Justia Tax Law Opinion Summaries

Articles Posted in Supreme Court of Missouri
by
The Supreme Court affirmed in part and reversed in part the decision of the administrative hearing commission (AHC) finding no use tax liability for APLUX LLC and Paul and Ann Lux Associates L.P. on the out-of-state purchase of two aircraft, holding that APLUX was not entitled to resale exemption on the purchase of either aircraft.After purchase, both aircraft - referred to as "the TBM" and "the Excel" - were brought to Missouri. APLUX asserted that it leased, on a non-exclusive basis, the TBM to its parent company, Luxco, Inc., and the Excel concurrently to both Luxco and Aero Charter, Inc. The AHC held that each lease agreement constituted a "sale" for purposes of the tax resale exemption set out in Mo. Rev. Stat. 144.018. The Supreme Court reversed in part, holding that a "sale" to Luxco did not occur, and therefore, APLUX was not entitled to a resale exemption based on the Luxco agreement. View "APLUX, LLC v. Director of Revenue" on Justia Law

by
The Supreme Court affirmed the decision of the administrative hearing commission (AHC) determining that John Gott, who owned and operated a sole proprietorship providing portable toilets to customers, was liable for unpaid sales tax, use tax, and additions to tax and statutory interest as assessed by the director of revenue for the period of April 1, 2012 through March 31, 2017, holding that the AHC decision was authorized by law and supported by competent and substantial evidence on the record.Specifically, the Supreme Court held (1) the AHC did not impermissibly extend the reach of the sales tax law to include AHC's portable toilet service, and therefore, Gott's gross receipts were subject to sales tax; (2) Mo. Rev. Stat. 144.010's plain language is clear and resolved this dispute without the Court having to resort to the "true object" test; and (3) the AHC did not violate Mo. Const. art. X, 26 because Gott was not engaged in a service or transaction not subject to sales, use, or transaction-based taxation. View "Gott v. Director of Revenue" on Justia Law

by
The Supreme Court affirmed the decision of the Administrative Hearing Commission (AHC) determining that SEBA, LLC was liable for unpaid state sales tax, statutory interest, and a five percent addition to tax owed as assessed by the director of revenue, holding that the AHC's decision was supported by substantial and competent evidence on the record.The AHC determined that SEBA was liable for unpaid sales tax in the amount of $38,540, minus the sales tax assessed on $26,567 in income generated from SEBA's exempt sales to three organizations the auditor initially included. The AHC found SEBA liable for five percent statutory interest because it was was negligent in reporting its taxable sales. The Supreme Court affirmed, holding that substantial and competent evidence supported the AHC's decision. View "SEBA, LLC v. Director of Revenue" on Justia Law

by
The Supreme Court reversed the decision of the Administrative Hearing Commission (AHC) that certain equipment purchased by Dreyer Electric Co. was exempt from sales tax because it was "replacement equipment" "used directly in the manufacturing process," as those terms are used in Mo. Rev. Stat. 144.030.2(5), holding that the AHC erred.Specifically, the Supreme Court held (1) the AHC correctly applied the three-factor "integrated plant doctrine" test set out in Floyd Charcoal Co. v. Director of Revenue, 599 S.W.2d 173 (Mo. banc 1980), to determine whether the subject replacement parts and equipment were "used directly in manufacturing"; but (2) the AHC erred in making specific findings as to some parts and then grouping all the parts together, including those it had not mentioned specifically in its decision, to find they were collectively integral to the electrical system that powered the machinery. The Court remanded the case for application of the integrated plant test to each type of replacement part or equipment purchased. View "Dreyer Electric Co., LLC v. Director of Revenue" on Justia Law

by
The Supreme Court reversed the decision of the Administrative Hearing Commission (AHC) holding that The Kansas City Chiefs Football Club, Inc. (the team) was the "purchaser" of certain items used in the renovation of Arrowhead Stadium and its related facilities and was, therefore, liable for sales and use tax on those items, holding that the AHC erred in determining that the team was the purchaser of the items.After the renovation was complete, the Director of Revenue conducted a sales and use tax audit and determined that the team was liable for sales and use tax on seven categories of contested items purchased from the nine vendors at issue in this appeal. The team appealed to the AHC, which found the team liable for sales tax and use tax on the items. The Supreme Court reversed, holding that the team was not the source of the consideration for the contested items and, therefore, was not the purchaser of the items, as that term is used in Missouri's sales and use tax statutes. View "Kansas City Chiefs Football Club, Inc. v. Director of Revenue" on Justia Law

