Missouri to Tax Remote Sellers Starting in 2023

On June 30, 2021, Missouri Governor Mike Parson signed into law SB 153, which establishes an economic nexus threshold of $100,000 for out-of-state sellers and requires marketplace facilitators to collect and remit state and local taxes on sales into Missouri. These requirements take effect January 1, 2023.

Missouri is the last state with a sales tax to adopt an economic nexus law to tax remote transactions following the U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc., which removed the physical presence requirement for the collection of sales and use taxes.

Nexus Threshold

SB 153 modifies the definition of “engaging in business activities within this state” to include vendors with more than $100,000 in gross taxable sales of tangible personal property sold for the purpose of storage, use, or consumption in Missouri during the previous 12-month period. This definition encompasses out-of-state sellers with more than $100,000 in gross taxable sales. Vendors that meet the nexus threshold are required to collect and remit the state’s 4.225 percent use tax. The bill also extends the sales tax collection requirement to local taxes.

The nexus threshold is determined by the prior 12 months ending the last day of each calendar quarter. At the close of each quarter, a taxpayer will need to determine whether it has nexus with the state. If it meets the nexus threshold, the taxpayer has until the end of the following quarter to collect and remit the required tax.

Marketplace Facilitators

The bill also requires marketplace facilitators to register with the state to collect and remit taxes on sales made through the marketplace facilitator’s marketplace and delivered into the state. This covers sales made directly by the marketplace facilitator as well as those made by third-party sellers. Marketplace facilitators are required to report and remit the tax separately from any sales and use tax that they were required to collect and remit prior to the new law.

The bill defines a marketplace facilitator as a person “who facilitates a retail sale by a marketplace seller by listing or advertising for sale by the marketplace seller, in any forum,” and who directly or indirectly “through agreements or arrangements with third parties collects payment from the purchaser and transmits all or part of the payment to the marketplace seller.”

The bill excludes from the definition of a marketplace facilitator “a person who provides internet advertising services, or product listing, and does not collect payment from the purchaser and transmit payment to the marketplace 16 seller.” It also excludes travel agency services, a third-party financial institution appointed by a merchant or a marketplace facilitator to handle various forms of payment transactions.

For questions about how Missouri’s economic nexus law might affect your business, contact us. We’re here to help.

© 2021