Sales Tax on Motor Vehicles

PURPOSE: This rule explains the application of sales tax on the sale of motor vehicles as it relates to sections 144.010.1(5), 144.020.1(1), 144.025.1, 144.069 and 144.070, RSMo. (1) In general, the sale of motor vehicles and trailers are subject to tax. (2) Definition of Terms. (A) Agricultural use—used in cultivating or raising agricultural products. (B) All-terrain vehicle—any motorized vehicle manufactured and used exclusively for off-highway use which is fifty inches (50") or less in width, with an unladen dry weight of six hundred (600) pounds or less, traveling on three (3), four (4) or more low pressure tires, with a seat designed to be straddled by the operator, and handlebars for steering control. (C) Grain or livestock produced or raised by the purchaser— means the purchaser of the motor vehicle or trailer has either cultivated the grain or has cared for the livestock. (D) Highway—any public thoroughfare for vehicles. (E) Motor vehicle—any self-propelled vehicle not operated exclusively upon tracks, except farm tractors. Off-road utility vehicles are not motor vehicles, but all-terrain vehicles are treated as motor vehicles for purposes of this rule. (F) Off-road utility vehicle—any motorized vehicle manufactured and used exclusively for off-highway use with a seat that is not designed to be straddled by the operator, and with a steering mechanism other than handlebars. (G) Trailer—any vehicle without motive power designed for carrying property or passengers on its own structure and for being drawn by a motor vehicle, except those running exclusively on tracks, cotton trailers and manufactured homes. (H) Vehicle—any mechanical device on wheels, designed primarily for use, or used, on highways, except motorized bicycles, vehicles propelled or drawn by horses or human power, or vehicles used exclusively on fixed rails or tracks, or cotton trailers or motorized wheelchairs operated by handicapped persons. (3) Basic Application. (A) Sales tax on motor vehicles and trailers is remitted to the Department of Revenue when submitting the application for title to the department. The applicable tax rate is the rate in effect at the address of the purchaser at the time the application is submitted to the department. (B) If a person purchases a motor vehicle or trailer, and, before titling and registering it in Missouri, moves and titles it out-of-state within thirty (30) days of the purchase, no Missouri tax is due. If a person registers a motor vehicle or trailer in another state and regularly operates it in such state for at least ninety (90) days prior to registering it in Missouri, no Missouri tax is due. If the vehicle is brought to Missouri within ninety (90) days of registering the motor vehicle or trailer, Missouri tax is due but is reduced by any tax paid to the other state. (C) A person registered with the department as a motor vehicle leasing company may elect to pay tax on its purchase of a motor vehicle or trailer or may purchase the motor vehicle or trailer without paying tax on the purchase and collect and remit tax on the lease receipts. If the motor vehicle leasing company chooses to pay tax on its purchase rather than the lease receipts, the tax rate it remits is based on the location of the motor vehicle leasing company. If the motor vehicle leasing company elects to collect and remit tax on the lease receipts and the lease is for more than sixty (60) days, tax is due on any down payment and lease receipts based on the address of the lessee. If the lease is for sixty (60) days or less, tax is due based on the location of the motor vehicle leasing company. Once a motor vehicle leasing company makes an election to pay tax on its purchases or to collect and remit tax on its subsequent lease receipts, the election must be the same for all vehicles it purchases for lease. To qualify as a motor vehicle leasing company that will remit tax on lease receipts, the company must first obtain a permit to operate as a motor vehicle leasing company from the department. (D) When a person trades tangible personal property to a motor vehicle dealer for a motor vehicle or trailer, tax is due on the difference between the price of the motor vehicle or trailer purchased and the amount allowed for the trade-in. If the amount allowed for the trade-in is greater than the purchase price of the motor vehicle or trailer, no tax is due. When a manufacturer’s rebate is