Effective August 28th, 2017, separately stated shipping charges will no longer be taxable in Missouri. For Missouri online sellers, this means that, as long as you actively let buyers know which charges are for shipping and which are for the price of the item, you will no longer need to charge sales tax on the shipping price you charge your customers. This is good news, but may mean that you have to change how you collect sales tax in Missouri.
What’s going on with Missouri shipping sales tax?
Shipping has historically been considered non-taxable in Missouri, but that all changed after the Alberici Constructors, Inc. v. Director of Revenue Missouri Supreme Court decision back in 2015. Without going into all the details of the case, it was about a construction crane and concluded that if a vendor intends for delivery charges to be part of the transaction, then those delivery charges are taxable.
This ended up applying to online transactions, since in most cases delivery is a necessary part of the transaction in order to send the product to the buyer.
But on July 5th, Missouri Governor Eric Greitens signed Missouri Senate Bill 16 into law. This bill updated Missouri’s law to say that sales tax is not applicable to “customary delivery charges that are stated separately from the sale price.”
This is good news for online sellers (and their customers)!
Now you no longer have to charge your customers sales tax on shipping charges in Missouri. This means they’ll see a tax break, if only a few cents.
What should online sellers do?
Shipping is no longer taxable in Missouri starting August 28, 2017.
On the day the law goes into effect, online sellers who collect sales tax from Missouri buyers should check the tax settings on their online shopping carts and marketplaces. Make sure shipping is set to “not taxed.”
Don’t worry if you forget about this for a day or two (or longer). If you think you may have accidentally collected sales tax on shipping from Missouri customers, you can use your TaxJar Missouri Report or your TaxJar Transactions Tab to find these instances. You should either refund the money to the customer or be sure you turn that erroneously collected money into the state. (Never keep money you accidentally collect due to sales tax!)
If you can’t remember where your sales tax settings are, or if the look different from the last time you poked around in there, we have guides on how to manage sales tax collection on most of the major shopping carts and marketplaces.
Do you have questions or something to say about shipping taxability in Missouri? Start the conversation in the comments!