Does a city owe sales tax on concessions at its aquatics center and merchandise sales at its municipal golf course?

Plain-English summary

The Missouri Department of Revenue ruled that a municipality's sales of concessions at its city aquatics center and Parks and Recreation Department events, plus its merchandise sales (like t-shirts) at its municipal golf course, are not subject to sales tax. All of these venues are owned and operated by the city, and every dollar of proceeds benefits the city itself, with no revenue-sharing agreements with any outside party.

The Department grounded this in two overlapping sources. First, Section 144.030.2(17), RSMo exempts fees and charges "paid by or for any place of amusement, entertainment or recreation, games, or athletic events" owned or operated by a municipality where all proceeds benefit the municipality -- and the Department has read this to cover related tangible-personal-property sales like concessions and merchandise, not just admission tickets, citing City of Jefferson v. Director of Revenue. Second, and distinctively in this ruling, the Department also invoked the Missouri Constitution itself, Article 3, Section 39(10), which bars the General Assembly from imposing a sales or use tax on property "paid for out of the funds of any county or other political subdivision" -- an independent constitutional layer supporting the same exempt result for a municipality's own purchases and sales.

What this means for you

Cities and municipalities running recreational facilities and golf courses

If your municipality owns and operates a facility like an aquatics center, community center, or golf course, and all concession and merchandise proceeds stay with the municipality (no private vendor or revenue-share arrangement), this ruling supports treating those sales as exempt under Section 144.030.2(17), RSMo -- and this specific ruling adds Missouri's own constitutional provision (Mo. Const. Art. 3, § 39(10)) as further support, on top of the statutory exemption.

Golf course and recreation-facility managers within city government

The exemption doesn't stop at admission fees -- it extends to merchandise sales (like the golf course's t-shirts) and concessions, as long as the municipality itself owns/operates the venue and keeps all the proceeds.

Private concessionaires and merchandise vendors partnering with municipalities

This exemption turns specifically on municipal ownership, operation, and exclusive benefit of proceeds. If a private company runs the concession stand or golf shop, or shares revenue with the city, the facts -- and likely the result -- would differ. This ruling does not address that scenario.

Common questions

Q: Are all sales at a city-owned facility automatically exempt from Missouri sales tax?
A: Not automatically. This ruling turned on specific facts: the city owned and operated the aquatics center, recreation events, and golf course, all proceeds benefited the city, and there was no revenue-sharing agreement with any other party. A different arrangement (for example, a private concessionaire keeping a cut) could produce a different result.

Q: Does the exemption cover merchandise sales, not just admission or concessions?
A: Yes, in this ruling -- the golf course's t-shirt sales were included in the exemption alongside aquatics-center concessions and recreation-event sales, because all were city-owned, city-operated, and benefited only the city.

Q: Why does the ruling cite the Missouri Constitution in addition to a statute?
A: The Department noted that the Missouri Constitution, Article 3, Section 39(10), independently bars the state from taxing purchases paid for out of a political subdivision's own funds -- giving this municipal-sales exemption a constitutional backstop alongside the statutory exemption in Section 144.030.2(17), RSMo.

Q: Can another municipality rely on this ruling for its own recreational facility sales?
A: No. A Missouri letter ruling binds the Department only as to the requesting Applicant, only for three years, and only while the facts and law don't change. Another municipality should confirm its own ownership, operation, and no-revenue-sharing facts match this pattern.

Citations and references

Statutes, constitutional provisions, and cases:

• Section 144.020.1, RSMo (imposition of sales tax on retail sales of tangible personal property)
• Section 144.010.1, RSMo (imposition of sales tax on tangible personal property)
• Section 144.020.1(2), RSMo (tax on fees for admission and places of amusement or recreation)
• Mo. Const. Art. 3, § 39(10) (bar on taxing purchases paid for out of county/political subdivision funds)
• Section 144.030.2(17), RSMo (exemption for municipally owned places of amusement, entertainment, or recreation where proceeds benefit the municipality)
• City of Jefferson v. Director of Revenue, 1992 WL 390471 (AHC No. 92-000424RV)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8338

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 December 3, 2024.

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

Applicant sells concessions at the city aquatics center and various recreational events sponsored by the city's Parks and Recreation Department.  In addition, the city sells merchandise, such as t-shirts, at the municipal golf course.  All proceeds of sales are for city benefit.  The city has not entered into any revenue sharing agreements related any of these sales.

ISSUE:
Must sales tax be collected on sales of concessions and other items sold by the city?

RESPONSE:
No. Sales tax need not be collected on sales of concessions and other items sold by the city.

Section 144.020.1, RSMo, provides: "A tax is hereby levied and imposed [...] upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this     state."  Section 144.010.1, RSMo, also provides for the imposition of a tax on the sale of tangible personal property.

Sales of tangible personal property are subject to tax unless a specific exemption applies, and tax exemptions and exclusions are strictly construed against the taxpayer, with any doubt to be resolved in favor of the tax.

Section 144.020.1(2), RSMo, imposes a sales tax on fees paid for admission and seating or paid in any place of amusement or recreation, games, or sporting event.

The Missouri Constitution, however, provides that the general assembly shall not have power to impose a sales or use tax upon the use, purchase or acquisition of property paid for out of the funds of any county or other political subdivision.  Mo. Const. Art. 3, § 39 (10).

Section 144.030.2(17), RSMo, provides, that:
[A]ll amounts paid or charged for admission or participation or other fees paid by or other charges to individuals in or for any place of amusement, entertainment or recreation, games, or athletic events ... owned or operated by a municipality or other political subdivision where all the proceeds derived therefrom benefit the municipality or other political subdivision ... [are not subject to sales taxes.]

The exemption contained in Section 144.030.2(17), RSMo, applies to all fees paid by individuals in a place of amusement and therefore exempts the Applicant's sales of tangible personal property.  City of Jefferson v. Director of Revenue , 1992 WL 390471 (AHC No. 92-000424RV).

Therefore, pursuant to the Missouri Constitution and Section 144.030.2, RSMo, sales tax need not be collected on proceeds of sales of concessions at Applicant' sporting events.

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 Senior Counsel Kent L. Brown, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.

Sincerely,

Trish Vincent