offered, the tax due is based on the purchase price of the motor vehicle or trailer less the rebate. A trade-in allowance applies only to transactions between a purchaser and a motor vehicle dealer. (E) Except as provided in subsection (3)(F), if an article is traded for a motor vehicle or trailer, the person trading the article must have paid or otherwise satisfied the tax on the purchase of the article unless the purchase was exempt or excluded from tax. (F) Grain or livestock raised or produced by a purchaser may be traded for a motor vehicle or trailer, if the motor vehicle or trailer is purchased from a motor vehicle dealer for agricultural use. (G) If a person purchases or contracts to purchase a motor vehicle or trailer and sells one (1) or more motor vehicles or trailers within one hundred eighty (180) days before or after the purchase or contract to purchase, the person owes tax on the difference between the purchase price and the sale price of the respective motor vehicles or trailers. If the person paid the full amount of the tax on the purchase, the person may obtain a refund of the excess tax paid. (H) If a person suffers a total insurance loss and subsequently purchases or contracts to purchase a replacement vehicle after the date of loss but no later than one hundred eighty (180) days after the date of the total loss payment, the person can offset the insurance payoff amount plus any deductible against the purchase price and remit tax on the difference. If the vehicle is not covered by insurance, the person must purchase the replacement vehicle within one hundred eighty (180) days of the loss. The person can only offset the loss against the purchase of one (1) replacement vehicle. (I) If a person who has previously titled and paid tax on a vehicle gives the vehicle to another person, the person must complete a gift statement for the person to whom the vehicle was given to present when titling with the department. No tax is due. (J) A sale of an all-terrain vehicle by a non-dealer is subject to sales tax if the purchase price is more than three thousand dollars ($3,000). A sale of an all-terrain vehicle by a non-dealer is not subject to sales tax if the purchase price is three thousand dollars ($3,000) or less. See 12 CSR 10-103.200. (4) Examples. (A) A person purchases a vehicle for $18,000 at the local car dealership. As a part of the transaction, the dealer offers a $500 rebate and the person trades a vehicle for another $3,000. The purchaser must pay tax to the Department of Revenue when titling the vehicle on $14,500 ($18,000 – $3,500 = $14,500). The applicable rate is the rate in effect at the purchaser’s address at the time of titling. (B) A person purchases a vehicle from a dealer for $25,000 in May. That person pays tax on $25,000. In June, the person sells a different vehicle for $15,000 and an outboard motor for $500. Because the sales took place within 180 days of the purchase of the vehicle, the person can obtain a refund of tax paid on the purchase transaction based upon the $15,500 received on the sale. (C) A person is in an accident that results in a total loss of the vehicle. After the loss of this vehicle, the person buys a new vehicle for $15,000 and pays tax on the full amount when titling the vehicle with the department. Two weeks after purchasing the vehicle, the insurance company pays $5,000 on the loss of the vehicle. The policy included a $500 deductible. The person can obtain a refund of tax based upon $5,500, which includes the $5,000 paid by the insurance company and the $500 deductible. (D) A person owns a motor vehicle. The person buys a second motor vehicle and puts the first motor vehicle on the market. Before the first vehicle is sold, it is in an accident that results in a total loss of the vehicle. Two weeks after the accident, the insurance company pays $5,000 on the loss of the first vehicle. The person cannot obtain a refund of tax because the person did not purchase a replacement vehicle after the first vehicle was destroyed. (E) A person is in an accident that results in a total loss of the vehicle. The vehicle was not insured. After the loss of this vehicle, the person buys a new vehicle for $15,000. The Kelly Blue Book value for the lost vehicle is $5,000. When titling the vehicle with the department, the person pays tax on $10,000, which is the $15,000 cost of the new vehicle less the value of the loss. (F) A person purchases an