Office Depot, Inc. v. Director of Revenue
484 S.W.3d 793
Mo.2016Background
- Office Depot contracted with out-of-state printers (Illinois and Indiana) to print and mail unsolicited catalogs to Missouri customers; printers delivered finished catalogs to U.S. Postal Service outside Missouri for direct delivery to Missouri recipients.
- Office Depot purchased paper and paid for printing and mailing; it paid $83,954.43 in Missouri use tax for catalogs mailed between 2008–2010 and sought a refund in 2012.
- The Missouri Director of Revenue denied the refund; Office Depot appealed to the Administrative Hearing Commission, which granted the refund.
- The Administrative Hearing Commission concluded Office Depot did not “use” the catalogs in Missouri under the statutory definition because Office Depot never exercised ownership/control over the catalogs within Missouri.
- The Supreme Court of Missouri reviewed de novo, applying the statutory definition of "use" (the exercise of any right or power over tangible personal property incident to ownership or control) and controlling precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether mailing catalogs from out-of-state to Missouri constitutes "use" in Missouri under § 144.605(13)–144.610.1 | Office Depot: catalogs were not possessed or controlled in Missouri; therefore no "use" occurred and refund is due. | Director: Office Depot exercised control via labels/delivery instructions and benefited from in-state distribution, so catalogs were "used" in Missouri. | Court: Affirmed refund — mailing from out-of-state that results in postal delivery to Missouri is not "use" because no exercise of ownership/control occurred in Missouri. |
Key Cases Cited
- May Dep’t Stores Co. v. Dir. of Revenue, 748 S.W.2d 174 (Mo. banc 1988) (placing catalogs in out-of-state mail for delivery to Missouri is not "use" in Missouri)
- Southwestern Bell Yellow Pages, Inc. v. Dir. of Revenue, 94 S.W.3d 388 (Mo. banc 2002) (presence of taxpayer’s agent in Missouri who exercised control rendered directories "used" in Missouri)
- Hoffman-LaRoche, Inc. v. Porterfield, 243 N.E.2d 72 (Ohio 1968) (out-of-state printing/mailings not "use" in state)
- Bennett Bros., Inc. v. State Tax Comm’n, 405 N.Y.S.2d 803 (N.Y. App. Div. 1978) (similar holding that out-of-state mailing does not constitute in-state use)
- District of Columbia v. W. Bell & Co., Inc., 420 A.2d 1208 (D.C. 1980) (out-of-state distribution not taxable as in-state use)
- Serv. Merchandise Co., Inc. v. Arizona Dept. of Revenue, 937 P.2d 336 (Ariz. App. 1996) (contrasting authority finding out-of-state mailing can be taxable under that state’s law)
- J.C. Penney Co., Inc. v. Balka, 577 N.W.2d 283 (Neb. 1998) (another contrasting decision treating out-of-state mailing as use under Nebraska law)
- Sharper Image Corp. v. Dep’t of Treasury, 550 N.W.2d 596 (Mich. App. 1996) (case discussing mailing/usage principles in advertising distribution)