Does a sports complex owe sales tax on rental fees it charges teams to use the fields, on top of spectator admission?

Plain-English summary

The Missouri Department of Revenue ruled that a baseball field complex's fees charged to teams and organizations for using the fields for practices, games, and events are subject to Missouri sales tax, just like the spectator admission fees the complex already correctly taxed.

Section 144.020.1(2), RSMo imposes a four percent tax on "amounts paid for admission and seating accommodations, or fees paid to, or in any place of amusement, entertainment or recreation, games, and athletic events," with an exception only for genuine instructional classes. The Department read this language broadly: it covers not just spectator tickets, but any fee paid to or in an establishment for games and athletic events -- including the rental fee teams and organizations pay to use the complex's fields. The Department relied on the Missouri Supreme Court's decision in Blue Springs Bowl v. Spradling, which held that this statutory language "is not limited or qualified in any way" and "says nothing about excluding therefrom any fees paid for participating in sports or events" at such establishments.

What this means for you

Sports facility and complex operators

If you charge fees to teams, leagues, or organizations to rent your fields, courts, or facilities for games, practices, or events -- not just admission fees to spectators -- both types of fees are generally taxable under Missouri's broad "place of amusement, entertainment or recreation" tax. Charging tax only on spectator tickets while leaving team rental fees untaxed would likely be incomplete.

Youth sports leagues, teams, and organizations renting facilities

Expect sales tax to apply to facility rental fees your team or league pays for practices, games, and events at a Missouri sports complex, in addition to any spectator admission charges collected separately.

Accountants and tax professionals serving recreation/sports facilities

Section 144.020.1(2), RSMo's broad language, as construed in Blue Springs Bowl, reaches essentially all fees paid to or in a place of amusement or athletic events -- don't assume a fee is exempt just because it's paid by a participating organization rather than a spectator. The one carved-out exception noted in the statute is genuine instructional classes.

Common questions

Q: Is only spectator admission taxable, or are facility rental fees taxable too?
A: Both. The statute taxes fees "paid to, or in" a place of amusement or athletic events broadly -- it doesn't distinguish between a spectator's admission ticket and an organization's fee to rent the field itself.

Q: Are there any exceptions to this tax for sports facilities?
A: Section 144.020.1(2), RSMo excepts "amounts paid for any instructional class." Genuine instructional classes may be treated differently, but general practice, game, and event rental fees are not.

Q: Can another sports facility rely on this ruling to determine its own tax obligations?
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 facility should apply Section 144.020.1(2), RSMo and the Blue Springs Bowl precedent to its own specific fee structure, or consult a tax professional.

Citations and references

Statutes and cases:

• Section 144.020.1, RSMo (imposition of sales tax on retail sales and taxable services)
• Section 144.020.1(2), RSMo (four percent tax on admission, seating, and fees paid at a place of amusement, entertainment, or recreation)
• Blue Springs Bowl v. Spradling, 551 S.W.2d 596 (Mo. 1977)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8314

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 July 2, 2024.

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

Applicant manages and oversees a baseball field complex where they charge teams and organizations to use the fields for practices, games, and events. Applicant already charges sales tax on admission to the facility for spectators for the practices and games.

ISSUE :

A re Applicant’s charges to teams and organizations for the use of their baseball fields for practices, games, and events subject to Missouri sales tax?

RESPONSE :

Yes. Applicant’s charges to teams and organizations for the use of their baseball fields for practices, games, and events are subject to Missouri sales tax.

Section 144.020.1, RSMo, imposes a sales tax upon all sellers engaging in the business of selling tangible personal property or rendering taxable service at retail in this state.

Section 144.020.1(2), RSMo, provides:

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[.]

Applicant already correctly charges sales tax on the admission to their facility in accordance with the statute. Additionally, the charges paid to the Applicant for the rental of their facility is considered a fee paid to a place of games and athletic events. Therefore, they should charge sales tax on the rental fee.

‘…the sales tax also is imposed on such other fees paid to or in such establishments. That simple general language is not limited or qualified in any way. It applies to all such fees paid to or in such establishments. It says nothing about excluding therefrom any fees paid for participating in sports or events in said establishments.’ Blue Springs Bowl v. Spradling , 551 S.W.2d 596 (Mo., 1977).

As the Supreme Court observes in Blue Springs , these types of fees are not limited or qualified in any way. Applicant is an establishment for games and athletic events, and the organizations renting it for games, practices, and events pay a fee to Applicant as required by the statute.

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

Sincerely,

Wayne Wallingford