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Missouri Use Tax Applies To In-State Aircraft Sale When Sales Tax Not Collected

In Featherston v. Director of Revenue, the Missouri Supreme Court addressed the question of whether Missouri use tax applied to an in-state sale of an aircraft that fell outside the scope of Missouri’s sales tax statute.  Missouri sales tax applies only to in-state transactions.  Sales tax does not apply unless the seller is engaged in the business of selling tangible personal property.  In this case, the executor of an estate in Missouri sold a plane out of the estate to a Missouri buyer.  Sales tax did not apply because the seller was making an isolated sale.  After the Director of Revenue assessed a use tax against the buyer, the Missouri Administrative Hearing Commission ruled the assessment improper, stating that use tax could be assessed only when goods were purchased outside the state.

The Missouri Supreme Court overruled the Administrative Hearing Commission’s decision.  Missouri use tax typically applies when goods are purchased outside the state and come to rest within Missouri (e.g., a Texas seller ships goods to the buyer in Missouri).  The Supreme Court noted, however, that the use tax is not limited to interstate sales; instead, it applies whenever a transaction is not subject to sales tax and is not otherwise exempt.  In this case, the sales tax failed to apply not because of an exemption but because of the nature of the seller.  The Supreme Court found nothing in the use tax statute analogous to the provision in the sales tax statute that says the sales tax covers only sales by sellers engaged in the business of selling goods.  Since no exemption covered the sale, it was subject to Missouri use tax.