HOUSE BILL NO. 1402 103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE DAVIS.
2254H.01I JOSEPH ENGLER, Chief Clerk
AN ACT To repeal section 144.030, RSMo, and to enact in lieu thereof one new section relating to a sales tax exemption.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Section 144.030, RSMo, is repealed and one new section enacted in lieu 2 thereof, to be known as section 144.030, to read as follows: 144.030. 1. There is hereby specifically exempted from the provisions of sections 2 144.010 to 144.525 and from the computation of the tax levied, assessed or payable pursuant 3 to sections 144.010 to 144.525 such retail sales as may be made in commerce between this 4 state and any other state of the United States, or between this state and any foreign country, 5 and any retail sale which the state of Missouri is prohibited from taxing pursuant to the 6 Constitution or laws of the United States of America, and such retail sales of tangible 7 personal property which the general assembly of the state of Missouri is prohibited from 8 taxing or further taxing by the constitution of this state. 9 2. There are also specifically exempted from the provisions of the local sales tax law 10 as defined in section 32.085, section 238.235, and sections 144.010 to 144.525 and 144.600 to 11 144.761 and from the computation of the tax levied, assessed or payable pursuant to the local 12 sales tax law as defined in section 32.085, section 238.235, and sections 144.010 to 144.525 13 and 144.600 to 144.745: 14 (1) Motor fuel or special fuel subject to an excise tax of this state, unless all or part of 15 such excise tax is refunded pursuant to section 142.824; or upon the sale at retail of fuel to be 16 consumed in manufacturing or creating gas, power, steam, electrical current or in furnishing 17 water to be sold ultimately at retail; or feed for livestock or poultry; or grain to be converted
EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. HB 1402 2
18 into foodstuffs which are to be sold ultimately in processed form at retail; or seed, limestone 19 or fertilizer which is to be used for seeding, liming or fertilizing crops which when harvested 20 will be sold at retail or will be fed to livestock or poultry to be sold ultimately in processed 21 form at retail; economic poisons registered pursuant to the provisions of the Missouri 22 pesticide registration law, sections 281.220 to 281.310, which are to be used in connection 23 with the growth or production of crops, fruit trees or orchards applied before, during, or after 24 planting, the crop of which when harvested will be sold at retail or will be converted into 25 foodstuffs which are to be sold ultimately in processed form at retail; 26 (2) Materials, manufactured goods, machinery and parts which when used in 27 manufacturing, processing, compounding, mining, producing or fabricating become a 28 component part or ingredient of the new personal property resulting from such 29 manufacturing, processing, compounding, mining, producing or fabricating and which new 30 personal property is intended to be sold ultimately for final use or consumption; and 31 materials, including without limitation, gases and manufactured goods, including without 32 limitation slagging materials and firebrick, which are ultimately consumed in the 33 manufacturing process by blending, reacting or interacting with or by becoming, in whole 34 or in part, component parts or ingredients of steel products intended to be sold ultimately for 35 final use or consumption; 36 (3) Materials, replacement parts and equipment purchased for use directly upon, and 37 for the repair and maintenance or manufacture of, motor vehicles, watercraft, railroad rolling 38 stock or aircraft engaged as common carriers of persons or property; 39 (4) Replacement machinery, equipment, and parts and the materials and supplies 40 solely required for the installation or construction of such replacement machinery, equipment, 41 and parts, used directly in manufacturing, mining, fabricating or producing a product which is 42 intended to be sold ultimately for final use or consumption; and machinery and equipment, 43 and the materials and supplies required solely for the operation, installation or construction of 44 such machinery and equipment, purchased and used to establish new, or to replace or expand 45 existing, material recovery processing plants in this state. For the purposes of this 46 subdivision, a "material recovery processing plant" means a facility that has as its primary 47 purpose the recovery of materials into a usable product or