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Sneary v. Director of Revenue, 865 S.W.2d 342, 27 A.L.R.5th 959

Facts

Richard R. Sneary, an architect licensed in Missouri, operated Sneary Architectural Illustration and sold architectural illustrations to architectural firms from May 14, 1987, through February 28, 1991. The Director of Revenue assessed sales tax on these sales, which Sneary contested, arguing that the true nature of the transactions was the sale of his professional services rather than the illustrations themselves. The Administrative Hearing Commission upheld the assessment, concluding that the transactions involved the sale of tangible personal property.

This is an appeal from the decision of the administrative hearing commission. Richard R. Sneary, appellant, is an architect licensed by the state of Missouri, doing business as Sneary Architectural Illustration.

Issue

Whether the sales by Sneary to his clients constitute the sales of tangible personal property within the meaning of § 144.020, RSMo 1986, or whether, as Sneary asserts, the transactions are nontaxable performances of a service.

The primary issue is whether the sales by Sneary to his clients constitute the sales of tangible personal property within the meaning of § 144.020, RSMo 1986, or whether, as Sneary asserts, the transactions are nontaxable performances of a service.

Rule

Section 144.020 imposes a sales tax upon every retail sale in Missouri of tangible personal property. The true object or essence of the transaction determines whether to treat a transaction as a taxable transfer of tangible personal property or the nontaxable performance of a service.

Section 144.020 imposes a sales tax upon every retail sale in Missouri of tangible personal property.

Analysis

The court found that the architectural illustrations were the objects of the transactions between Sneary and the architectural firms. Evidence indicated that the firms retained Sneary to provide illustrations, with no mention of other architectural services. The agreements and billing statements reflected that the buyers placed importance on the tangible illustrations, and the final products were used to promote projects, indicating that the illustrations were not merely incidental to the services provided.

The decision in this case is dictated by evidence that reflects that the architectural illustrations are the objects of the transactions between Sneary and the architectural firms.

Conclusion

The court affirmed the Administrative Hearing Commission's decision, concluding that the assessment of sales tax on Sneary's sales of architectural illustrations was appropriate.

The commission's decision upholding the director's assessment of sales tax is affirmed.

Who won?

Director of Revenue; the court upheld the assessment of sales tax, determining that the sales involved tangible personal property.

The director established its policy regarding architectural illustrations in 1985 when it assessed sales tax on their sale.

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