Missouri: Final State to Enact Sales Tax Economic Nexus and Marketplace Legislation

On June 30, 2021, Missouri’s governor signed S.B. 153, enacting economic nexus and marketplace facilitator standards beginning in 2023. Missouri is the final state of the forty-five states that impose sales tax to implement economic nexus rules since Wayfair.

 

Economic Nexus Threshold

Beginning January 1, 2023, a vendor is presumed to engage in business activities in Missouri if the seller’s gross receipts from taxable sales from delivery of tangible personal property into Missouri in the previous calendar year or current calendar year exceeds $100,000. If the vendor exceeds the threshold, then it is required to register, charge, collect and remit sales tax.

To calculate a seller’s gross receipts, following the close of each calendar quarter, a vendor must determine whether it met the gross receipts requirements during the 12-month period ending on the last day of the preceding quarter. If the vendor meets the requirements, then the vendor is required to collect and remit the tax over the next 12 months, beginning not more than three months following the close of the preceding calendar quarter.

 

Marketplace Facilitator Provisions

A marketplace facilitator is considered a “seller” and is required to collect and remit tax on its sales, and sales it facilitates, if it engages in business activities in Missouri, either by being present in Missouri or by exceeding $100,000 in gross receipts from taxable sales.

Missouri defines a marketplace facilitator as a person who “facilitates a retail sale by a marketplace seller by listing or advertising for sale by the marketplace seller, in any forum, tangible personal property or services that are subject to tax under this chapter; and either directly or indirectly through agreements or arrangements with third parties collects payment from the purchaser and transmits all or part of the payment to the marketplace seller.”

Specifically excluded from the definition of marketplace facilitator are persons who provide internet advertising services, or product listings, and do not collect payment from the purchaser and transmit payment to the marketplace seller; persons who provide travel agency services; and third-party payment processors “whose sole activity with respect to marketplace sales is to facilitate the payment transactions between two parties.”

The new legislation cannot be construed to limit or prohibit the ability of a marketplace facilitator and a marketplace seller to enter into agreements regarding the fulfillment of these new marketplace requirements.

Marketplace facilitators are required to report the facilitated sales separately from their direct sales. All taxable sales made through a marketplace are considered to be completed at the location where the item is shipped or delivered, or where the purchaser takes possession of the goods. This differs from the current rule where sales to in-state customers are sourced to the retailer’s place of business for local sales tax.

Marketplace facilitators will be eligible for the retailer’s discount on facilitated sales when the tax is remitted to the Missouri Department of Revenue in a timely manner.

 

Administrative and Streamlined Sales Tax Developments

This act authorizes the Department of Revenue to consult, contract and work jointly with the Streamlined Sales and Use Tax Agreement's Governing Board to allow sellers to use the Governing Board's certified service providers and central registration system services, or to consult, contract and work with certified service providers independently. The authorization automatically sunsets after five years.

The Department has until July 1, 2022 to update its mapping feature to include use tax rates and the total tax rate for locations that have overlapping sales or use taxes levied. 

Another administrative change included in the bill will adjust the sales tax filing frequency for some sellers. The tax liability threshold that requires sellers to file on a monthly basis has been increased from $250 per month to $500 per month. Taxpayers that have a liability of less than $500 per month but more than $200 per calendar quarter will now file returns on a quarterly basis. Finally, the annual filing basis has also been adjusted to taxpayers that have a tax liability of less than $200 per calendar quarter.

   

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