a different form which is used in 48 producing a new product and shall include a facility or equipment which are used exclusively 49 for the collection of recovered materials for delivery to a material recovery processing plant, 50 or facilities licensed under section 301.218 but shall not include motor vehicles used on 51 highways. For purposes of this section, the terms motor vehicle and highway shall have the 52 same meaning pursuant to section 301.010. For the purposes of this subdivision, "part" 53 includes purchases of vehicles which are unusable as a whole. For the purposes of this 54 subdivision, subdivision (5) of this subsection, and section 144.054, as well as the definition HB 1402 3
55 in subdivision (9) of subsection 1 of section 144.010, the term "product" includes 56 telecommunications services and the term "manufacturing" shall include the production, or 57 production and transmission, of telecommunications services. The preceding sentence does 58 not make a substantive change in the law and is intended to clarify that the term 59 "manufacturing" has included and continues to include the production and transmission of 60 "telecommunications services", as enacted in this subdivision and subdivision (5) of this 61 subsection, as well as the definition in subdivision (9) of subsection 1 of section 144.010. 62 The preceding two sentences reaffirm legislative intent consistent with the interpretation of 63 this subdivision and subdivision (5) of this subsection in Southwestern Bell Tel. Co. v. 64 Director of Revenue, 78 S.W.3d 763 (Mo. banc 2002) and Southwestern Bell Tel. Co. v. 65 Director of Revenue, 182 S.W.3d 226 (Mo. banc 2005), and accordingly abrogates the 66 Missouri supreme court's interpretation of those exemptions in IBM Corporation v. Director 67 of Revenue, 491 S.W.3d 535 (Mo. banc 2016) to the extent inconsistent with this section and 68 Southwestern Bell Tel. Co. v. Director of Revenue, 78 S.W.3d 763 (Mo. banc 2002) and 69 Southwestern Bell Tel. Co. v. Director of Revenue, 182 S.W.3d 226 (Mo. banc 2005). The 70 construction and application of this subdivision as expressed by the Missouri supreme court 71 in DST Systems, Inc. v. Director of Revenue, 43 S.W.3d 799 (Mo. banc 2001); Southwestern 72 Bell Tel. Co. v. Director of Revenue, 78 S.W.3d 763 (Mo. banc 2002); and Southwestern Bell 73 Tel. Co. v. Director of Revenue, 182 S.W.3d 226 (Mo. banc 2005), is hereby affirmed. 74 Material recovery is not the reuse of materials within a manufacturing process or the use of a 75 product previously recovered. The material recovery processing plant shall qualify under the 76 provisions of this section regardless of ownership of the material being recovered; 77 (5) Machinery and equipment, and parts and the materials and supplies solely 78 required for the installation or construction of such machinery and equipment, purchased and 79 used to establish new or to expand existing manufacturing, mining or fabricating plants in the 80 state if such machinery and equipment is used directly in manufacturing, mining or 81 fabricating a product which is intended to be sold ultimately for final use or consumption. 82 The construction and application of this subdivision as expressed by the Missouri supreme 83 court in DST Systems, Inc. v. Director of Revenue, 43 S.W.3d 799 (Mo. banc 2001); 84 Southwestern Bell Tel. Co. v. Director of Revenue, 78 S.W.3d 763 (Mo. banc 2002); and 85 Southwestern Bell Tel. Co. v. Director of Revenue, 182 S.W.3d 226 (Mo. banc 2005), is 86 hereby affirmed; 87 (6) Tangible personal property which is used exclusively in the manufacturing, 88 processing, modification or assembling of products sold to the United States government or to 89 any agency of the United States government; 90 (7) Animals or poultry used for breeding or feeding purposes, or captive wildlife; HB 1402 4
91 (8) Newsprint, ink, computers, photosensitive paper and film, toner, printing plates 92 and other machinery, equipment, replacement parts and supplies used in producing 93 newspapers published for dissemination of news to the general public; 94 (9) The rentals of films, records or any type of sound or picture transcriptions for 95 public commercial display; 96 (10) Pumping machinery and equipment used to propel products delivered by 97 pipelines engaged as common carriers; 98 (11) Railroad rolling stock for use in transporting persons or property in interstate 99 commerce and motor vehicles licensed for a gross weight of twenty-four thousand pounds or 100 more or trailers used by common carriers, as defined in section 390.020, in the transportation 