sales tax is imposed on the sale of tangible personal property that is sold in Missouri when title to the property transfers to the buyer in Missouri.  Under Missouri Code of State Regulations 12 CSR 10-113.200(3)(A), “Title transfers when the seller completes its obligations regarding physical delivery of the property, unless the seller and buyer expressly agree that title transfers at a different time.”

The Commissioner stated that pursuant to the provisions in 12 CSR 10-113.200(3)(A), the Taxpayer completes its portion of the physical delivery of the equipment to its customer once a common carrier picks up the equipment from the Missouri facility. At this time, title transfers to the customer and the seller no longer has risk of loss regarding the property.  As a result of the title transfer in Missouri the sale is deemed completed in Missouri.

Based on the above the Department concluded that these sales are subject to sales tax when the customer independently arranges for a third-party common carrier to ship the items from the Taxpayer’s Missouri distribution facility to an out-of-state location.

For Further Information

Missouri Department of Revenue – Letter Ruling #LR 7279