by
The Supreme Court affirmed the decision of the Administrative Hearing Commission determining that DI Supply I, LLC's room furnishing sales to the Drury Hotels were not exempt from sales tax under the resale exemption in Mo. Rev. Stat. 144.010.1(11), holding that DI Supply failed to meet its burden to prove that the items it sold to Drury Hotels were resold by the hotels.An audit determined that DI Supply failed to remit sales tax on more than $11 million in taxable sales of room furnishings to Drury Hotels during the audit period. DI Supply contested the tax liability, arguing that the items of tangible personal property were purchased for resale to hotel guests and not subject to Missouri local sales or use tax. The Commission upheld $613,159 of the assessment for sales tax and interest. On appeal, DI Supply contested its sales tax liability for sales of room furnishings to Drury Hotels. The Supreme Court affirmed, holding that DI Supply failed to show that Drury Hotels transferred title or ownership of the room furnishings and, therefore, failed to show the applicability of the resale exemption by clear and unequivocal proof. View "DI Supply I, LLC v. Director of Revenue" on Justia Law

by
The Supreme Court affirmed in part and reversed in part the judgment of the trial court entering judgment in favor of the cities of Aurora, Cameron, Oak Grove, and Wentzville (collectively, the Cities) in this action for declaratory judgment and injunctive relief against CenturyLink, Inc. and its subsidiaries, holding that the trial court erred in awarding prejudgment interest and attorneys fees to the Cities.In their petition, the Cities alleged that, since 2000, CenturyLink failed to pay all license taxes owed under the Cities' respective ordinances. Further, the Cities alleged that CenturyLink failed to enter into right-of-way user agreements under Cameron's and Wenzville's respective ordinances and failed to pay Cameron's linear foot fees. The trial court entered partial summary judgments in favor of the Cities on the issue of liability. After a trial, the court entered a final judgment for the Cities on the issue of damages. The trial court then awarded the Cities attorney fees, prejudgment interest, and postjudgment interest. The Supreme Court reversed in part and remanded the cause, holding that the trial court (1) erred in awarding prejudgment interest to the Cities, and (2) erred in awarding attorney fees to three of the cities. View "City of Aurora, Missouri v. Spectra Communications Group, LLC" on Justia Law

by
The Supreme Court affirmed the decision of the administrative hearing commission determining that certain pain treatment service items used in compounding medications do not fall under the use tax exemption in Mo. Rev. Stat. 144.054.2 for materials used or consumed in compounding a product, holding that the commission correctly determined that the Interventional Center for Pain Management (Center) did not qualify for the compounding exemption under section 144.054.2.The director of revenue assessed $69,311 in tax liability for a five-year period against Center after discovering that Center did not file a use tax return or pay use tax on certain out-of-state purchases. Center contested use tax liability for certain items used for the injection of prescription drug compounds, asserting that the devices were exempt from use tax as materials used in compounding operation under section 144.054.2. The administrative hearing petition upheld the assessment. The Supreme Court affirmed, holding that Center failed to meet its burden of proof to prove its purchases were used in the compounding of a product for sale, as required for the compounding exemption under section 144.054.2. View "Interventional Center for Pain Management v. Director of Revenue" on Justia Law

by
The Supreme Court reversed the decision of the Administrative Hearing Commission (AHC) assessing use tax, additions to tax, and interest against Appellants, Business Aviation LLC and its members, as a result of Business Aviation's purchase of an aircraft, holding that Appellants qualified for the resale use tax exemption pursuant to the interplay of Mo. Rev. Stat. 144.018.1(4), 144.615(3), and 144.030.2(20).The aircraft at issue was purchased in Kansas and then leased by Business Aviation to Burgess Aircraft Management LLC, a common carrier in Missouri. The AHC determined that Appellants owed the use tax because, although it found that the right to use the aircraft was transferred to Burgess, the right was not fully transferred for valuable consideration. The Supreme Court reversed, holding that because Business Aviation transferred the right to use the aircraft to a common carrier for valuable consideration paid or to be paid, the lease agreement constituted a sale pursuant to both the use and sales tax definitions. View "Business Aviation, LLC v. Director of Revenue" on Justia Law

by
The Supreme Court reversed the decision of the administrative hearing commission (AHC) reversing the denial of the director of the department of revenue of David and Jill Kehlenbrinks' application for a sales tax refund, holding that the AHC erroneously decided that the Kehlenbrinks were entitled to a refund of all the sales tax they paid after their purchase of a new vehicle.On appeal, the director claimed that, in calculating the sales tax owed on the Kehlenbrinks' newly purchased vehicle, Mo. Rev. Stat. 144.025.1 allowed the Kehlenbrinks to credit the sale proceeds of only one vehicle against the purchase price of the new vehicle. The Supreme Court agreed, holding that the AHC erroneously decided that the Kehlenbrinks were entitled to a refund of all the sales tax they paid because it mistakenly allowed credit for four vehicles the Kehlenbrinks sold within 180 days of their purchase of a new vehicle. View "Kehlenbrink v. Director of Revenue" on Justia Law