101 of persons or property; 102 (12) Electrical energy used in the actual primary manufacture, processing, 103 compounding, mining or producing of a product, or electrical energy used in the actual 104 secondary processing or fabricating of the product, or a material recovery processing plant as 105 defined in subdivision (4) of this subsection, in facilities owned or leased by the taxpayer, if 106 the total cost of electrical energy so used exceeds ten percent of the total cost of production, 107 either primary or secondary, exclusive of the cost of electrical energy so used or if the raw 108 materials used in such processing contain at least twenty-five percent recovered materials as 109 defined in section 260.200. There shall be a rebuttable presumption that the raw materials 110 used in the primary manufacture of automobiles contain at least twenty-five percent 111 recovered materials. For purposes of this subdivision, "processing" means any mode of 112 treatment, act or series of acts performed upon materials to transform and reduce them to a 113 different state or thing, including treatment necessary to maintain or preserve such processing 114 by the producer at the production facility; 115 (13) Anodes which are used or consumed in manufacturing, processing, 116 compounding, mining, producing or fabricating and which have a useful life of less than 117 one year; 118 (14) Machinery, equipment, appliances and devices purchased or leased and used 119 solely for the purpose of preventing, abating or monitoring air pollution, and materials and 120 supplies solely required for the installation, construction or reconstruction of such machinery, 121 equipment, appliances and devices; 122 (15) Machinery, equipment, appliances and devices purchased or leased and used 123 solely for the purpose of preventing, abating or monitoring water pollution, and materials and 124 supplies solely required for the installation, construction or reconstruction of such machinery, 125 equipment, appliances and devices; 126 (16) Tangible personal property purchased by a rural water district; HB 1402 5
127 (17) All amounts paid or charged for admission or participation or other fees paid by 128 or other charges to individuals in or for any place of amusement, entertainment or recreation, 129 games or athletic events, including museums, fairs, zoos and planetariums, owned or operated 130 by a municipality or other political subdivision where all the proceeds derived therefrom 131 benefit the municipality or other political subdivision and do not inure to any private person, 132 firm, or corporation, provided, however, that a municipality or other political subdivision may 133 enter into revenue-sharing agreements with private persons, firms, or corporations providing 134 goods or services, including management services, in or for the place of amusement, 135 entertainment or recreation, games or athletic events, and provided further that nothing in this 136 subdivision shall exempt from tax any amounts retained by any private person, firm, or 137 corporation under such revenue-sharing agreement; 138 (18) All sales of insulin, and all sales, rentals, repairs, and parts of durable medical 139 equipment, prosthetic devices, and orthopedic devices as defined on January 1, 1980, by the 140 federal Medicare program pursuant to Title XVIII of the Social Security Act of 1965, 141 including the items specified in Section 1862(a)(12) of that act, and also specifically 142 including hearing aids and hearing aid supplies and all sales of drugs which may be legally 143 dispensed by a licensed pharmacist only upon a lawful prescription of a practitioner licensed 144 to administer those items, including samples and materials used to manufacture samples 145 which may be dispensed by a practitioner authorized to dispense such samples and all sales or 146 rental of medical oxygen, home respiratory equipment and accessories including parts, and 147 hospital beds and accessories and ambulatory aids including parts, and all sales or rental of 148 manual and powered wheelchairs including parts, and stairway lifts, Braille writers, electronic 149 Braille equipment and, if purchased or rented by or on behalf of a person with one or more 150 physical or mental disabilities to enable them to function more independently, all sales or 151 rental of scooters including parts, and reading machines, electronic print enlargers and 152 magnifiers, electronic alternative and augmentative communication devices, and items used 153 solely to modify motor vehicles to permit the use of such motor vehicles by