Missouri – Supreme Court Ends Longstanding Practice of Applying Use Tax Definitions in Sales Tax Case


On March 17, 2020, the Missouri Supreme Court held that the use tax definition of “sale” cannot be applied to sales tax cases, turning more than two decades of precedent on its head.

In DI Supply I, LLC v. Director of Revenue, DI Supply sold hotel room furnishings to its parent, Drury Hotels Company (DHC), which operates hotels. The issue before the court was whether DI Supply’s sales to DHC were nontaxable sales for resale. DI Supply argued the sales were for resale because DHC transferred the right to use the hotel room furnishings to its guests and included the cost of such items in the nightly room rate.

In a seeming failure to adhere to the principle of stare decisis, the Missouri Supreme Court held that DI Supply’s sales of room furnishings to DHC did not qualify for the sales tax resale exclusion because the hotels did not transfer ownership of or title to the furnishings to hotel guests. In so holding, the court explicitly repudiated its prior practice of applying use tax definitions to sales tax cases, observing that the sales tax and use tax statutes on their face have different requirements.


For more Information: JD Supra

jd supra
by Zachary Atkins
april 7, 2020