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Home / Opinions / Courts / Missouri Supreme Court / Missouri Supreme Court Digest: Sept. 19, 2022

Missouri Supreme Court Digest: Sept. 19, 2022


Charitable Organization Tax Exemption

Civic Redevelopment Organization

Plaintiff was a non-profit organization established to create safe and sanitary housing in low-income areas in St. Louis County that suffered from crime, poverty, and unemployment. Plaintiff launched the development of the Pagedale Town Center development. Phase IV of the project involved the construction of a commercial structure that would include retail tenants, healthcare providers, and a community kitchen. Plaintiff established a separate non-profit LLC for the Phase IV building. Although plaintiff had been granted a perpetual tax exemption as a civic organization, the director of revenue denied the LLC’s application for sales and use tax exemption as a charitable organization. The administrative hearing commission concluded that Phase IV was a charitable activity and reversed the director’s decision. The director petitioned for review.

Where charitable and civic organizations were not mutually exclusive and plaintiff could qualify as both for tax exemption purposes, plaintiff and its LLC for Phase IV were entitled to sales and use tax exemption because the purpose of plaintiff and Phase IV was clearly charitable in nature by redeveloping distressed neighborhoods while not making profit from rents from developments. However, plaintiff was not entitled to attorneys’ fees where the director’s appeal was not patently frivolous.

Judgment is affirmed.

Beyond Housing, Inc. v. Director of Revenue (MLW No. 78928/Case No. SC99051 – 26 pages) (Supreme Court of Missouri, Russell, J.) Petition for review of a decision of the Administrative Hearing Commission, Dandamudi, C. (Jeff P. Johnson, Jefferson City, for appellant) (Jeffrey B. Hunt and Brian J. Beck, St. Louis, for appellees)



Sales and Use Tax

Manufacturing Exemption

Carfax, Inc. sells vehicle history reports to dealers and consumers. To create the reports, Carfax compiled information about the specific vehicle from its database stored in servers in Columbia. The director of revenue audited Carfax and determined that it was liable for sales and use tax on equipment it had purchased, including computer servers, networking equipment, software, and workstations. Carfax appealed the director’s decision, contending that the equipment was eligible for the manufacturing exception from sales and use tax because the equipment was used to manufacture vehicle history reports. The commission agreed, and the director petitioned for review of the commission’s decision.

Where “manufacturing” only encompassed transforming inputs into an output with a separate and distinct use and value from the inputs, the court concluded that what Carfax was using its computer equipment for was not manufacturing since the equipment was merely being used to compile a report with information that Carfax had obtained from other sources and stored in its database. Thus, the report was not different in identity from the original data that was used to generate the report.

Judgment is vacated and remanded.

Carfax, Inc. v. Director of Revenue (MLW No. 78926/Case No. SC99367 – 9 pages) (Supreme Court of Missouri, Russell, J.) Petition for review of a decision of the Administration Hearing Commission, Slusher, C. (Michael E. Talent, St. Louis, for petitioner) (Carole L. Iles, Jefferson City, and Benjamin A. Ford, St. Louis, for respondent)




Vehicle Retail Installment Agreement

Suit to Recover Deficiency

Defendants entered a retail installment contract to purchase a vehicle, with the security agreement being assigned to plaintiff. Defendants ultimately defaulted on the loan, and plaintiff sent notice of default and defendants’ right to cure. Defendants made a payment but again defaulted. Plaintiff sent another notice of default and after defendants missed further payments, plaintiff repossessed the vehicle. Plaintiff sent pre-sale notice of intent to sell the vehicle at a dealers-only auction. When the vehicle sold for less than defendants owed, plaintiff sent a post-sale notice of deficiency and sued to collect. The trial court entered judgment for defendants, ruling that plaintiff was not entitled to recover the deficiency because it had failed to provide proper pre-sale notice and post-sale explanation of deficiency.

Where plaintiff sent a pre-sale notice adequately explaining the method of disposition of the vehicle and the time when the sale would occur and then sent a post-sale explanation of deficiency via certified mail that was returned unclaimed, plaintiff complied with its statutory obligations as certified mailing met the mailing requirement and the statute did not require plaintiff to take further steps to contact defendants when the mailing was returned.

Judgment is reversed and remanded.

The Central Trust Bank v. Branch (MLW No. 78927/Case No. SC99297 – 15 pages) (Supreme Court of Missouri, Russell, J.) Appealed from circuit court, St. Louis County, Herne, J. (Booker T. Shaw, Christopher M. Hohn, and Brain A. Lamping, St. Louis) (Bryan E. Brody and Alexander J. Cornwell, St. Louis, and David T. Butsch and Christopher E. Roberts, Clayton, for appellees)