Wrapping Materials (Rescinded September 30, 2001)

AUTHORITY: section 144.270, RSMo 1994. This rule was previously filed as rule no. 34. S.T. regulation 011-3 was last filed Dec. 31, 1975, effective Jan. 10, 1976. Refiled March 30, 1976. Amended: Filed Aug. 13, 1980, effective Jan. 1, 1981. Amended: Filed Oct. 15, 1985, effective Jan. 26, 1986. Amended: Filed July 14, 1986, effective Nov. 28, 1986. Rescinded: Filed March 28, 2001, effective Sept. 30, 2001. Rival Manufacturing Co. v. Director of Revenue, Case No. RS81-0522 (A.H.C. 6/4/83). The issue in this case was the imposition of sales and use tax on shippers (boxes to ship multiple items) which taxpayer used to send crock pots to its customers. The controlling issue in this case was whether or not the shippers were purchased by the petitioner at retail (for its own use and consumption) or purchased for resale (to be sold to its customers). If they were purchased for resale, they were exempt from taxation. The commission cited the three-part test of Smith Beverage Co. v. Reiss, 568 SW2d 61 (Mo. banc 1978) for determining if purchases were for resale. The three parts of that test are: 1) a transfer, barter or exchange of title; 2) of tangible personal property; 3) for consideration. The Department argued that the third part of the test had not been met because consideration must be bargained for. They were part of petitioner’s overhead and they were optional. The purchasers did not bargain for the shippers because it did not bargain for a particular mode of shipment. The commission found that the cost of the shippers was part of the selling price of the items purchased. They were transferred for a consideration. The court concluded that the shippers were exempt from tax because they were not purchased at retail, but were purchased for resale. King v. National Super Markets, Inc., 653 SW2d 220 (Mo. banc 1983). The purchase of paper bags by a supermarket was considered to be a purchase for resale because they are transferred to the supermarket’s customers for consideration, since customers pay an increased price in exchange for the quantity of bags required to bag their purchases. Since National was including the cost of the bags as part of the gross taxable sale, the purpose of the use tax would not be achieved by allowing its imposition in this case.