Missouri Supreme Court Upholds Tax on Sales of Supplies Delivered to Towboats in Mississippi River

Thursday, May 8th, 2014

 
 
A towboat on the Mississippi river.
Share
Link
Missouri
General

The Missouri Supreme Court recently upheld Missouri's application of tax to sales of supplies delivered to towboats on the Mississippi River. It did not violate either the Commerce Clause or the Maritime Transportation Security Act (MTSA).

The taxpayer owned towboats that transported cargo from Minneapolis to New Orleans. The taxpayer purchased food and other supplies and had them delivered to the boats on the Mississippi River. The boats did not dock in Missouri but were in Missouri waters when they received the supplies. The taxpayer argued that the Commerce Clause and the MTSA barred Missouri from taxing these purchases.

A tax violates the Commerce Clause if, among other things, it is not fairly related to the services provided by the state. On this point, courts ask whether the state has given anything for which it can ask a return (i.e., a tax). Police and fire protection and the use of public roads and mass transit are examples of things that a state "gives" for which it may ask a return.

The taxpayer argued that the tax was not fairly related to services provided by Missouri. The Court ruled that the tax was fairly related to services that Missouri provided. Although the boats were on the Mississippi River, they were within Missouri. The taxpayer received the benefits of Missouri's law enforcement systems while in Missouri waters. The taxpayer also received the benefit of Missouri roads and docks that facilitated the deliveries. The tax did not violate the Commerce Clause.

In addition, the tax did not violate the MTSA. The MTSA bars states from taxing vessels that are operating in navigable waters subject to the authority of the United States. The Court ruled that the tax was not on the vessel: it was on the supplies. The taxpayer therefore had to pay Missouri sales and use taxes on its purchases.

http://www.courts.mo.gov/file.jsp?id=72973


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Service Repairs to Petroleum Storage Tanks Exempt in...

Friday, January 18th, 2019 -Louisiana's Board of Tax Appeals recently ruled that repairs on petroleum storage tanks were not taxable. ...

Nevada Exempts Feminine Hygiene Products in 2019

Wednesday, January 16th, 2019 -Last year, Nevada voters approved via ballot measure changes to the Sales and Use Tax Act of 1955. Voters amen...

Cleaning of Beer-Tap Lines Not Taxable in Ohio

Monday, January 14th, 2019 -The Supreme Court of Ohio recently ruled that cleaning beer-tap lines is not taxable. The taxpayer was...

Louisiana Court of Appeals Finds Marketplace Facilitators...

Friday, January 11th, 2019 -The Louisiana Court of Appeals has recently addressed the sales tax liability of marketplace facilitators. A c...

Iowa Supreme Court Determines Taxable Carpentry Services...

Wednesday, January 9th, 2019 -The Iowa Supreme Court has recently addressed the taxability of various installation services. The taxpayer wa...

Tax Applies to Metallurgical Coke in Illinois

Monday, January 7th, 2019 -Illinois recently ruled that use tax was due on purchases of metallurgical coke. The taxpayer was a business t...