Does an online auction platform have to collect Missouri sales tax on its 10% buyer's premium, for both regular goods and titled property like vehicles and boats?

Plain-English summary

The Missouri Department of Revenue ruled on how sales tax applies to the 10% "buyer's premium" charged by an online no-reserve auctioneer and sales platform (specializing in construction, agricultural, and fleet assets) that operates in Missouri, and reached a split result depending on what is being sold.

For sales of ordinary tangible personal property (non-titled goods), the buyer's premium is subject to Missouri sales tax. Under Section 144.020, RSMo, Missouri taxes retail sales of tangible personal property, and Section 144.070.2, RSMo, defines the taxable purchase price as the entire contract amount agreed upon to complete the acquisition. Section 144.605(8), RSMo, further makes charges for labor or services related to a sale part of the sales price. Because the buyer's premium is intended by all parties to be part of the transaction -- there is no sale without paying it -- it counts as part of the taxable sales price.

For sales of titled property (motor vehicles, trailers, and boats), the buyer's premium is not subject to Missouri sales tax. That's because Section 144.020, RSMo, imposes a separate titling tax on such property, and Section 144.020(9), RSMo, places that tax on the person titling the property -- the buyer -- not on the seller or auctioneer. However, the buyer's premium is still part of the purchase price for titled property (for the same reasons it's part of the sales price for other goods), so it should be reflected on the title as part of the purchase price.

What this means for you

Online auction platforms and auctioneers

If you charge a buyer's premium on auction sales in Missouri, you generally must collect and remit Missouri sales tax on that premium for sales of ordinary tangible personal property, because the premium is treated as part of the taxable sales price. For sales of titled property (vehicles, trailers, boats), you are not required to collect sales tax on the premium -- the buyer instead pays Missouri's titling tax directly when titling the property -- but you should still ensure the buyer's premium is reflected on the title as part of the purchase price.

Buyers at online auctions

If you buy titled property (a vehicle, trailer, or boat) at auction, expect the buyer's premium to be included in the purchase price shown on the title, and you will pay Missouri's titling tax (not sales tax collected by the auctioneer) when you title the property.

Accountants and tax professionals

The key distinction in this ruling is titled versus non-titled property, not how the buyer's premium is labeled or calculated. The premium is part of the "purchase price" either way; the difference is which tax mechanism applies and who is responsible for remitting it -- the seller/auctioneer collects sales tax on non-titled goods, while the buyer pays titling tax directly on titled property.

Common questions

Q: Does an auction platform ever have to collect sales tax on the buyer's premium for vehicle or boat sales in Missouri?
A: No, not under this ruling's facts. Titled property like motor vehicles, trailers, and boats is subject to Missouri's separate titling tax under Section 144.020, RSMo, and Section 144.020(9), RSMo, places that tax on the buyer when they title the property -- not on the seller or auctioneer as sales tax.

Q: Is the buyer's premium taxable for ordinary goods sold at auction, like construction, agricultural, or fleet equipment that isn't titled?
A: Yes. The premium is part of the taxable sales price under Section 144.070.2, RSMo, and Section 144.605(8), RSMo, because it's an amount both buyer and seller intend to be part of completing the sale.

Q: If the buyer's premium isn't taxed as sales tax on a titled vehicle, does that mean it's ignored for tax purposes entirely?
A: No. It's still part of the purchase price and should be reflected on the vehicle's or boat's title as part of that purchase price -- it's simply taxed (if at all) through the titling process paid by the buyer, not through sales tax collected by the auctioneer.

Q: Can another auction company rely on this ruling for its own buyer's premium?
A: Not automatically. A Missouri letter ruling binds the Department only as to the requesting Applicant, only for three years, and only while the facts and law don't change. Another company should confirm its facts match and consult a tax professional before relying on this result.

Citations and references

Statutes and cases:

• Section 144.020, RSMo (imposition of sales tax on retail sales of tangible personal property; titling tax on certain vehicles and boats)
• Section 144.070.2, RSMo (purchase price includes the entire contract amount to complete the acquisition)
• Section 144.605(8), RSMo (labor or service charges related to a sale are part of the sales price)
• Section 144.020(9), RSMo (titling tax imposed on the person titling the property, not the seller)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8285

Original ruling text

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated December 5, 2023.

The facts as presented in your letter ruling request are summarized as follows:

Applicant is an online no reserve auctioneer and sales platform specializing in construction, agricultural, and fleet assets. Applicant has one location, which is in Kansas. It operates, however, in a number of states, including Missouri. Auction items are sold from their location, which could be any state where Applicant operates. Applicant charges a "10% buyer's premium" based on the winning bid for all sales, including sales inside Missouri. In consideration for payment of that premium, Applicant provides a variety of services to both the buyer and the seller that creates a less risky sale across a wider marketplace than if each were to engage in a purchase without the aid of Applicant.

ISSUE 1 :

Must Applicant collect and remit state and local sales tax on the "buyer's premium" for sales of tangible personal property inside the state of Missouri?

RESPONSE 1 :

Yes. Applicant does have to collect and remit applicable state and local sales tax on the "buyer's premium" for sales of tangible personal property inside the state of Missouri.

Section 144.020, RSMo, imposes a sales tax on the retail sales of tangible personal property. Section 144.070.2, RSMo, states that the purchase price is the entire amount of the contract agreed upon to complete the acquisition of the vehicle, regardless of medium of payment. Section 144.605(8), RSMo, further makes the price for labor or services related to the sale of tangible personal property part of the sales price.

Applicant charges a "buyer's premium" of 10% of all winning bids. The buyer's premium is intended by all parties to be part of the sales transaction. The seller chooses the services of Applicant in order to secure payment for the property being sold, there can be no sale without payment of the premium. Because of these factors, the buyer's premium is part of the sales price.

Applicant should remit sales tax for property pursuant to section 144.020, RSMo, and all applicable Missouri statutes and regulations.

ISSUE 2:

Must Applicant collect and remit state and local sales tax on the "buyer's premium" for sales of property that is titled inside the state of Missouri?

RESPONSE 2:

No. Applicant does not have to collect and remit applicable state and local sales tax on the buyer's premium for sales of property that is titled, such as motor vehicles, trailers, and boats inside the state of Missouri.

Section 144.020, RSMo, imposes a tax on the titling of certain vehicles and boats. Section 144.020(9), RSMo, states that vehicles subject to a titling tax have the tax "imposed on the person titling such property." The purchasers of the property will be responsible for paying the tax when they title the property pursuant to section 144.020(9), RSMo.

ISSUE 3:

Is the buyer's premium part of the purchase price for a piece of property titled in Missouri, and should it be reflected on the title as part of the purchase price?

RESPONSE 3:

The buyer's premium is part of the purchase price for a piece of titled property ( see Response 1) . Because the buyer's premium is part of the purchase price for a piece of titled property, it should be reflected on the title as part of the purchase price.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals.  If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.  For this reason, the interpretation set forth above should be reviewed on a regular basis.  Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Associate Counsel J. Ross Shelton General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.

Sincerely,

Wayne Wallingford