The Missouri Department of Revenue recently ruled that taxpayers do not have to charge sales tax on donated items.
The taxpayer was a retail grocery store chain that made donations to exempt and non-exempt organizations. These organizations received donations for a certain dollar amount to be used at the stores. If the total purchase price was over the donated amount, the excess was paid for by the organizations.
The ruling determined that no tax was due on the donations because they are not retail sales. However, tax was due on any excess amount if the purchaser was a non-exempt organization.
Note that although the taxpayer did not have to charge tax on the donations, it was responsible for paying tax on items purchased for resale but taken out of inventory for donation.