What is the sales tax rate in Missouri?
In Missouri, sales tax is levied at both the state and local levels. The state sales tax rate is currently set at 4.225%. However, local sales taxes, which can be imposed by counties, cities, and special districts, can vary significantly. These local rates can range from 0% to over 5%, depending on the jurisdiction. As a result, the total sales tax rate can vary from 4.225% to around 9.75%, depending on where the sale takes place.
It is essential to be aware of the specific sales tax rates that apply in the area where you are conducting business, as well as any changes to those rates that may occur. There are various online tools available to help you find the current sales tax rates for specific locations within Missouri.
When should your business collect Sales Tax in Missouri?
If your business has a nexus in Missouri, you are required to collect sales tax on the taxable goods and services you sell. Nexus in Missouri can be established through a physical presence or economic criteria. Physical presence can include owning or renting property, having employees, or regularly conducting business in the state. Economic nexus is established if your business exceeds a certain revenue or transaction threshold within a year. In Missouri, the threshold is $100,000 in cumulative gross receipts from sales in the state over the previous 12 months.
Once a nexus is established, you should collect sales tax on all eligible transactions. Sales tax applies to tangible personal property, admission fees for recreational or entertainment activities, utilities, and certain services. The specific services subject to sales tax in Missouri are relatively limited compared to other states.
Missouri Physical Sales Tax Nexus
In Missouri, a physical sales tax nexus can be established in several ways:
Sales Tax Physical Nexus checklist for Missouri
Having an office, warehouse, or place of business: If your business operates a physical location within Missouri, including a storefront, office, or warehouse, you have a physical nexus.
Employees in the state: If you have employees working in Missouri, whether they are salespeople, representatives, or perform services, you have a physical nexus.
Ownership or rental of real or personal property: If you own or rent property in Missouri, such as equipment, inventory, or kiosks, you have a physical nexus.
Regular presence in the state: If you regularly conduct business in Missouri, such as through trade shows, craft fairs, or other events, you have a physical nexus.
If your business meets any of these criteria, you are required to register for a sales tax permit and collect sales tax on your taxable sales in Missouri.
Missouri Economic Nexus Threshold: Revenue, Thresholds and Transactions
Missouri has adopted economic nexus rules for sales tax collection, which means that out-of-state sellers can be required to collect sales tax if they exceed a specific threshold in sales or transactions within the state. The threshold in Missouri is currently set at $100,000 in cumulative gross receipts from sales to Missouri customers in the previous 12 months.
It’s important to note that this threshold includes all sales, whether they are taxable or not. Once you exceed this threshold, you are required to register for a sales tax permit and collect sales tax on your eligible sales in Missouri.
The economic nexus rules in Missouri aim to level the playing field between in-state and out-of-state sellers, ensuring that all businesses that have a significant economic presence in the state are contributing to the state’s tax revenue.
Which services are taxable in Missouri?
In Missouri, most services are exempt from sales tax. However, there are a few exceptions where services are taxable. It’s essential to know which services are taxable to ensure that your business is collecting and remitting the correct amount of sales tax.
Taxable services in Missouri include, but are not limited to:
Telecommunications services: This includes the transmission of voice, data, text, sound, and video using wired, wireless, or similar technology.
Admission fees: Fees for entering places of entertainment or recreation, such as concerts, movies, or sporting events.
Rental of tangible personal property: If you rent out equipment, vehicles, or other tangible personal property, those rentals are subject to sales tax.
Installation, repair, or maintenance of tangible personal property: This includes services related to appliances, electronics, machinery, or other tangible personal property.
Accommodations: Hotel rooms, vacation rentals, and other short-term accommodations are subject to sales tax in Missouri.
Utilities: Sales of electricity, gas, water, and sewer services are taxable.
Fitness centers: Membership fees and charges for fitness centers or health clubs are taxable.
Cable and satellite television services: These services are subject to sales tax in Missouri.
It’s important to note that while the sale of tangible personal property is generally taxable in Missouri, many services are exempt from sales tax. However, if a service involves the transfer of tangible personal property or falls within one of the categories listed above, it may be subject to sales tax.
Missouri Sales Tax on Products: How to Calculate What Your Business Should be Charging
To calculate the sales tax on products sold in Missouri, you need to consider both the state and local tax rates. Here’s how to do it:
Determine the state sales tax rate: The current state sales tax rate in Missouri is 4.225%.
Identify the local sales tax rate: Find the local sales tax rate for the specific location where the sale is taking place. Local rates can vary widely, ranging from 0% to over 5%. You can use online tools or consult the Missouri Department of Revenue website for accurate local tax rates.
Calculate the total sales tax rate: Add the state and local rates together to get the total sales tax rate that applies to the sale.
Apply the total sales tax rate to the sale price: Multiply the sale price of the product by the total sales tax rate to calculate the sales tax amount.
Add the sales tax amount to the sale price: Add the sales tax amount to the sale price to get the total amount the customer needs to pay.
Example: If you sell a product for $100 in an area with a local sales tax rate of 3%, the total sales tax rate would be 7.225% (state rate of 4.225% + local rate of 3%). Multiply the sale price by the total sales tax rate ($100 x 0.07225), and the sales tax amount is $7.23. The total amount the customer pays would be $107.23.
