PURPOSE: This rule is intended to aid in defining a purchaser’s responsibilities for state use taxes and interprets and applies sections 144.610 and 144.620, RSMo.

1. (1) When a person has delivered an exemption certificate to an out-of-state vendor and the person delivering the exemption certificate uses the tangible personal property in a manner other than that indicated on the exemption certificate, then the person delivering the exemption certificate is subject to the use tax on the value of the tangible personal property at the time it is converted to use.

2. (2) When a person purchases tangible personal property outside Missouri upon which the Missouri use tax has not been imposed, that person is subject to the use tax on the purchase price of the tangible personal property, unless the tangible personal property is purchased for resale.

   1. (A) Example: A veterinarian, Dr. Horse, located in Jefferson City, Missouri, purchases chemicals and supplies from two (2) companies, “C” and “D”. Companies “C” and “D” are both located in Chicago, Illinois and do all their business strictly by mail order. During calendar year 1973, Dr. Horse purchased one thousand dollars ($1000) worth of merchandise from each company. Company “C” is registered with the Missouri Department of Revenue for the payment of use tax and should collect and remit the use tax on Dr. Horses’s purchases. Company “D” does not file a return with Missouri and Dr. Horse must file a return showing the amount of purchase from Company “D” and pay the use tax on those purchases.

AUTHORITY: section 144.705, RSMo 1994.* U.T. regulation 605-2 originally filed Oct. 28, 1975, effective Nov. 7, 1975. Refiled March 30, 1976. Amended: Filed Nov. 8, 1988, effective Jan. 27, 1989. *Original authority: 144.705, RSMo 1959. Southwestern Bell Telephone Co. v. Morris, 345 SW2d 62 (1961). A compensating use tax such as the one now under scrutiny has been aptly characterized as a levy on the privilege of using, within the taxing state, property purchased outside the state, if the property would have been subject to the sales tax had it been purchased at home. It seems to be universally considered that the use tax and sales tax laws are complimentary and supplementary to each other. Pryor Executive Planes, Inc. v. Director of Revenue, Case No. RS-82-0463, (A.H.C. 8/6/87). The Administrative Hearing Commission examined the case under 144.615(6), RSMo which limits the resale exemption to goods held by 1) retailers, 2) solely for resale, and 3) in the regular course of business. As a retailer whose regular business was the sale of aircraft, petitioner met two prongs of the test. Petitioner failed to meet the second requirement because petitioner chartered the aircraft, rented the aircraft to its shareholders and depreciated the aircraft for income tax purposes. The commission stated these uses were inconsistent with petitioner’s holding of aircraft solely for resale, and instead constituted use or consumption sufficient to subject the acquisition of the aircraft to use tax.