What does Missouri LR 8187 conclude about Marina Boat Space Rental Fees are Subject to Sales Tax?

Plain-English summary

The Missouri Department of Revenue ruled that a marina's receipts from renting out floating boat dock space are subject to Missouri sales tax. The Applicant in this case rented floating dock space to boaters on a daily, weekly, monthly, or annual basis, and had bought the docks themselves from the marina's previous operator without paying sales tax on that purchase.

The Department's reasoning rests on Section 144.020.1(8), RSMo, which taxes the rental or lease of tangible personal property at 4%, unless the person renting it out already paid sales tax when they originally purchased the property. The key legal step is that floating boat docks count as tangible personal property rather than real estate, based on the Missouri Administrative Hearing Commission's decision in Siverly v. Director of Revenue. Because the Applicant did not pay sales tax when it bought the docks, it cannot claim the "already taxed" exception, and it must collect and remit sales tax on the rental income it receives from boaters renting the dock spaces.

The ruling is narrow and fact-specific: it turns on the fact that no sales tax was ever paid on the docks themselves. The letter notes that if the facts change, the ruling no longer applies.

What this means for you

Marina operators and dock owners

If you rent out floating boat dock space and did not pay Missouri sales tax when you purchased the docks, this ruling indicates that your rental receipts are subject to the 4% sales tax under Section 144.020.1(8), RSMo. The classification of floating docks as tangible personal property (not real property) is the crux of the analysis — it's why "rental of tangible personal property" tax rules apply rather than any real-estate leasing treatment.

Marinas that did pay tax on their docks

The statute cited contains a "no double tax" exception: if the lessor already paid sales tax at the time it purchased, leased, or rented the tangible personal property, it does not have to also collect tax on the subsequent rental receipts from that same property. This ruling does not apply to a marina in that situation — but that marina should be able to document that the sales tax was paid up front on the docks.

Accountants and tax professionals

This letter ruling is a useful data point on how the Department treats floating dock/marina rental fees, but it is binding only as to this specific Applicant, only for three years from its March 25, 2022 date, and only while the facts and law remain the same. Confirm your client's purchase history for the docks (was sales tax paid on acquisition?) before applying this reasoning, and watch for any change in the underlying statute, regulation, or the Siverly precedent.

Common questions

Q: Why are boat dock rental fees treated like tangible personal property rentals instead of real estate rentals?
A: The ruling relies on Siverly v. Director of Revenue (Mo. Admin. Hearing Comm'n 2014), which held that floating boat docks are tangible personal property for sales tax purposes, not real property. That classification triggers the tangible personal property rental tax under Section 144.020.1(8), RSMo, rather than treating the arrangement as a real estate lease (which is generally not subject to Missouri sales tax).

Q: Does this mean all marina rental fees are automatically taxable in Missouri?
A: Under this ruling's facts, yes for this Applicant — because it never paid sales tax on the docks when it purchased them. But Section 144.020.1(8), RSMo, has a built-in exception: if the lessor already paid sales tax when purchasing, leasing, or renting the property, it does not have to collect tax again on the rental receipts. A marina that paid tax on its docks at purchase could reach a different result.

Q: Can another marina rely on this letter ruling?
A: No. As stated in the ruling itself, it binds the Department only as to the requesting Applicant, only for three years from the March 25, 2022 date of the letter, and only so long as the facts and law remain unchanged. Other marina operators would need their own ruling request or should consult a Missouri tax professional about their specific facts.

Q: What rate applies?
A: The ruling cites the 4% rate under Section 144.020.1(8), RSMo, for rental or lease of tangible personal property (state-level rate; applicable local sales taxes would be additional, though the letter itself does not address local tax).

Citations and references

Statutes, regulations, and cases:

• Section 144.020.1, RSMo (imposition of sales tax on tangible personal property and certain enumerated services)
• Section 144.020.1(8), RSMo (4% tax on rental/lease of tangible personal property, with exception where tax was already paid on purchase, lease, or rental)
• 12 CSR 10-108.700 (rental/lease of tangible personal property)
• Siverly v. Director of Revenue, Case No. 11-1431 RS (Mo. Admin. Hearing Comm'n, May 13, 2014) (floating boat docks are tangible personal property)
• Section 536.021.10, RSMo, and 12 CSR 10-1.020 (letter ruling procedure and binding effect)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8187

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 February 12, 2022.

The facts as presented in your letter ruling request and a discussion with Legal Counsel Stephen S. Krogmeier are summarized as follows:

Applicant rents floating dock space on a daily, weekly, monthly, or annual basis for boaters.  Applicant purchased the floating docks from the former operator of the marina.  No sales tax was paid on that purchase.

ISSUE:

Are Applicant's receipts from the rental of boat spaces at the marina subject to Missouri sales tax?

RESPONSE:

Yes.  Applicant's receipts from the rental of boat spaces at the marina are subject to Missouri sales tax.

Section 144.020.1, RSMo, imposes a sales tax on sales of tangible personal property and certain enumerated services.  Section 144.020.1(8), RSMo, provides:

A tax equivalent to four percent of the amount paid or charged for rental or lease of tangible personal property, provided that if the lessor or renter of any tangible personal property had previously purchased the property under the conditions of sale at retail or leased or rented the property and the tax was paid at the time of purchase, lease or rental, the lessor, sublessor, renter or subrenter shall not apply or collect the tax on the subsequent lease, sublease, rental or subrental receipts from that property.

For the purpose of sales tax, floating boat docks are tangible personal property.  See Siverly v. Director of Revenue , Case No. 11-1431 RS (Mo. Admin. Hearing Comm'n, May 13, 2014).  Payments for the lease of tangible personal property are subject to tax unless the lessor paid tax on the purchase of the property.  Section 144.020.1(8), RSMo; 12 CSR 10-108.700.  Here, the lessor did not pay tax on the purchase of the property.  Therefore, the lessor must remit sales tax for its receipts from the rental of boat spaces at the marina.

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 Legal Counsel Stephen S. Krogmeier, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, (573)-751-0961.

Sincerely,

Wayne Wallingford