Sales Tax

Scope

This policy applies to all University departments that either purchase or sell tangible goods and services from or to non-University of Missouri entities.

Reason for Policy

The purpose of this policy is to ensure the University’s compliance with all applicable state and local sales tax laws.

Policy Statement

Purchases by the University
Purchases by the University of goods or services from Missouri suppliers and from out-of-state suppliers located in states with sales tax exemptions are not subject to state or local sales tax if conducted within the exempt functions and activities of the University. 

This exemption from sales tax for purchases by the University extends to contractors who receive a project exemption certificate from the University to purchase construction materials that will be directly incorporated into or consumed in the work required to fulfill a particular contract.  University employees making personal purchases may not use this exemption.

Sales by the University
Sales by the University of tangible personal property and taxable services completed within the State of Missouri are presumed taxable and subject to all applicable Missouri state and local sales tax unless the sale is either specifically exempted by law or to a tax-exempt organization that has provided to the University a valid state sales and use tax exemption certificate.  Items sold or services rendered to other University departments are not subject to tax.

Appropriate state, county, city, and mass transportation sales tax must be collected on all taxable sales made by the University.  Generally, the amount of tax the University must remit to the Missouri Department of Revenue depends on the combined state and local sales tax rate of the location of the University unit making the sale.

Sales tax must be collected on tangible personal property sold over the internet if the item is taxable and the delivery point is within the state of Missouri.  Sales tax must also be collected on University sales to customers outside of the state of Missouri if the customer receives the goods in Missouri.  If the customer is also required to pay for the delivery charge and the item being sold is taxable, the associated delivery charge is also generally subject to tax even when it is separately stated.

Exemptions from Collection of Sales Tax
Certain sales are exempt from the collection of all sales taxes, both state and local.  These sales include tuition, fees, room and board (when part of a room contract), sales for resale, and advertising.  A link to a complete list is available in the Related Information section of this policy. 

In addition, certain types of sales are either exempt from all or a portion of the state sales tax rate, but not the local sales tax rate.  This includes textbook sales that are exempt from the state portion of the sales tax rate when purchased by a student who possesses proof of current enrollment at any Missouri postsecondary institution and the books purchased are required or recommended for the enrolled class.  This also includes food sold for home consumption that is generally subject to a reduced state sales tax.

By state law, certain back-to-school purchases, such as clothing, school supplies, computers, and other items as defined by the statute are exempt from the state’s portion of the sales tax rate and are exempt from local sales tax when a local jurisdiction chooses to participate.  This sales tax exemption, referred to as the sales tax holiday, is a three-day period that begins on the first Friday in August and ends on the following Sunday.  

Required Identification of Sales Tax
All tickets that are subject to sales tax, such as sporting events and performances, must have printed, stamped, or otherwise endorsed thereon, the words, “This ticket is subject to a sales tax.”  The amount of sales tax collected must be identified and set forth separately on each cash register receipt, sales slip, credit card sales slip, and invoice. 

For advertising purposes, University offices selling taxable goods may add the sales tax in the sales price and include that information in their flyers, publications, and websites, using the phrase “sales tax included”.  The total selling price may be rounded up to minimize the need to keep change on hand.

Miscellaneous Requirements
All sales tax collected must be recorded as income in the appropriate PeopleSoft account chartfield according to the type and location of the sale and must be deposited with other cash and credit card receipts. 

All refunds made on taxable sales items must include the amount of sales tax collected.  “Buy backs” in bookstore operations are considered purchases for resale and not refunds; therefore, no sales tax is to be refunded for buy backs.

Definitions

Accountabilities

UM System Controller’s Office:

• Remit sales taxes collected to the State of Missouri

Campus Departments:

• Ensure that the proper tax rate is charged on all taxable sales
• Properly classifying the revenue from the sale of tangible personal property or services as taxable or non-taxable by entering the appropriate PeopleSoft account chartfields
• Using the approved payment methods and providing in-state and out-of-state suppliers with the appropriate sales tax exemption certificates in order to exempt purchases from sales taxes

Additional Details

Forms

Related Information

Missouri Department of Revenue:

• Sales and Use Tax: http://dor.mo.gov/business/sales/
• Exemptions: http://revisor.mo.gov/main/OneSection.aspx?section=144.030&bid=33391&hl=
• Sales Tax Holiday: http://revisor.mo.gov/main/OneSection.aspx?section=144.049&bid=7370&hl=
• Sales tax rates for each taxing district: http://dor.mo.gov/business/sales/rates/

UM System Controller’s Office – Sales Tax Rate Table and Exemptions List

History

This policy combines the following former policies:

• Accounting Policy Manual 10.10.80 – Sales Tax (revised 4/21/2007)
• Business Policy Manual 205 – Sales Tax (revised 10/20/2015)

Procedure