Should you collect sales tax in Missouri?
Sales tax is levied on the retail sale of tangible personal property to your customers, including leasing or renting. However, you will collect the sales tax if you determine the nexus in Missouri. A nexus is a presence that may come physically or economically.
A physical nexus is typically created when your business has a store, warehouse, or office location in Missouri. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
Let’s explore if your business has a Physical nexus in Missouri.
A physical nexus is integrated when your business is engaged in the following in Missouri:
- Selling tangible personal property in Missouri.
- Maintaining, occupying, or using a place of business or an office in Missouri.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Missouri.
Is it constituting an Economic nexus in Missouri?
If you are a remote seller (i.e., don’t have a physical presence in the state) or a marketplace seller, and your business sales in Missouri exceed $100,000 during the current or previous calendar year, you must comply with and register under sales tax rules.
Click for more detailed guidance.
How can you Register for Sales tax in Missouri?
To get a sales tax permit in Missouri, you need to apply online on the Missouri online portal. Alternatively, you can complete the Missouri Tax Registration Application (Form 2643) and submit it via mail or fax.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- FEIN and Social Security numbers of all officers, partners, or owners.
- Address details (physical and mailing).
- Business incorporation dates in Missouri.
- Contact information.
- NAICS code.
- Estimated taxable sales.
- Nature of business.
Once you apply for the sales tax permit in Missouri, you will receive a confirmation number and other registration details. Generally, it takes around 2-3 days to process your application. Paper applications may take a little longer time.
Is your product or services liable to Sales tax in Missouri?
Tangible Property: Sales tax in Missouri is imposed primarily on the retail sale of tangible personal property, such as Furniture, giftware, toys, etc.
Services: Many services, such as communication services, fabrication, and utilities, are subject to sales tax in Missouri. For more information, click here.
Digital Product: Missouri doesn’t charge sales tax on digital products . So, if you sell digital products such as software, streaming services, e-books, etc., you need not to collect sales tax. Please see the Missouri Revenue Department advisory (pg. 12) on digital transactions and software here.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. It is non-taxable in Missouri. Read here for official guidance.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, newspapers/ magazines, and manufacturing equipment. To see what exemptions are covered, please click here.
You can also visit the Missouri Department of Revenue website for more concise information about taxability in Missouri.
How should you collect and calculate state taxes in Missouri?
Collecting and computing accurate sales tax to be remitted to the state may not involve those boisterous efforts. The sales tax is origin-based in Missouri, which means you must collect taxes at the rate where your business is located.
If you are not based in Missouri and create a business relationship through an economic nexus in the state, you’ll have to collect and remit the sales tax. However, buyers/ customers are liable for additional use taxes based on their jurisdiction, so you may voluntarily collect the local taxes based on the delivery destination.
Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Missouri has a base sales tax rate of 4.225%, followed by local tax rates, which can be up to 7.375%, depending on the cities and municipalities. Click here for the sales tax rates in Missouri (including local rates).
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (4.225% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
Shipping charges can be delineated separately in the sale invoice raised to the customer or dissipated within the selling price of the items sold. If shipping charges are separately stated on the invoice, there will be no tax applicability; however, you need to collect the tax on the full sales price, including shipping charges, if not stated separately. Here is the guidance issued by the state.
How should you file sales tax in Missouri?
E-file: You can e-file your return using the e-filing portal.
Paper filing: You can complete Form 53-1 and file / pay it through mail. The department issues this form when asked.
Filing frequencies and due dates
You must file the monthly sales tax due on the last Day of the following month. However, you will get the quarterly filing status when your sales tax collection is $500 or less per month. In that case, file your sales tax by the last date of the month from the end of the relevant quarter.
Additionally, you can file annually if your total sales tax collection is less than $200 per quarter. Then, please file your sales tax by 31st January of the following year.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. For more information, refer to the Missouri Department of Revenue webpage.
Are there any fines or penalties for default in filing or paying sales tax?
The state levies a 5% monthly sales tax penalty if you file or pay after the due date. The maximum penalty can be 25% of the tax due.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the guidelines provided by the Missouri Department of Revenue on penalty and interest.
Sales tax holiday in Missouri
The Missouri sales tax holiday applies to Energy Star products with a selling price of less than $1,500 and certain other back-to-school commodities. It requires sellers to charge the sales tax at reduced or zero rates. For detailed information on the sales tax holiday, refer to the Missouri Revenue Department advisory here.