Pallets (Rescinded September 30, 2001)

AUTHORITY: section 144.270, RSMo 1994. This rule was previously filed as rule no. 34. S.T. regulation 011-4 was last filed Oct. 28, 1975, effective Nov. 7, 1975. Refiled March 30, 1976. Amended: Filed Aug. 13, 1980, effective Jan. 1, 1981. Rescinded: Filed March 28, 2001, effective Sept. 30, 2001. Floyd Charcoal Co. v. Director of Revenue, 599 SW2d 173 (1980). Appellant charcoal company purchased pallets upon which charcoal packages were loaded for sale to its customers and claimed an exemption from the payment of sales tax on its initial purchase of the pallets as being purchases for resale to its customers. The assessment of sales tax was upheld since the charcoal company maintained the practice of crediting the customer’s next purchase for each pallet returned to it. Kaiser Aluminum & Chemical Corp. v. Director of Revenue, Case No. RS-82-0068 (A.H.C. 10/28/83). The issues in this case were the taxability of the purchase and subsequent transfer of certain pallets which petitioner used to stack its bricks upon as they were transferred to customers. The commission based its conclusions of law upon a factual finding that the pallets were indeed sold to its customers. Because the pallets were sold to petitioner’s customers, the resale exemption certificates which the petitioner presented at the time it purchased the pallets in question were valid. In reaching this conclusion, the commission held that the statutory definition accorded the word sale was applicable to the term resale as well, reasoning by analogy from the decision in Smith Beverage Co. v. Reiss, 568 SW2d 61 (Mo. banc 1978). In making its factual finding the commission noted that while the petitioner’s customers could have returned the pallets for a deposit they were under no obligation to do so, and additionally, that for accounting purposes the transfer of pallets was treated as sales. The other issue addressed in the case was whether or not the sale of the pallets constituted sales at retail which would be subject to sales tax. Petitioner contended that its subsequent sale of the pallets was exempt because they constituted reusable containers. The commission upheld 12 CSR 10-3.020(2) which provides that pallets are not exempt. The commission pointed to the language in section 144.011.1, RSMo which requires that the containers be sold with “tangible personal property contained therein.” Because goods are not contained in pallets the commission held that they did not constitute containers and were nonexempt.