What does Missouri LR 8190 conclude about Tickets to Non-Profit Exhibition are Exempt from Sales Tax?

Plain-English summary

The Applicant partnered with a nonprofit, charitable organization to produce an art exhibition in a Missouri city. The Applicant acted as producer — handling marketing, production, staffing, box office, and the electronic ticketing system — while the nonprofit acted as presenter, helping book and promote the show. Under their arrangement, the Applicant processed and held all ticket sales until the exhibition ended, then transferred the funds to the nonprofit. The Applicant asked whether the exhibition tickets are exempt from Missouri sales tax under Section 144.030.2(19), RSMo.

The Department of Revenue answered yes, but with a condition attached. Missouri generally taxes amounts paid for admission to places of amusement, entertainment, or recreation under Section 144.020.1(2), RSMo. However, Section 144.030.2(19), RSMo exempts "all sales made by or to religious and charitable organizations and institutions in their religious, charitable or education functions and activities." Because the tickets here were being sold by, or on behalf of, an exempt charitable organization, the Department ruled that the tickets qualify for that exemption — but only if all the proceeds of the ticket sales are retained by the exempt charitable organization and used in its charitable or educational functions and activities.

In other words, the exemption isn't automatic just because a nonprofit is involved in an event. What matters is where the money actually ends up and what it's used for. The ruling also noted that the Applicant might host future exhibitions where the nonprofit itself acts as the ticket broker, processing and holding all ticket sales directly — the same proceeds-retention-and-use test would apply there too.

What this means for you

Event producers partnering with nonprofits

If you produce or co-produce an event with a charitable organization and route ticket revenue to that nonprofit, the tickets can be sales-tax exempt under Section 144.030.2(19), RSMo — but only if all of the proceeds actually flow to the nonprofit and are used for its charitable or educational purposes. If your contract lets you (the for-profit producer) keep a cut of ticket revenue as a fee or profit share, this ruling's reasoning would not support treating those tickets as exempt, since not "all the proceeds" would be retained by the exempt entity.

Nonprofit organizations and charitable presenters

This ruling confirms that tickets sold on your behalf, even by a commercial partner handling logistics and ticketing, can qualify for the charitable sales tax exemption, as long as your organization ultimately receives and uses all the ticket proceeds for your religious, charitable, or educational functions. Keep clear documentation of the final accounting and fund transfer to substantiate that "all the proceeds" reached the exempt organization.

Accountants and tax professionals

The holding hinges entirely on two facts: (1) the ticket seller is the exempt charitable organization or someone selling on its behalf, and (2) all proceeds are retained by that exempt entity and used in its exempt functions. Watch for arrangements where a for-profit producer retains any portion of ticket revenue as compensation — that would take the transaction outside the facts of this ruling and likely outside the exemption.

Common questions

Q: Does every ticket sold for a nonprofit event automatically qualify for the sales tax exemption?
A: No. Per this ruling, the exemption under Section 144.030.2(19), RSMo applies only if all the proceeds of ticket sales are retained by the exempt charitable organization and used in its religious, charitable, or educational functions and activities.

Q: Does it matter that a for-profit company (the Applicant) handled marketing, production, and ticketing?
A: Not by itself. The Department found the tickets were being sold "by, or on behalf of, an exempt charitable organization," so a commercial partner can handle logistics without disqualifying the exemption — as long as the proceeds ultimately go to the nonprofit for its exempt purposes.

Q: What happens if the facts change, for example if the nonprofit acts as ticket broker for future exhibitions instead?
A: The ruling notes this alternative arrangement and treats it the same way: the exemption still depends on whether all proceeds are retained and used by the exempt entity. Any material change in facts from what was presented, though, would render this specific ruling inapplicable to that new arrangement.

Q: How long can the Applicant rely on this ruling?
A: The ruling is binding on the Department only as to this Applicant, only for three years from its May 2, 2022 date, and only so long as the facts and the underlying law remain unchanged.

Citations and references

Statutes and regulations:

• Section 144.020.1, RSMo (imposition of sales tax on retail sales)
• Section 144.020.1(2), RSMo (tax on amounts paid for admission and seating accommodations)
• Section 144.030.2(19), RSMo (exemption for sales by/to religious and charitable organizations in their exempt functions)
• Section 536.021.10, RSMo (statutory authority for letter rulings)
• 12 CSR 10-1.020 (Department of Revenue letter ruling procedure)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8190

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 March 7, 2022.

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

Applicant partnered with a non-profit, charitable organization to host an art exhibition in a Missouri city. Applicant is the producer of the exhibition and the non-profit is the presenter of the exhibition. Applicant's responsibilities as the producer, as outlined by contact, are to provide and pay for the elements necessary to arrange for the creation, operations, and promotion of the art exhibition. These elements specifically include all marketing and promotion of the exhibition to ticket buyers during the term of this agreement. In addition, Applicant shall provide or arrange to provide the necessary production, sets, equipment, technical and management expertise, house staff, and box office services to ensure that the production and operation of the exhibition is carried out in an effective and efficient manner. Applicant is also responsible for making arrangements to have admission tickets for the exhibit made available to the public through the exhibition's designated electronic ticketing system. This includes processing and holding all ticket sales until the end of the art exhibition.  Upon final accounting of ticket sales, funds will be transferred to the non-profit to compensate for their role in the art exhibition. The non-profit's responsibilities as the presenter are to provide and pay for the elements necessary to arrange for the booking and promotion of the exhibition. These elements specifically include marketing, promoting, and advertising the exhibition.

Additionally, Applicant may host future exhibitions where the non-profit acts as the ticket broker and is responsible for processing and holding all ticket sales for the exhibition.

ISSUE :

Are the exhibition tickets exempt from sales tax under section 144.030.2(19), RSMo?

RESPONSE :

Yes.  The retail sale of exhibition tickets are sales tax exempt, only if all the proceeds of the ticket sales are retained by the exempt entity, and used as a part of the exempt entity's religious, charitable, or educational functions and activities.

Section 144.020.1, RSMo states:

"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..."

And specifically, in section 144.020.1(2), RSMo:

"A tax equivalent to four percent of the amount paid for admission and seating accommodations, or fees paid to, or in any place of amusements, entertainment or recreation, games and athletic events, except amounts paid for any instructional class;"

However, section 144.030.2(19), RSMo exempts:

"All sales made by or to religious and charitable organizations and institutions in their religious, charitable or education functions and activities..."

The tickets at issue in this letter ruling are being sold by, or on behalf of, an exempt charitable organization as contemplated by section 144.030.2(19). Therefore, if all the proceeds are retained by the exempt charitable organization and used in their charitable or educational functions and activities, the tickets are exempt from sales tax.

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 J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, (573)-751-0961.

Sincerely,

Wayne Wallingford