How much is Missouri clothing tax?
In Missouri, clothing is generally subject to the same sales tax rates as other tangible personal property. This means that the sales tax rate for clothing will vary depending on the location of the sale. As mentioned earlier, the state sales tax rate is 4.225%, and local rates can range from 0% to over 5%. Therefore, the total sales tax rate for clothing can range from 4.225% to around 9.75%.
It’s essential to determine the correct local sales tax rate for the area where the sale is taking place, as the local rates can significantly impact the total amount of sales tax that needs to be collected.
Do Missouri sales tax holidays affect Missouri clothing tax?
Yes, Missouri has an annual sales tax holiday during which certain items, including clothing, are exempt from sales tax. The sales tax holiday usually occurs during the first weekend of August and applies to specific items such as clothing, school supplies, and personal computers.
During the sales tax holiday, clothing items priced at $100 or less per item are exempt from state and participating local sales taxes. However, some local jurisdictions may choose not to participate in the sales tax holiday, so local taxes may still apply in those areas.
It’s important for businesses to be aware of the sales tax holiday and its rules to ensure that they are correctly applying the sales tax exemption during the designated period.
Missouri Online Sales Tax: Are SaaS and Digital Services Taxable?
In Missouri, Software as a Service (SaaS) and digital services are generally not subject to sales tax. However, there are some exceptions and nuances to consider.
For example, digital goods, such as music downloads, e-books, or streaming services, are not taxable in Missouri. Similarly, SaaS, which is essentially software accessed over the internet, is not considered a taxable sale of tangible personal property.
However, certain digital services may be taxable if they fall under the category of taxable services in Missouri, such as telecommunications services. It’s crucial to assess each service on a case-by-case basis and consult with a tax professional or the Missouri Department of Revenue for specific guidance.
SaaS Sales Tax Missouri: Does my Business Need to Charge Sales Tax for SaaS in Missouri?
As mentioned earlier, SaaS is generally not subject to sales tax in Missouri. So Missouri SaaS sales tax isn’t a concern for SaaS providers yet. However, it is essential for businesses to verify the taxability of their specific services. Factors such as the nature of the service, the terms of the service agreement, and the location of the customer can all influence the taxability of a service.
If your business provides a digital service that falls under the category of taxable services in Missouri, such as telecommunications services, then you may need to charge sales tax. Always consult with a tax professional or the Missouri Department of Revenue for specific guidance on your business’s tax obligations.
How can a business get a sales tax permit in Missouri?
To collect sales tax in Missouri, businesses must first obtain a sales tax permit from the Missouri Department of Revenue. Here’s how to do it:
Determine if you need a sales tax permit: If you have a physical presence (nexus) in Missouri or exceed the economic nexus thresholds, you are required to collect sales tax.
Register your business: Before applying for a sales tax permit, make sure your business is registered with the Missouri Secretary of State if required.
Apply for a sales tax permit: You can apply online through the Missouri Department of Revenue’s website or submit a paper application (Form 2643). You’ll need information such as your business name, address, contact details, Federal Employer Identification Number (FEIN) or Social Security Number (SSN), and a description of your business activities.
Receive your sales tax permit: After submitting your application, the Department of Revenue will review it and issue a sales tax permit if approved. This permit allows you to collect sales tax from your customers.
Display your sales tax permit: Once you receive your sales tax permit, you must display it prominently in your business location.
Collecting Sales Tax in Missouri as a Business
Collecting sales tax in Missouri involves several steps:
Determine the correct sales tax rate: As previously mentioned, add the state sales tax rate of 4.225% and the local sales tax rate applicable to the location of the sale.
Apply the sales tax rate to taxable sales: Collect the appropriate amount of sales tax from your customers based on the total sales tax rate and the sale price.
Keep accurate records: Maintain detailed records of all taxable sales, sales tax collected, and any sales tax exemptions. These records will be crucial when filing your sales tax returns.
File sales tax returns: Submit your sales tax returns to the Missouri Department of Revenue according to the required frequency (monthly, quarterly, or annually) based on your sales tax liability.
Remit the collected sales tax: Pay the sales tax you’ve collected to the Missouri Department of Revenue when filing your sales tax returns.
Missouri Tax Return Due Dates Explained
In Missouri, the due dates for filing sales tax returns are determined by the frequency of your filing, which can be monthly, quarterly, or annually.
- Monthly filers: Sales tax returns are due on the 20th of the following month. For example, sales tax collected in January must be filed by February 20th.
- Quarterly filers: Sales tax returns are due on the 20th of the month following the close of the quarter. For example, sales tax collected in the first quarter (January to March) must be filed by April 20th.
- Annual filers: Sales tax returns are due on January 20th of the following year.
What is the required frequency for sales tax returns in Missouri?
The frequency for sales tax returns in Missouri is determined by your sales tax liability:
- Monthly filers: If your sales tax liability is more than $250 per month, you must file monthly.
- Quarterly filers: If your sales tax liability is less than $250 per month but more than $50 per quarter, you must file quarterly.
- Annual filers: If your sales tax liability is $50 or less per quarter, you may file annually.
- The Missouri Department of Revenue will notify you of your filing frequency when you receive your sales tax permit.
