PURPOSE: This rule indicates when a contractor is considered a dual operator and sets forth the procedures to be used by the dual operator to determine when purchases become subject to use tax. Examples are given for clarification purposes.

1. (1) A Missouri contractor who purchases materials and supplies from an out-of-state vendor for both consumption and resale is operating as a dual operator. For use tax purposes, a dual operator shall adopt the following procedures:

   1. (A) For items which the Missouri contractor purchases from an out-of-state vendor and for which s/he has not been charged tax equal to or greater than the Missouri state tax and which the contractor uses in his/her operation, the contractor is subject to use tax;
   2. (B) For items which the Missouri contractor purchases for both consumption and resale, the contractor should present an exemption certificate to the out-of-state vendor for items purchased. Subsequently, when an item is removed from the contractor’s inventory, for personal use by the contractor or in fulfillment of a contract, at that point, the contractor should remit use tax on that transaction. If an item is removed from inventory as part of a sale at retail, the contractor should charge sales tax on the gross receipts of the sales; and
   3. (C) For items which the Missouri contractor purchases from an out-of-state vendor for a contract job which is out-of-state and where the item never enters Missouri, no Missouri use tax is due.
2. (2) Example: Handy Contracting, a Missouri contractor, purchases a stairway lift elevator from Hi-Flite Corporation, an out-of-state company. This purchase by Handy Contracting is solely for use in the operation as a contractor and will be installed in Missouri. If Hi-Flite Corporation has not collected Missouri use tax on this lift, Handy Contracting must pay use tax.
3. (3) Example: Handy Contracting, a Missouri contractor, purchases five (5) stairway lift elevators from Hi-Flite Corporation, an outof-state company. Handy Contracting maintains these lifts in inventory. Handy Contracting should give Hi-Flite Corporation a resale exemption certificate. As part of a contract, Handy Contracting removes a lift from the inventory and installs it in a building. Handy Contracting should self-assess use tax on the lift. The next day Handy Contracting sells a lift to Alex Contracting, also a Missouri contractor. Handy Contracting is subject to sales tax upon the gross receipts from the sale.
4. (4) Example: Handy Contracting, a Missouri contractor, purchases a stairway lift elevator from Hi-Flite Corporation, an out-of-state company, with delivery to an out-of-state construction site. Handy Contracting does not owe Missouri use tax on this purchase, however, it may owe use tax to the state in which the contract is being performed.

AUTHORITY: section 144.705, RSMo (1994).* Original rule filed Oct. 15, 1985, effective March 24, 1986.

*Original authority 1959.