Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Do you need to collect sales tax in Missouri?
You’ll need to collect sales tax in Missouri if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Missouri?
Missouri considers a seller to have physical nexus if you have any of the following in the state:
- An office or place of business
- An employee present in the state for more than 2 days per year
- Goods in a warehouse
- Ownership of real or personal property
- Delivery of merchandise in Missouri in vehicles owned by the taxpayer
- Independent contractors or other representatives in Missouri for more than 2 days per year
You can click here to read exactly what the Missouri Department of Revenue has to say about what constitutes sales tax nexus in Missouri.
Do you have economic nexus in Missouri?
Under Missouri’s economic nexus law, retailers who make at least $100,000 of retail sales to buyers in the state in the previous 12-month period must collect sales tax from Missouri buyers.
This law is similar to the economic nexus provisions found in many other states. And like many states, there is no transaction threshold that retailers must exceed before being considered liable to collect Missouri sales tax.
Does your e-commerce business gross more than $100,000 in sales from Missouri buyers? The good news is that you have plenty of time to get compliant. The economic nexus law goes into effect on January 1, 2023.
However, when the law does go into effect, this means that your business is required to register for a Missouri sales tax permit and begin collecting sales tax from buyers in Missouri.
Is what you’re selling taxable?
Services in Missouri are generally not taxable. However– if the service you provide includes selling, creating or manufacturing a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Missouri, with a few exceptions. These exceptions include certain prescription medicine and medical devices, and machinery and chemicals used in agriculture and manufacturing, among other things. For a full list of exemptions and exclusions from tax, consult the Missouri Department of Revenue’s site. Select tax exemptions include “all sales at retail for which federal government coupons or vouchers under the supplemental feeding for women, infants and children program are used as payment” and 40% of the purchase price of a new manufactured home.
Is SaaS taxable in Missouri?
SaaS is non-taxable in Missouri. (Source)
How to get a sales tax permit in Missouri
You can register online at the Missouri Department of Revenue
You can also fill out the Missouri Tax Registration Application (Form 2643) and submit it to:
Missouri Department of Revenue
P.O. Box 357
Jefferson City, MO 65105-0357
You need this information to register for a sales tax permit in Missouri:
- Personal identification info (SSN, address, etc.)
- Business identification info (EIN, address, etc.)
- Estimated monthly sales to buyers in Missouri
- Business entity
A business making retail sales must post a bond equal to three times the average monthly sales and use tax. Use this calculator to determine your Missouri bond amount. (You can request to have this bond refunded after two years of good payment history.) Other business registration fees may apply.
Collecting Sales Tax
The sales tax rate you collect in Missouri depends on whether you are based in Missouri or out-of-state.
How to Collect Sales Tax in Missouri if You are Based in Missouri
Missouri is an origin-based sales tax state. So if you live in Missouri, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located.
You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator. The state sales tax rate for Missouri is 4.225%.
If you have more than one location in Missouri, then you would base the sales tax rate you charge on the point of origin of your sale.
How to Collect Sales Tax in Missouri if you are Not Based in Missouri
This scenario is a bit more complicated. If you are not based in Missouri, but have sales tax nexus in Missouri you are considered a Missouri “remote seller.” This is where things get challenging, since remote sellers are required to collect “use tax,” which is similar to sales tax, but can vary slightly from Missouri sales tax rates. If you’re running into this problem as an online seller, no worries! The TaxJar API will make sure you collect the right rate every time.
Should you collect sales tax on shipping charges in Missouri?
In 2017, Missouri declared that most shipping charges are no longer taxable. Read a full explanation of sales tax on shipping in Missouri here.
When are Returns Due?
When you file and pay Missouri sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Missouri?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Missouri, you will be required to file and remit sales tax either monthly, quarterly or annually.
Filing Sales Tax
When it comes time to file sales tax in Missouri you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Missouri
Calculating how much sales tax you should remit to the state of Missouri is easy with TaxJar’s Missouri sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Missouri sales tax return will be waiting for you in TaxJar. Start by logging in to TaxJar.
How to File and Pay Sales Tax in Missouri
You have three options for filing and paying your Missouri sales tax:
- File online – File online at the Missouri Department of Revenue. (If filing from out of state, choose “Vendor’s Use Tax.”) You can remit your payment through their online system. High-volume sellers (who have made payments of $8,000 or more in the prior tax year) are required to file online. In some cases, quarterly filers may be required to pay online, too.
- File by mail – You can use Form 53-1 and file and pay through the mail. The Missouri Department of Revenue will issue you this form. You will not receive paper returns in the mail if you have previously filed electronically (unless you contact the department and request future paper returns.)
- AutoFile – Let TaxJar automate your sales tax filing and remittance. AutoFile covers standard Missouri sales tax returns, however it’s important to note that the state also has a unique vendor’s use tax, which businesses will need to take into account.