Justia Missouri Supreme Court Opinion Summaries

In 2001, Southwestern Bell Telephone Company ("SWBT") created Southwestern Bell Texas Holdings, Inc., ("Holdings") a new Delaware corporation, which created Southwestern Bell Telephone Texas LLC. SWBT then converted to a Texas limited partnership and named Southwestern Bell Telephone LP (“LP”). Holdings was the sole owner of LP. In 2007, the Director of Revenue conducted an audit and determined that Holdings was engaged in business in Missouri in 2003-2005 through its interest in LP. The Administrative Hearing Commission (AHC) determined that Holdings was not subject to Missouri franchise taxes for this period. At issue before the Supreme Court was whether a foreign corporation that has been engaged in business in Missouri and paying Missouri franchise taxes for decades can escape liability for franchise taxes, even though it continues to be engaged in the same business in the same locations using the same assets, by merely inserting a wholly owned limited partnership to own and operate those assets. The Supreme Court vacated the AHC’s determination, holding that Holdings was engaged in business in the state from 2003-2005 and, as a result, was subject to franchise taxes for those years. View "Southwestern Bell Tel. Co. v. Dir. of Revenue" on Justia Law

Beemer Construction Company and Seal-O-Matic Paving Company moved to set aside a tax sale of certain real property to Realty Acquisition, LLC, arguing that they had mechanic’s liens on the property and that the Director of Collection’s failure to give them prior personal notice of the tax sale violated their due process rights. The trial court set aside the tax sale as null and void. The Supreme Court affirmed, holding (1) a mechanic’s lien constitutes a substantial property interest, which is subject to due process protection; and (2) because Beemer and Seal-O-Matic, who had valid mechanic’s liens on the property, did not receive personal notice by mail of the tax sale, the trial court properly set aside the tax sale in question. View "In re Foreclosure Liens for Delinquent Taxes by Action in rem" on Justia Law

Respondent was a Missouri corporation that sold rock base and asphalt from its quarries and asphalt plants to paving companies to be used to construct and resurface roads and parking lots. Respondent petitioned the Director of Revenue for a sales tax refund under Mo. Rev. Stat. 144.054.2, claiming that the resurfacing process qualified for the exemption. The Director denied the refund. The Administrative Hearing Commission (AHC) reversed and entered a decision in favor of Respondent. The Supreme Court reversed, holding that the AHC misapplied section 144.054.2 when it determined that the paving companies were engaged in “manufacturing,” “processing,” “compounding,” or “producing” roads and parking lots, and therefore, Respondent was not entitled to a refund of sales tax paid on the products it sold to the paving companies. View "Fred Weber, Inc. v. Dir. of Revenue" on Justia Law

Appellant in this case was a subcontractor that purchased steel beams and other steel components that were used to fulfill Appellant's contracts to construct steel frames for large-scale commercial buildings and structures. Appellant filed a petition with the Director of Revenue for sales and tax refunds under Mo. Rev. Stat. 144.054.2, which exempts “materials used or consumed in the manufacturing, processing, compounding, mining, or producing of any product” from sales tax. The Director concluding that Appellant did not meet the requirements for a tax exemption under section 144.054.2. The Administrative Hearing Commission affirmed. The Supreme Court affirmed, holding that because Appellant was using steel beams, plates, angles, and other components to fulfill its construction contracts, an activity not exempt under the plain and ordinary language of section 144.054.2, it failed to meet the statutory criteria for a sales and use tax exemption. View "Ben Hur Steel Worx, LLC v. Dir. of Revenue" on Justia Law

Appellant bought tobacco products from a Missouri wholesaler and sold the tobacco products to Missouri retailers. Appellant did not report the sale of the tobacco products on his tax returns. The Director of Revenue determined that Appellant was responsible for the first sale of the tobacco products within the state. The Administrative Hearing Commission (AHC) agreed with the Director’s decision, determining that, although Appellant did not sell the tobacco products at retail to consumers, Appellant was liable for the ten-percent tax imposed on the “first sale of tobacco products, other than cigarettes” within the state. The Supreme Court affirmed, holding that the AHC correctly determined that the Director’s assessment of tax, interest, penalties, and costs was proper. View "Lalani v. Dir. of Revenue" on Justia Law

