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Missouri Hotels Are No Longer Eligible for Utility Sales Tax Exemption

04.21.2021

Changes are in store for the sales tax treatment of utility purchases for area hotels.

Effective April 30, 2021, Missouri hotel and motel operators will no longer be allowed a resale exemption for their utility purchases.  The Missouri Department of Revenue stated in a letter, dated April 8, 2021, officially notifying taxpayers that “this change is a result of DI Supply l LLC, v Director of Revenue 601 S.W.3d 195 (Mo. Banc 2020), handed down by the Missouri Supreme Court on March 17, 2020.”

Historically, Missouri hotel and motel owners have been able to purchase the portion of their utilities used by guests under a resale sales tax exemption; however, that will no longer be permitted based on the Missouri Department of Revenue’s interpretation of the DI Supply case.

Refunds under the resale exemption will continue to be accepted by the Missouri Department of Revenue for claim tax periods through April 30, 2021.

What to Keep in Mind

If you own a hotel or similar establishment in the state of Missouri, make sure you have a good understanding of this utility sales tax exemption change and how it will affect your business.

Starting April 30, 2021, scrutinize your utility bills more carefully. If you are self-accruing sales tax on the taxable portion of your utility bills, make sure that the utility company is not also charging you sales tax. Stay in close contact with your utility company and make sure you have a good grasp on the billing changes you may see. Otherwise, you may find yourself overpaying sales tax.

The Department’s interpretation of this case does not affect the sales tax exemption afforded to hotels or similar establishments under Mo. Rev. Stat. §144.011.1(11), which exempts items such as soap, shampoo, tissue and other toiletries and food or confectionary items offered to guests without charge.

Brown Smith Wallace can help your organization navigate these changes and take full advantage of the existing sales tax exemptions. If you have questions or need assistance, please feel free to reach out to Bernie Ottenlips, State and Local Tax Principal, at 314.687.2375 (BOttenlips@bswllc.com) or Amy Jackson, State and Local Tax Principal, at 314.983.1336 (AJackson@bswllc.com).

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