PURPOSE: Section 144.021, RSMo, imposes a tax on a seller’s gross receipts. This rule provides guidance for reporting gross receipts.

1. (1) In general, all gross receipts resulting from the sale of tangible personal property and taxable services should be reported to the department. When filing a return, the taxpayer should deduct nontaxable receipts from gross receipts to arrive at taxable sales.

2. (2) Definitions.

   1. (A) Gross receipts—the total amount of the sale price of taxable services and tangible personal property including any services, other than charges incident to the extension of credit, that are a part of such sale and are capable of being valued in money, whether received in money or otherwise.
   2. (B) Rebate—a return of part of an amount given in payment.
   3. (C) Taxable sales—the total amount of gross receipts plus or minus any adjustments permitted or required by law.

3. (3) Basic Application of Tax.

   1. (A) Tax is imposed on the total amount of the sale price received for the sale of tangible personal property and taxable services. The total amount of each sale should be reported as gross receipts even if the seller separately states to the customer the various components of the sale. Exempt sales should be deducted from gross receipts to arrive at taxable sales. Tax collected as a part of a sale should not be included in gross receipts.
   2. (B) When a taxpayer receives consideration other than money, the full market value of the item exchanged should be included in gross receipts.
   3. (C) When the taxpayer accepts third party coupons, the total sale price includes the value of the coupon. When the taxpayer accepts third party coupons along with food stamps, the value of the food stamps is not included in taxable sales, but the value of the coupon is included in taxable sales.
   4. (D) The value of a coupon issued by the seller is not included in taxable sales.
   5. (E) Rebates from sellers or manufacturers do not reduce taxable sales, except for rebates on motor vehicles, boats, trailers and outboard motors.
   6. (F) A taxpayer accepting an article in trade as a credit or part payment on the purchase price should include the value of the article in gross receipts. The value of the article should be deducted from gross receipts when calculating taxable sales.
   7. (G) Money received in advance, such as down payments, layaways or gift certificates, are not included in gross receipts until the sale has been consummated.
   8. (H) Charges to customers for the extension of credit, such as late fees or financing charges are excluded from gross receipts.
   9. (I) A seller’s expenses associated with utilizing the service of credit card companies are not excluded from gross receipts.
   10. (J) If the taxpayer’s inventory is stolen or destroyed by fire or other casualty, the insurance receipts are not subject to tax and should not be included in gross receipts.

4. (4) Examples.

   1. (A) A grocery store accepts manufacturer’s coupons from its customers on purchases of various goods. The store sells aluminum foil for $1.50. The customer presents to the store a $.50 manufacturer’s coupon and pays the remaining balance of $1.00. The store submits the $.50 coupon to the manufacturer for payment of the $.50. The gross receipts from the sale of the aluminum foil are $1.50 and total taxable sales are $1.50. Tax should be charged on $1.50.
   2. (B) On Tuesdays, the same grocery store in Example (A) doubles all manufacturers’ coupons. The store then receives $.50 from the customer and $.50 from the manufacturer. Gross receipts are $1.00, and total taxable sales are $1.00. Tax should be charged on $1.00.
   3. (C) An appliance manufacturer offers a $100 cash rebate on an $800 refrigerator. The store selling the refrigerator should charge tax on $800. Tax is due on $800, whether the rebate is received by the customer at the time of purchase or a later date.
   4. (D) A furniture retailer allows customers to “layaway” their purchases until they have paid the full sale price. When the customer has paid the full sale price, the retailer completes the sale and transfers the furniture to the customer. The furniture dealer should not include the layaway amount in its gross receipts until the sale is complete. At that time the total sale price should be reported as gross receipts.
   5. (E) A construction company purchases a new bulldozer. The equipment dealer agrees to sell it a new machine for $50,000 and give a trade-in allowance of $10,000 for the old one. The equipment dealer should report $50,000 in gross receipts. The equipment dealer should then deduct the $10,000 tradein value to arrive at taxable sales.
   6. (F) A retailer sells a chair for $100 to a customer who uses his credit card to pay for the purchase. The seller should charge tax on the full $100 sales price of the chair. The seller should report $100 in gross receipts, even though it must pay the credit card company a transaction fee.

AUTHORITY: section 144.270, RSMo 1994.* Original rule filed Aug. 21, 2000, effective Feb. 28, 2001. *Original authority: 144.270, RSMo 1939, amended 1941, 1943, 1945, 1947, 1955, 1961. Central Hardware Company, Inc. v. Director of Revenue, 887 S.W.2d 593 (Mo. banc 1994). The taxpayers were not entitled to a refund of the sales tax paid on the percentage of their credit sales they paid as fees to credit card companies. The fees were not excludable from the sales price as charges incident to the extension of credit. The fees were an expense paid by the taxpayers to the credit card companies and were not a charge to their customers incident to the extension of credit. They charged their customers the same sales price irrespective of the mode of payment and there was no charge to a customer who paid by credit card. The taxpayers cannot alternatively claim that because they never actually received the fees, they were not part of the gross receipts. The transactions on which the gross receipts were based and on which the sales tax should be calculated were the retail sales that occurred between the taxpayers and their customers and not the transactions between the taxpayers and the credit card companies. The fact that the taxpayers chose to pay the fees out of the credit draft proceeds did not decrease the amount of their gross receipts. 12 CSR 10-103 Oakland Park Inn v. Director of Revenue, 822 S.W.2d 425 (Mo. banc 1992). Hotel was liable for sales tax on amounts paid as mandatory gratuities. Under the hotel’s banquet contracts, customers were obligated to pay a 16% gratuity. The gratuities were part of the sale price of the food and drink because they were mandatory. The fact that the gratuities were separately stated and served to equalize employee wages does not affect taxability of the gratuity. Golde’s Department Stores, Inc. v. Director of Revenue, 791 S.W.2d 478 (Mo. App. 1990). A department store that paid sales tax on gross sales was entitled to refund of sales tax that was overpaid. Under gross sales reporting method, it reported credit sales for which no payment was ever received. It was entitled to compute its liability under gross receipts reporting method because the law imposes the sales tax based on gross receipts, not gross sales.