The Missouri Supreme Court affirmed a decision of the Administrative Hearing Commission (AHC) that a golf club’s gross receipts from its golf cart rentals were not subject to Missouri sales tax because the club paid sales tax on its purchases or leases of the golf carts and sales tax collection was not required on its subsequent golf cart rentals.

The Director of Revenue argued that §144.020.1(2), RSMo, governed this case because it levied “a tax equivalent to four percent of the amount paid for admission and seating accommodations, or fees paid to, or in any place of amusement.” A golf course is a “place of amusement.” Golfers paid fees for the use of carts. Therefore, the director argued that the taxpayer should have collected and remitted sales taxes on the fees charged for the use of the golf carts pursuant to §144.020.1(2). The taxpayer relied on §144.020.1(8) and a previous decision of the Missouri Supreme Court. In that decision, the court applied §144.020.1(8) to a similar situation in which the director assessed sales taxes against a private golf club’s rental of golf carts to its members. In that case, the court rejected the director’s argument that §144.020.1(2) applied and, instead, held that “section 144.020.1(8) is a more specific statute than section 144.020.1(2) in that it expressly deals with the lease or rental of personal property upon which sales tax has already been paid.” Thus, §144.020.1(8) was the applicable statute in this case. Applying §144.020.1(8) to the facts of this case demonstrated that the AHC reached the correct result. The taxpayer paid sales tax on its purchases or leases of golf carts prior to renting the carts to its customers. The fact that the taxpayer paid sales tax on its initial acquisitions of the golf carts meant that it was not required to collect sales tax on the subsequent rentals of those carts to its customers. Therefore, the taxpayer did not have to charge sales tax on cart rentals to its customers.

Alternatively, the director argued that the taxpayer did not rent golf carts and, instead, sold rounds of golf that included the use of golf cart. The director reasoned that if the taxpayer did not rent carts and simply sold rounds of golf, §144.020.1(8) was inapplicable. However, this argument failed because there was substantial evidence in the record supporting the AHC’s factual determination that the taxpayer rented golf carts. The taxpayer granted golfers the right to use its golf carts for a fee pursuant to certain terms and conditions. Each golfer’s receipt separately itemized the green fees and the golf cart rental. Although it was true that almost every golfer elected to use a cart, this fact did not alter the nature of the transaction. A mandatory rental was still a rental. Thus, the AHC’s finding that the taxpayer rented golf carts was supported by substantial evidence in the record.

Finally, the director argued that §144.020.1(8) did not apply because of the “boat and outboard motor” exception in the statute. This exception provides that the “rental or lease of boats and outboard motors” is never considered a “sale, charge, or fee to, for or in places of amusement” and that all such rentals shall be taxed under the provisions of the sales tax laws applicable to motor vehicles and trailers. However, the “boat and outboard motor” exception did not apply because the exception was merely intended to be sure that boats and outboard motors were taxed under the laws for motor vehicles and trailers. PF Golf, LLC v. Director of Revenue, Missouri Supreme Court, No. SC92663, July 16, 2013

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