Fenix Construction Company of St. Louis, Five Star Ready-Mix Concrete Company and Horstmeyer Enterprises, Inc. (collectively, Taxpayers) filed sales tax refund claims for their purchases of materials used to construct tilt-up concrete walls. Taxpayers asserted that the materials fell within the Mo. Rev. Stat. 144.054.2 tax exemption for materials used in “manufacturing…any product.” The director of revenue denied the claims. The Administrative Hearing Commission (AHC) also denied the refund claims, determining that the tax exemption was inapplicable because the tilt-up concrete walls were not a “product” pursuant to section 144.054.2. The Supreme Court affirmed, holding that the AHC correctly determined that Taxpayers did not establish that the tilt-up concrete walls were a “product” as that term is used in section 144.054.2. View "Fenix Constr. Co. of St. Louis v. Dir. of Revenue" on Justia Law

Two retail stores offered customers the opportunity to finance their purchases through private label credit cards. The cards were issued by banks that paid to the retailer at the time of the sale the full amount of the purchase, including sales tax, for each transaction made using the credit cards. The retailer then remitted the applicable sales tax to the State. If a customer failed to pay his or her credit card debt, the issuing bank took any tax write off. The retailers in this case separately applied for refunds of the sales tax that the banks had written off. The Director of Revenue denied both requests. The Administrative Hearing Commission reversed and allowed the retailers to claim their respective sales tax refunds. The Supreme Court reversed, holding that because, at the time of the initial transaction, the banks fully reimbursed the retailers for both the amount of the sales tax and the amount of the purchase on which that tax was based, the retailers were not entitled under statute to seek a refund of taxes the banks subsequently wrote off. View "Circuit City Stores, Inc. v. Dir. of Revenue" on Justia Law

Commercial Barge Line (CBL) was a Delaware corporation and the single member of two limited liability companies, one of which was American Commercial Barge Line (ACBL). In 2007, the Department of Revenue (DOR) conducted an audit and determined that CBL and ACBL (together, Taxpayers) owed Missouri sales and use tax on goods and supplies delivered to ACBL’s towboats while the towboats traveled south on the Mississippi River. Taxpayers sought review of these assessments. The Administrative Hearing Commission (AHC) upheld the DOR’s determination that Taxpayers owed Missouri sales and use tax on the goods and supplies at issue. The Supreme Court affirmed the decision of the AHC, holding (1) the sales and use tax assessments did not violate the Commerce Clause because the supplies were purchased or used within Missouri and were fairly related to the services the Taxpayers received from the state; (2) the taxes did not violate the Maritime Transportation Security Act because they were assessed on ACBL’s purchases and deliveries of supplies and not on the towboats; and (3) the relevant statute of limitations did not bar the DOR from assessing tax liability for the audit period, 2001 through 2006. View "Commercial Barge Line Co. v. Dir. of Revenue" on Justia Law

Respondent, a Mississippi corporation with operations in several states, including Missouri, established a “rabbi trust” to fund its executive deferred compensation plan for company executives. In filing its 2007 Missouri corporate income tax return, Respondent reported income from the rabbi trust as “non-business” income and, therefore, reported and allocated all trust income to Mississippi and paid Mississippi income taxes on that income. The Missouri director of revenue determined that the trust income was business income subject to apportionment and taxation in Missouri. On appeal, the Administrative Hearing Commission concluded that the trust income was non-business income. The Supreme Court reversed, holding that the trust income was business income “used for the current operational purpose of attracting and retaining key employees” and was therefore subject to apportionment in Missouri. View "MINACT, Inc. v. Dir. of Revenue" on Justia Law

Appellant was a Missouri corporation that sold rides on untethered hot air balloons. Appellant collected sales tax on receipts of balloon rides and subsequently requested a refund of those sales taxes from the director of revenue. The director denied Appellant’s request. The director also assessed sales taxes on the amount paid to Appellants by third-party vendors and use taxes on a hot air balloon and inflator fan purchased in Texas. The administrative hearing commission (AHC) denied Appellant’s claim for a refund of the sales taxes paid and Appellant’s challenge to the assessment of sales and use taxes. The Supreme Court (1) reversed the ruling of the AHC as to the assessment of sales taxes on all sales of hot air balloon rides - those purchased directly from Appellant in Missouri and those purchased by flight certificate from out-of-state third-party vendors - because the taxes on those gross receipts were state taxes on air commerce, which are prohibited by the Anti-Head Tax Act; and (2) affirmed the AHC in regard to the assessed use taxes, holding that Appellant was liable for use taxes on equipment purchased outside of Missouri. View "Balloons Over the Rainbow, Inc. v. Dir. of Revenue" on Justia Law