If you’re an online seller with actual or potential sales tax ties to Missouri, then you’re in the right place!
In this post I’ll take you through the most common scenarios we see with our customers trying to do the right thing when it comes to sales tax.
Hopefully this will give you a better idea of when you’re required to collect sales tax in Missouri and how much to collect. If you and your business don’t fit into any of the following scenarios, your best option to is contact a tax professional to get some guidance.
Online sellers with zero ties to Missouri
If you make a living selling items online and you live and operate your business in a state other than Missouri AND have zero ties to Missouri (no inventory, no employees, no facilities, etc) then you’re not required to collect sales tax on items shipped to Missouri.
Online sellers living in Missouri
If you live in Missouri then most likely you also operate your business in the state as well. If that’s true then you have nexus in Missouri (here’s an entire post about sales tax and nexus). That means you’re required to collect sales tax on taxable items delivered to customers in Missouri.
In order to collect sales tax you have to register your business with the state by submitting a Missouri Tax Registration Application (Form 2643) online. I’ll talk about how much sales tax to collect later in the post.
Out-of-state online sellers using a fulfillment service
Let’s say you live in Ohio (or any state other than Missouri) and you use a fulfillment service that warehouses and ships your inventory from a location in Missouri. According to Missouri, that inventory gives your business nexus to the state. That means you’re required to register your business with the state and collect sales tax on taxable items shipped to customers in Missouri.
Here’s the exact language used by the state in Chapter 144 that qualifies your inventory as a “place of business” in Missouri:
“Maintains a place of business in this state” includes maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary, or agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business.
Collecting sales tax in Missouri
The sales tax rate you’ll use to charge your customers is a sum of the state rate (4.225 percent as I write this) plus any local tax that cities, counties, and districts may impose. The good news is the tax rate you charge your customers doesn’t change. Missouri’s tax rate is based on the origin of the sale (where your business is located).
For example, let’s say you live and operate your business in Windyville, MO. Windyville is located in Dallas County. The local rate in Dallas County is 2 percent. Add that to the state rate and the rate that you’re supposed to charge your customers in Missouri is 6.225 percent (PDF). Any customer is Missouri gets charged that same rate.
Here’s a second example: let’s say you live in Charlotte, NC and use a fulfillment service that warehouses and ships your inventory from their location in Jefferson City, MO. Jefferson City is located in Cole County. The local rate in Cole County is 1.5 percent. There’s also a city tax of 2.0 percent that Jefferson City imposes. That means the tax rate you’re supposed to charge your customers in Missouri is 7.725 percent (4.225 state + 1.5 percent county + 2 percent city). Any customer is Missouri gets charged that same rate.
Filing sales tax in Missouri
If you need to file a sales tax return in Missouri, TaxJar has your back. You can now enroll in AutoFile for the state of Missouri and we’ll automatically file your sales tax return for you! Find out more at TaxJar.com.
Summary: if your business has nexus, collect based on your business location
If you’re an online seller, there are two common ways you’ll be required to collect sales tax in Missouri. The first is if you live and operate your business in the state. The second is if you have inventory warehoused and shipped from a location in the state. Collecting sales tax in Missouri is relatively straight-forward. You’re only required to use one rate to collect on every order shipped to a customer in the state. That rate is based on your business location. It will be the sum of the state rate plus any local rates (like county or city).
Are you currently registered as a seller in Missouri? Got any fun stories to share? Let’s talk in the discussion group below or head over to our sales tax community on Facebook.