My bakery charges admission for cookie-decorating classes at community events -- is that fee subject to Missouri sales tax?

Plain-English summary

The Missouri Department of Revenue ruled that a bakery's cookie-decorating classes, held at community events at local venues, qualify as exempt "instructional classes" -- so the admission fees Applicant charges for them are not subject to Missouri sales tax.

Applicant is a bakery that makes decorative cookies and occasionally hosts cookie-decorating classes at community events. Applicant charges an admission fee for the classes and supplies all of the materials used. During each class, one of Applicant's employees teaches participants complex cookie-decorating techniques, using visual aids to walk them through the steps.

Section 144.020.1(2), RSMo, generally taxes "amounts paid for admission and seating accommodations, or fees paid to, or in any place of amusement, entertainment or recreation, games and athletic events" at 4%, but it expressly excepts "amounts paid for any instructional class." Section 144.010.1(5), RSMo, defines an "instructional class" as "any class, lesson, or instruction intended or used for teaching." Because Applicant's classes provide specific instruction on cookie-decorating technique -- not just entry to a recreational or amusement activity -- the Department concluded they are "instructional classes" under Section 144.010.1(5), RSMo, and the admission fees are therefore excepted from the tax imposed by Section 144.020.1(2), RSMo.

What this means for you

Bakeries and other food businesses offering hands-on classes

If your bakery or food business charges an admission or entry fee for a hands-on class where an instructor actively teaches participants a technique step-by-step -- such as cookie decorating -- that fee can qualify as payment for an "instructional class" under Section 144.010.1(5), RSMo, and fall outside the sales tax that otherwise applies to admission fees under Section 144.020.1(2), RSMo. The key facts here were that Applicant's employee taught specific techniques using visual aids and provided all the materials, rather than simply granting access to an activity or space.

Craft studios, hobby shops, and event venues hosting workshops

This ruling's reasoning is not limited to baking. Any business charging admission for a genuine instructional workshop -- where someone actively teaches a skill or technique to participants -- may be able to treat that fee as exempt under the same "instructional class" exception. The distinction the Department draws is between teaching a skill (exempt) and merely charging for entertainment, recreation, or amusement access (taxable). Venues hosting third-party instructors should confirm the class itself, not just the venue rental, is what the admission fee pays for.

Small-business owners charging admission for classes at community events

Occasional or pop-up classes held at community events, rather than at a fixed studio location, are treated the same way as classes held at a permanent business location -- what matters is the instructional nature of the class, not where or how often it's offered.

Common questions

Q: Does it matter that Applicant only holds these classes occasionally, at community events rather than a permanent studio?
A: No. The ruling does not turn on the frequency or location of the classes. What matters is that each session is genuine instruction -- an employee teaching participants specific techniques step-by-step -- rather than a fee for mere admission to an amusement or recreational activity.

Q: Would the answer change if Applicant just let people decorate cookies on their own, without any teaching?
A: Likely yes. The exemption in Section 144.010.1(5), RSMo, applies to a "class, lesson, or instruction intended or used for teaching." If participants simply paid to use materials and decorate cookies without an employee actively teaching techniques, the fee would look more like a fee for a recreational or amusement activity taxable under Section 144.020.1(2), RSMo, rather than an instructional class.

Q: Does it matter that Applicant provides all the materials and charges one combined admission fee?
A: The ruling doesn't separately break out a materials charge -- it treats the entire admission fee as payment for the instructional class because the class itself (the teaching) is the substance of what's being sold, with materials included as part of that instruction.

Q: Can another bakery or business rely on this ruling directly?
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 remain unchanged. A similar business should confirm its classes genuinely involve step-by-step instruction by an employee, and consult a tax professional before relying on this result.

Citations and references

Statutes and cases:

• Section 144.020.1(2), RSMo (taxes admission and seating fees paid to places of amusement, entertainment, or recreation, except amounts paid for an instructional class)
• Section 144.010.1(5), RSMo (defines "instructional class" as any class, lesson, or instruction intended or used for teaching)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8265

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 June 27, 2023.

The facts as presented in your letter ruling request and subsequent phone call are summarized as follows:

Applicant is a bakery that makes various food items including decorative cookies. Occasionally, Applicant will host cookie decorating classes. These classes take place during community events at local venues. Applicant charges a fee for entry into their cookie decorating classes, and all materials used in the class are paid for and provided by Applicant. During the classes, one of Applicant's employees teaches participants how to do complex cookie decoration techniques. The leader of the class uses visual aids to show the participants step-by-step how to decorate the cookies.

ISSUE :

Are the admission fees charged for Applicant's cookie decoration classes subject to sales tax?

RESPONSE :

No. The admission fees charged for Applicant's cookie decoration classes are not subject to sales tax.

Section 144.020.1(2), RSMo, provides:

A tax is hereby levied and imposed for the privilege of titling new and used motor vehicles, trailers, boats, and outboard motors purchased or acquired for use on the highways or waters of this state which are required to be titled under the laws of the state of Missouri and, except as provided in subdivision (9) of this subsection, 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.  The rate of tax shall be as follows:

(2): [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, entertainment or recreation, games and athletic events, except amounts paid for any instructional class[.]

Section 144.010.1(5), RSMo, defines 'instructional class' as:

[...] any class, lesson, or instruction intended or used for teaching [.]

Applicant's cookie decorating classes provide specific instructions to their participants on how to decorate the cookies. Therefore, the cookie decorating classes qualify as 'instructional classes' per section 144.010.1(5), RSMo, and so are not subject to tax pursuant to section 144.020.1(2), RSMo.

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

Sincerely,

Wayne Wallingford