Reversal of ‘ICC Management’ and ‘Music City’ Clarifies Missouri’s Resale Exemption

Recent enactment of “new” Mo. Rev. Stat. §144.018 essentially overturns ICC Management and Music City and clarifies Missouri’s resale exemption – welcome relief for many lawyers and businesspeople in Missouri. In the October issue of the Journal of Multistate Taxation and Incentives, Kansas City Counsel James Matthews authored an examination of the issues, outcomes and uncertainties flowing from these cases and the enactment of §144.018.

In Music City Centre Management, LLC v. Director of Revenue and ICC Management, Inc. v. Director of Revenue, one case undercut the value of Missouri’s resale exemption, the other case clouded its administration and both left the scope of this exemption less certain than before. In their stead, §144.018 cements the framework of Missouri’s resale exemption into a firmer statutory foundation, with more predictable results. Matthews’ article notes that this legislation has important ramifications – perhaps unintended – for ticket brokers and online travel service operators. The critical task going forward will be to distinguish a sale of goods from a nontaxable sale of services when they are inseparable components of a mixed transaction, via a “true object” analysis. Dozens of other states use the “true object” or “essence of the transaction” methodology, giving Matthews’ article broad appeal among state and local taxation practitioners.

Matthews concentrates his practice in the area of taxation law, with an emphasis on state income and sales or use tax matters representation for proprietary and nonprofit businesses. His practice also includes substantial involvement in transactional tax, estate and business tax planning, as well as client representation in tax controversies, tax compliance and tax enforcement defense.

Prior to entering private practice, Matthews gained experience as a tax law specialist in the Corporation Tax Branch of the Internal Revenue Service’s national office in Washington, D.C. Since entering private practice, he has served as chairman of both the Taxation Committee of the Missouri Bar Association and the Kansas City Metropolitan Bar Association. He remains as an original appointed member of the Missouri director of revenue’s advisory group. Matthews regularly appears as a speaker at federal and state tax seminars and has authored several chapters and articles on federal and state tax topics.

Click here to read his article, which appears in and is reproduced with the permission of the Journal of Multistate Taxation and Incentives, October 2010. Published by Warren, Gorham & Lamont, a division of RIA. Copyright © 2010 RIA.