My venue collects ticket money for touring performers who rent our space, and we agreed they'd handle the sales tax -- am I still responsible for collecting it at the point of sale?

Plain-English summary

The Missouri Department of Revenue ruled on who is responsible for collecting sales tax on ticket sales at an entertainment venue that hosts touring musical groups, and found that the venue -- not the touring groups -- must collect the tax, despite a private agreement assigning remittance responsibility to the groups.

Applicant is an entertainment performance venue in Missouri that hosts music concerts and variety shows. Two musical entertainment groups rent and perform at the venue at different times. Under their agreement, the groups are responsible for reporting and remitting sales tax to the Department, and they report all admission revenue on their own financial statements and income tax returns. Operationally, though, Applicant collects and deposits all admission revenue from ticket sales -- cash, credit card, and check -- into its own bank account, then transfers 100% of that revenue to the groups' bank accounts. (The groups separately collect and deposit revenue from vouchers and other group sales directly into their own accounts.)

Under Section 144.020.1(2), RSMo, Missouri taxes amounts paid for admission and seating at places of amusement, entertainment, or recreation. Section 144.010.1(13)(a), RSMo, defines a "sale at retail" to include sales of admission tickets and cash admissions to such places. Section 144.021, RSMo, places the primary tax burden on the seller actually making the taxable sale. Because Applicant is the one collecting the money directly from ticket buyers -- even though it later transfers all of that revenue to the groups -- Applicant is acting as the seller for purposes of the ticket sales, and the private agreement about who ultimately reports and remits the tax doesn't change who must collect it at the point of sale. Applicant must therefore collect sales tax on its ticket sales, while the musical entertainment groups remain responsible for remitting that tax to the Department.

What this means for you

Venues renting space to touring performers

If your venue collects ticket-sale revenue on behalf of performers or promoters who rent your space -- even if you deposit that money into your own account only briefly before transferring it to them -- you are the one who must collect Missouri sales tax on those ticket sales. An internal agreement that shifts remittance duties to the performers does not relieve you of the collection duty at the point of sale, because the statute looks at who actually collects money from the ticket buyer, not who keeps the revenue afterward.

Performers and promoters relying on a venue to collect

If you rent a venue and have it handle your ticket sales, you can agree that the venue will collect sales tax and that you will remit it to the Department, as happened in this ruling. But make sure that division of labor is followed in practice and documented, since the Department will still look to whoever is actually collecting the ticket money as the party responsible for collecting the tax in the first place.

Accountants and tax professionals

The key fact in this ruling is the flow of funds, not the private contract terms. Because Applicant collected 100% of ticket revenue directly from buyers before transferring it onward, it was treated as the seller responsible for collecting sales tax under Section 144.021, RSMo, regardless of the agreement's language assigning remittance to the touring groups. When reviewing similar venue-and-performer arrangements, trace who physically collects payment from the end customer -- that is generally who bears the collection duty.

Common questions

Q: Can a private contract override who has to collect sales tax?
A: No. Even though Applicant and the musical entertainment groups agreed that the groups would be responsible for reporting and remitting sales tax, Missouri law under Section 144.021, RSMo, places the collection duty on the seller actually making the taxable sale. A private agreement can allocate remittance responsibilities between the parties, but it doesn't change who the Department looks to for collecting the tax at the point of sale.

Q: Does it matter that Applicant transferred 100% of the ticket revenue to the touring groups and kept none of it?
A: No. The ruling notes that all proceeds of Applicant's ticket sales were transferred to the groups' bank account, but that didn't change the outcome -- Applicant was still the one collecting the money from ticket buyers, so it was responsible for collecting the sales tax, even though it acted essentially on behalf of the groups.

Q: Is renting a venue for a performance itself a taxable "sale," or is it just the ticket sales that are taxed?
A: This ruling addresses ticket sales specifically. Under Section 144.020.1(2), RSMo, and Section 144.010.1(13)(a), RSMo, amounts paid for admission and seating at a place of amusement -- like concert or show tickets -- are taxable retail sales. The ruling doesn't address the rental payment between the venue and the performing groups.

Q: Can another entertainment venue rely on this ruling for its own ticket sales arrangement?
A: Not automatically. A Missouri letter ruling binds the Department only as to the requesting Applicant, only for three years from its date, and only so long as the facts and law don't change. A venue with a similar arrangement should confirm its facts match and consult a tax professional before relying on this result.

Citations and references

Statutes and cases:

• Section 144.020.1(2), RSMo (imposes sales tax on amounts paid for admission and seating at places of amusement, entertainment, or recreation)
• Section 144.010.1(13)(a), RSMo (defines 'sale at retail' to include sales of admission tickets and cash admissions to places of amusement, entertainment, and recreation)
• Section 144.021, RSMo (places the primary tax burden on the seller making the taxable sale)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8278

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 October 12, 2023.

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

Applicant is an entertainment performance venue in Missouri which hosts music concerts and variety shows. Two musical entertainment groups will rent and perform at the theatre at different times. According to an agreement between Applicant and the musical entertainment groups, the groups will be responsible for reporting and remitting sales tax to the Department. The Groups will pay rent to Applicant, which will include the cost of personnel services. Applicant will collect and deposit into Applicant's bank account all admission revenue received from its ticket sales, including monies from credit cards, cash, and checks. Applicant will transfer 100% of the revenue it receives to the musical entertainment groups' bank accounts. The musical entertainment groups will collect and deposit to its bank account all of the admission revenue it receives from vouchers and other group sales. The musical entertainment groups will report all admission revenue on its financial statements and income tax returns.

ISSUE:

Is Applicant responsible for collecting sales tax on its ticket sales?

RESPONSE:

Yes. Applicant is responsible for collecting sales tax on its ticket sales. The musical entertainment groups are responsible for remitting the sales tax to the Department of Revenue.

Section 144.020.1(2), RSMo, imposes a tax upon "...the amount paid for admission and seating accommodations, or fees paid to, or in any place of amusement, entertainment or recreation, games and athletic events, except amounts paid for any instructional class."

Under Section 144.010.1(13)(a), RSMo, a "sale at retail" includes "[s]ales of admission tickets, cash admissions, charges and fees to or in places of amusement, entertainment and recreation, games and athletic events, except amounts paid for any instructional class."

Section 144.021, RSMo, provides in relevant part: "...the primary tax burden is placed upon the seller making the taxable sales of property or service and is levied at the rate provided for in section 144.020."

Applicant is renting its facility to the musical entertainment groups and providing the service of selling tickets. The facility is a place of amusement and sales for admission are subject to sales tax. All the proceeds of Applicant's ticket sales are transferred to the musical entertainment groups' bank account. Applicant is acting on behalf of the musical entertainment groups. Therefore, Applicant should collect sales tax on its sales of tickets. The musical entertainment groups should remit to the Department of Revenue sales tax on all sales of tickets.

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 65105­0475 (phone 573­751­0961), or me.

Sincerely,

Wayne Wallingford