Thompson Coburn’s State and Local Tax (“SALT”) Controversy team attorneys Janette Lohman, Matt Landwehr, and Kristen Sanocki aided in briefing an important victory for taxpayers across industries in a recent case before the Supreme Court of Missouri.
In Walmart Starco LLC v. Director of Revenue, No. SC99998, handed down on November 7, 2023, the Court unanimously ruled in favor of the taxpayer, Walmart Starco LLC. It found that Missouri’s resale exemption, § 144.615(6), RSMo., applies to equipment that is resold with the addition of software, hardware, and testing. The Court additionally held that the equipment was exempt from Missouri’s use tax because the purchasers paid use tax to the jurisdictions where the products were delivered and sold, thereby prohibiting the likelihood of “double taxation.”
In reaching this well-reasoned conclusion, the Court found that Custom Hardware Engineering & Consulting, Inc. v. Director of Revenue, 358 S.W.3d 54 (Mo. banc 2012), which declined to apply the resale exemption to equipment purchased for use on large computer systems, was the “polar opposite of this case” relating to subsequent taxable sales.
The Court’s decision in favor of the taxpayer on the resale exemption and application of the exemption from use tax where tax is already paid on the products’ ultimate use location is an important win for Missouri industries. TC’s team represented amicus curiae Council On State Taxation (“COST”) and filed an amicus brief that addressed many of the arguments the Court relied on in reaching its ultimate decision, including the prohibition of double taxation and distinguishing Custom Hardware from the case.
Read the opinion in Walmart Starco LLC v. Director of Revenue, No. SC99998, here, and COST’s amicus curiae brief here. The case has received national attention, including from State Tax Notes, Bloomberg Tax, Law360, and Associated Industries of Missouri.
This is the second Supreme Court of Missouri victory for TC’s SALT team in the past seven months. In April, Matt Landwehr, Janette Lohman, Dave Mangian, and Kristen Sanocki won a tax case for Charter Communications (d/b/a Spectrum) with industry-wide implications for Missouri’s manufacturing tax exemptions.
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