12 CSR 10-107.100 - Use of and Reliance on Exemption Certificates
(1) In general, a seller that receives and
accepts an exemption certificate in good faith is not required to collect and
remit tax on a sale covered by the exemption certificate. If the exemption
certificate accepted in good faith is not valid, the purchaser is liable for
the tax.
(2) Definition of Terms.
(A) Exemption certificate-A certificate
signed by the purchaser and provided to the seller that specifies the basis for
the purchaser's claim of exemption. A copy of a letter of exemption issued by
the department to an exempt entity and delivered to a seller is equivalent to
an exemption certificate for purposes of this rule.
(B) Good faith-Honesty of intention and
freedom from knowledge of circumstances which ought to put the holder upon
inquiry. Also see 12 CSR
10-101.500(2)(B), Burden of
Proof.
(C) Burden of Proof-Burden
of persuading the finder of fact that the existence of a fact is more probable
than the nonexistence.
(3) Application of Rule.
(A) The seller must obtain and maintain
exemption certificates for any exempt sales. If the seller does not have an
exemption certificate for a sale it claims was exempt, the seller may be held
liable for the tax.
(B) The seller
must indicate on each invoice or bill of sale the name of the purchaser
claiming the exemption.
(C) If a
seller has an exemption certificate from the purchaser on file, the seller may
rely on the certificate on file for future sales unless-
1. The certificate, by its terms, does not
apply to the transaction; or
2. The
seller can no longer rely in good faith on the certificate.
(D) A document issued by the purchaser
stating that a specific transaction is subject to tax requires the seller to
collect tax on the transaction, even if it contradicts the purchaser's prior
claim of exemption. A claim of exemption issued by the purchaser relating to a
specific transaction applies only to that transaction and is not a general
claim of exemption.
(E) If a
purchaser gives the seller an exemption certificate claiming an exemption that
the purchaser is not entitled to claim, or if the purchaser subsequently uses
the tangible personal property in a manner inconsistent with the purchaser's
claim of exemption, then the purchaser is liable for the tax. If sales tax
should have been paid on the original purchase, then the purchaser should
report and remit sales tax based on the location of the seller. If use tax
should have been paid on the original purchase, then the purchaser should
report and remit use tax based on the location of the purchaser. If the
purchaser cannot determine whether the goods are subject to sales or use tax,
the goods are subject to the sales tax rate at the location of the
purchaser.
(F) If a seller does not
act in good faith when accepting an exemption certificate, the seller and
purchaser are jointly liable for the amount due.
(4) Examples.
(A) A Joplin grocery store buys two (2) dozen
mops for resale from a seller in St. Joseph, Missouri, and delivers an
exemption certificate. The grocery store then removes six (6) of these mops
from stock for use in cleaning the store. The grocery store is subject to sales
tax on the actual cost of the six (6) mops removed from stock based on the rate
in effect at the seller's St. Joseph location.
(B) A Missouri seller has an exemption
certificate on file from a Missouri purchaser. Therefore, the seller should not
collect tax from the purchaser. On a future purchase, the purchaser issues a
purchase order stating that the purchase is taxable. The seller must collect
and remit tax on the transaction.
(C) A seller claims a number of sales are
exempt from tax. The seller's invoices do not identify the purchasers. Unless
the seller can otherwise establish the validity of the exemptions, the seller
must remit tax on these sales.
(D)
A retailer has an unsigned exemption certificate from a customer. The retailer
does not charge tax on the sales it makes to that customer. The retailer is
liable for tax on the sales to that customer, because an unsigned exemption
certificate is not valid.
(E) An
out-of-state seller sells to a Missouri customer. The Missouri customer issues
an exemption certificate, which is taken in good faith. The out-of-state seller
should not collect or remit Missouri tax. The Missouri buyer must report and
remit tax if the items are not exempt.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.