individuals with 154 disabilities or sales of over-the-counter or nonprescription drugs to individuals with 155 disabilities, and drugs required by the Food and Drug Administration to meet the over-the- 156 counter drug product labeling requirements in 21 CFR 201.66, or its successor, as prescribed 157 by a health care practitioner licensed to prescribe; 158 (19) All sales made by or to religious and charitable organizations and institutions in 159 their religious, charitable or educational functions and activities and all sales made by or to all 160 elementary and secondary schools operated at public expense in their educational functions 161 and activities; 162 (20) All sales of aircraft to common carriers for storage or for use in interstate 163 commerce and all sales made by or to not-for-profit civic, social, service or fraternal HB 1402 6
164 organizations, including fraternal organizations which have been declared tax-exempt 165 organizations pursuant to Section 501(c)(8) or (10) of the 1986 Internal Revenue Code, as 166 amended, in their civic or charitable functions and activities and all sales made to 167 eleemosynary and penal institutions and industries of the state, and all sales made to any 168 private not-for-profit institution of higher education not otherwise excluded pursuant to 169 subdivision (19) of this subsection or any institution of higher education supported by public 170 funds, and all sales made to a state relief agency in the exercise of relief functions and 171 activities; 172 (21) All ticket sales made by benevolent, scientific and educational associations 173 which are formed to foster, encourage, and promote progress and improvement in the science 174 of agriculture and in the raising and breeding of animals, and by nonprofit summer theater 175 organizations if such organizations are exempt from federal tax pursuant to the provisions of 176 the Internal Revenue Code and all admission charges and entry fees to the Missouri state fair 177 or any fair conducted by a county agricultural and mechanical society organized and operated 178 pursuant to sections 262.290 to 262.530; 179 (22) All sales made to any private not-for-profit elementary or secondary school, all 180 sales of feed additives, medications or vaccines administered to livestock or poultry in the 181 production of food or fiber, all sales of pesticides used in the production of crops, livestock or 182 poultry for food or fiber, all sales of bedding used in the production of livestock or poultry for 183 food or fiber, all sales of propane or natural gas, electricity or diesel fuel used exclusively for 184 drying agricultural crops, natural gas used in the primary manufacture or processing of fuel 185 ethanol as defined in section 142.028, natural gas, propane, and electricity used by an eligible 186 new generation cooperative or an eligible new generation processing entity as defined in 187 section 348.432, and all sales of farm machinery and equipment, other than airplanes, motor 188 vehicles and trailers, and any freight charges on any exempt item. As used in this 189 subdivision, the term "feed additives" means tangible personal property which, when mixed 190 with feed for livestock or poultry, is to be used in the feeding of livestock or poultry. As used 191 in this subdivision, the term "pesticides" includes adjuvants such as crop oils, surfactants, 192 wetting agents and other assorted pesticide carriers used to improve or enhance the effect of a 193 pesticide and the foam used to mark the application of pesticides and herbicides for the 194 production of crops, livestock or poultry. As used in this subdivision, the term "farm 195 machinery and equipment" shall mean: 196 (a) New or used farm tractors and such other new or used farm machinery and 197 equipment, including utility vehicles used for any agricultural use, and repair or replacement 198 parts thereon and any accessories for and upgrades to such farm machinery and equipment 199 and rotary mowers used for any agricultural purposes. For the purposes of this subdivision, 200 "utility vehicle" shall mean any motorized vehicle manufactured and used exclusively for off- HB 1402 7
201 highway use which is more than fifty inches but no more than eighty inches in width, 202 measured from outside of tire rim to outside of tire rim, with an unladen dry weight of three 203 thousand five hundred pounds or less, traveling on four or six wheels; 204 (b) Supplies and lubricants used exclusively, solely, and directly for producing crops, 205 raising and feeding livestock, fish, poultry, pheasants, chukar, quail, or f