all-terrain vehicle from a local dealer. The purchaser must obtain a title and remit tax to the department based on the rate in effect at the purchaser’s location at the time of titling. (G) A business sells an off-road utility vehicle. The utility vehicle is not a motor vehicle and does not need to be titled. The business must collect and remit tax on the sale. (H) A person trades in grain valued at $5,000 to a dealer on the purchase of a cattle trailer valued at $10,000. The purchaser grew the grain and will use the cattle trailer in its business of raising cattle. The purchaser receives a trade-in credit of $5,000 on the purchase of the trailer because the purchaser produced the grain and the trailer is used by the purchaser in agriculture. (I) Same situation as subsection (4)(H), except the purchaser’s son produced the grain. The purchaser receives no trade-in credit because the purchaser did not produce the grain that was traded. (J) A landowner agrees with a local farmer that the farmer can farm some of landowner’s land in exchange for 50% of the crops produced on the land. The landowner trades in grain grown by the farmer on the land on the purchase of a horse trailer used in the landowner’s breeding operations. The landowner receives a trade-in credit on the purchase of the trailer. The landowner shares the risk of a successful harvest and therefore, is cultivating the grain. (K) A landowner agrees with a local farmer that the farmer can farm some of landowner’s land in exchange for $1,000. The farmer delivers grain grown on the land valued at $1,000 in payment of the rent. The landowner trades in the grain on the purchase of a horse trailer used in the landowner’s breeding operations. The landowner does not receive a trade-in credit on the purchase of the trailer because the landowner is merely renting land, not cultivating grain. (L) A farmer sells grain raised by the farmer to an elevator and directs the elevator to pay the farmer for the grain by delivering a check payable to a local motor vehicle dealer. The farmer uses the check to purchase a pickup truck that will be used to haul and carry necessary supplies and materials to and from the farm. The transaction does not qualify for the trade-in allowance because the grain was not traded to the dealer for the truck. Instead, it was sold to the elevator and the proceeds were used to purchase the truck. (M) An out-of-state motor vehicle leasing company purchases a motor vehicle out of state and leases it to a Missouri resident. The leasing company has elected to pay tax on lease receipts rather than on the purchase. The lease payments are subject to sales tax at the rate in effect at the location of the Missouri resident. (N) An out-of-state motor vehicle leasing company purchases a motor vehicle out-of-state and leases it to an out-of-state resident. The resident’s state requires the leasing company to pay tax on all proceeds under the lease at the time of the lease. During the term of the lease, the lessee moves to Missouri. Under section 144.440, RSMo, the lease payments are subject to highway use tax at the rate in effect at the location of the Missouri resident. The lessor receives credit for any tax paid to another state on the lease receipts. (O) An individual purchases a used motor vehicle by making a down payment, trading in another vehicle, and using dealer financing for the balance of the purchase price. Prior to titling the vehicle, the dealer repossesses the vehicle for failure to make payments under the financing agreement. The individual still owes sales tax on the purchase of the vehicle unless the dealer agrees in writing to void the sale and return all payments and the trade-in to the purchaser. AUTHORITY: sections 144.010.1(5), 144.020.1(1) and 144.025.1, RSMo Supp. 2005 and 144.069, 144.070 and 144.270, RSMo 2000.* Original rule filed Sept. 12, 2005, effective March 30, 2006. *Original authority: 144.010, RSMo 1939, amended 1941, 1943, 1945, 1947, 1974, 1975, 1977, 1978, 1979, 1981, 1985, 1988, 1993, 1996, 1998, 1999, 2001, 2005; 144.020, RSMo 1939, amended 1941, 1943, 1945, 1947, 1963, 1965, 1972, 1975, 1979, 1982, 1985, 1996, 1998, 2001; 144.025, RSMo 1963, amended 1977, 1979, 1985, 1986, 1994, 1998, 2003, 2004, 2005; 144.069, RSMo 1986, amended 1996; 144.070, RSMo 1939, amended 1941, 1943, 1945, 1947, 1951, 1961, 1974, 1975, 1977, 1985, 1997; and 144.270, RSMo 1939, amended 1941, 1943, 1945, 1947, 1955, 1961.