Current through Register Vol. 50, No. 6, March 17, 2025
PURPOSE: Section 144.020.1(3), RSMo, imposes
a tax on the basic rate paid for sales of electricity, water, and gas to
domestic, commercial, or industrial consumers. Section 144.030.2(23), RSMo,
exempts from tax sales for domestic use of these services, as well as wood,
coal, and home heating oil. Section
144.032, RSMo, provides cities
and counties the option to reimpose certain local sales taxes on sales for
domestic use. This rule explains the taxation of electricity, water, and
gas.
(1) In
general, sales of electricity, water, and gas to commercial or industrial
consumers are subject to tax. Sales of these services to domestic consumers are
exempt from state sales tax but may be subject to certain local sales taxes if
reimposed by a city or county. Sales of electricity, water, and gas for
agricultural use are excluded from tax.
(2) Definition of Terms.
(A) Basic rate-the rate charged for utility
services, including any advance or equalized payment, surcharge, minimum, or
flat rate. It does not include such things as refundable deposits, or
separately stated charges for any franchise, occupation, sales, license,
excise, privilege, or similar tax or fee of any kind imposed upon the supplier
of the utility service by any taxing body or authority whether by statute,
ordinance, or otherwise. The basic rate does include income taxes and other
charges imposed on the seller even if the seller chooses to separately state
such charges. The basic rate also includes any "payment in lieu of tax (PILOT)"
imposed on municipal-owned utilities, even if separately stated.
(B) Domestic use-nonagricultural,
nonindustrial, and noncommercial use. Sales made by regulated utilities
pursuant to a "residential" rate classification are for domestic use. Sales
through a single or master meter for residential nursing homes, apartments, or
condominiums, including service for common areas and facilities and vacant
units, but not including administrative and maintenance areas, are sales for
domestic use.
(C)
Utilities-electricity, water, or gas services.
(3) Basic Application of Tax.
(A) Sales or use taxes apply to all sales of
electricity, water, and gas to commercial or industrial consumers.
(B) Sales tax does not apply to sales of
electricity, metered water service, and gas if sold for domestic use. Certain
local sales taxes apply if reimposed by a city or county.
(C) Sales tax does not apply to agricultural
use of utility services, including use by greenhouses.
(D) Sales of propane gas, wood, coal, or home
heating oil for domestic use are exempt from sales tax. Certain local sales
taxes apply if reimposed by a city or county.
(E) Sales of sewer service for either
commercial or domestic use are not subject to tax if billed
separately.
(F) Sales of unmetered
water service for domestic use are subject to tax except in the City of St.
Louis, where metered and unmetered water service for domestic use are exempt
from state sales tax.
(G) Persons
making domestic purchases of service exempt from sales tax that use a portion
of the service for nondomestic purposes must file a return and pay sales tax by
April 15 of the year following the year of purchase on that portion of service
used for nondomestic purposes.
(H)
Persons making commercial purchases of service subject to state tax that use a
portion of the service for domestic purposes may file for a refund for that
portion of the utility service. See
12 CSR
10-102.016.
(4) Examples.
(A) An apartment complex purchases
electricity. To the extent the purchases are for residents of the complex or
for common areas, the purchases are exempt. The complex may issue an exemption
certificate to its utility supplier. The purchases are subject to local sales
taxes if reimposed by the local taxing authorities. If some of the electricity
is used for the complex office or other facilities related to the business of
the complex owner, the complex must remit state tax on these purchases directly
to the department.
(B) A farmer has
a single meter that services both the farm and his home. If the local taxing
authorities have reimposed local tax on domestic use, the farmer must file a
return and pay local sales tax directly to the department on the portion of the
service used for his home.
(C) A
company purchases natural gas from an out-of-state supplier, who has nexus with
Missouri, for commercial use. The supplier must collect vendor's use tax on the
sales price of the gas.
(D) A
propane gas company located in City A delivers gas by commercial truck and
meters the gas on the truck. The company delivers gas to a customer located in
City B. The company should charge the local sales tax (if applicable) based on
its business location in City A. If the meter is located on the customer's
tank, the local tax rate is based on the location of the meter.
AUTHORITY:
sections 143.961,
144.032, and
144.046, RSMo 2016, and sections
144.010 and
144.030, RSMo Supp. 2021.*
Original rule filed May 1, 2006, effective Nov. 30, 2006. Amended: Filed Oct.
12, 2021, effective April 30, 2022.
