I sell mobile homes in Missouri but deliver and install some of them out of state -- do I owe Missouri sales tax on those out-of-state sales?

Plain-English summary

The Missouri Department of Revenue ruled on whether a Missouri mobile-home dealer (Applicant) owes Missouri sales tax when it sells a mobile home to a customer located outside Missouri -- here, in Illinois -- and concluded that it does not.

Section 144.020.1, RSMo, taxes sellers for the privilege of selling tangible personal property at retail "in this state." Missouri Code of State Regulations 12 CSR 10-133.200.1 explains how to apply that rule: a sale is subject to Missouri sales tax if title or ownership to the property transfers in Missouri (unless the transaction is in interstate commerce); if the sale isn't subject to Missouri sales tax but the property is nonetheless stored, used, or consumed in Missouri, Missouri use tax applies instead; and if neither of those is true, no Missouri tax at all is due on the transaction. 12 CSR 10-133.200.3(A) further explains that title transfers when the seller completes its obligations regarding physical delivery of the property, unless the buyer and seller expressly agree that title transfers at a different time.

Applicant did not retain the Manufacturer's Statement of Origin for these units, and Applicant itself was responsible for delivering and installing the mobile home at the customer's Illinois location. Because Applicant doesn't complete its delivery obligations -- and therefore doesn't transfer title -- until the home is delivered and installed in Illinois, the taxable event occurs in Illinois, not Missouri. Since the sale isn't taxable in Missouri and the mobile home is never stored, used, or consumed in Missouri, no Missouri sales tax or use tax applies. The Department noted that Applicant should instead consult the Illinois Department of Revenue to determine the method and rate of any Illinois tax due on the transaction.

What this means for you

For dealers delivering and installing goods across state lines

If you sell tangible personal property and your obligation as the seller isn't complete until you deliver -- and, as here, install -- the item at a location in another state, title transfers there, not in Missouri, unless you and the buyer have expressly agreed otherwise in writing. That means the sale generally falls outside Missouri's sales tax, and outside Missouri's use tax too, as long as the property is never stored, used, or consumed in Missouri along the way. You should still confirm your own tax obligations in the destination state.

For anyone determining where a sale's "taxable event" occurs

The key question under 12 CSR 10-133.200.1 and .200.3(A) isn't where the buyer is located or where the contract was signed -- it's where title actually transfers, which by default is wherever the seller finishes its delivery obligations. If your delivery obligations end out of state (for example, delivery and installation at the buyer's location), the taxable event is treated as happening there. Missouri use tax is a separate fallback that only applies if the sale escapes Missouri sales tax but the property still ends up stored, used, or consumed in Missouri.

Accountants and tax professionals

This ruling is a useful illustration of Missouri's two-step analysis for multistate sales: first ask whether title transfers in Missouri (sales tax); if not, ask whether the property is nonetheless stored, used, or consumed in Missouri (use tax); if neither applies, no Missouri tax is owed at all. Delivery-and-installation obligations that extend into another state can move the title-transfer point -- and therefore the entire tax result -- across state lines.

Common questions

Q: Would the answer change if the buyer picked up the home in Missouri instead of Applicant delivering it to Illinois?
A: Very likely yes. Under 12 CSR 10-133.200.3(A), title transfers when the seller completes its delivery obligations. If Applicant's obligations ended with the buyer taking possession in Missouri, title would transfer in Missouri, and the sale would be subject to Missouri sales tax under Section 144.020.1, RSMo, unless the parties expressly agreed to a different transfer point.

Q: Why doesn't Missouri use tax apply here if sales tax doesn't?
A: Use tax under 12 CSR 10-133.200.1 only applies when a sale escapes Missouri sales tax but the property is still stored, used, or consumed in Missouri. Here, the mobile home was delivered and installed in Illinois and never stored, used, or consumed in Missouri, so neither Missouri sales tax nor Missouri use tax applies.

Q: Does it matter that Applicant didn't hold the Manufacturer's Statement of Origin for these units?
A: The ruling notes this fact as part of the background, but the Department's reasoning turns on where title transfers under 12 CSR 10-133.200.3(A) -- that is, where Applicant completes its delivery and installation obligations -- rather than on possession of the Manufacturer's Statement of Origin itself.

Q: If no Missouri tax is owed, does that mean the sale is tax-free altogether?
A: Not necessarily. The Department specifically instructed Applicant to consult the Illinois Department of Revenue about the method and rate of Illinois tax owed on the transaction. The ruling only addresses Missouri tax; it doesn't exempt the sale from tax in the destination state.

Citations and references

Statutes and cases:

• Section 144.020.1, RSMo (imposes sales tax on sellers for the privilege of selling tangible personal property at retail "in this state")
• 12 CSR 10-133.200.1 (a sale is Missouri sales-tax-taxable if title transfers in Missouri; if not, Missouri use tax applies instead if the property is stored, used, or consumed in Missouri; if neither, no Missouri tax is due)
• 12 CSR 10-133.200.3(A) (title transfers when the seller completes its delivery obligations, unless buyer and seller expressly agree otherwise)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8281

Original ruling text

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated November 10, 2023.

The facts as presented in your letter-ruling request are summarized as follows:

Applicant sells mobile homes in Missouri. Occasionally they sell mobile homes to customers located outside of Missouri such as Illinois. According to the Applicant, they do not hold the Manufacturer's Statement of Origin for a unit in a transaction. Additionally, the Applicant is responsible for delivery and installation of the mobile home in Illinois.

ISSUE :

Is Applicant's sale of mobile or manufactured homes to customers in Illinois subject to Missouri sales tax?

RESPONSE :

No. Applicant's sale of mobile/manufactured homes are not subject to Missouri state and local sales tax.

Section 144.020.1 RSMo, levies tax "...upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state."

12 CSR 10-133.200.1 provides:

In general, a sale of tangible personal property is subject to sales tax if title or ownership to the property transfers in Missouri unless the transaction is in commerce...[i]f a sale is not subject to Missouri sales tax but the property is stored, used or consumed in Missouri, the transaction is subject to use tax...[i]f a sale of tangible personal property is not subject to Missouri sales tax and the property is not stored, used or consumed in this state, no Missouri tax is due.

Additionally, in section 12 CSR 10-133.200.3(A), the regulation continues:

Title transfers when the seller completes its obligations regarding physical delivery of the property, unless the seller and buyer expressly agree that title transfers at a different time.

Here, Applicant does not transfer the title equivalent to the mobile/manufactured home to the purchaser and does not complete its obligations in the sale until the home is delivered and installed in Illinois. This means that the taxable event takes place in Illinois, so no Missouri sales or use tax is owed for the transaction.

Applicant must ask the Illinois Department of Revenue to determine the method and rate of Illinois tax to be paid on the transaction.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals.  If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.  For this reason, the interpretation set forth above should be reviewed on a regular basis.  Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Legal Counsel J. Ross Shelton General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.

Sincerely,

Wayne Wallingford