Does a golf course have to collect sales tax when it rents out golf simulators it already paid sales tax on?

Plain-English summary

The Missouri Department of Revenue ruled that a golf course renting golf simulators to its patrons by the hour does not have to collect sales tax on those rental fees.

Missouri generally taxes retail sales of tangible personal property, and separately taxes fees paid for admission or use of places of amusement, entertainment, or recreation under Section 144.020.1(2), RSMo. But Section 144.020.1(8), RSMo carves out an exception: if a lessor already paid sales tax when it purchased or previously leased the property, it doesn't have to collect tax again when it turns around and rents that same property to someone else. Here, the golf course bought the simulators outright and paid sales tax at the time of purchase, so the "second round" of tax on the hourly rental receipts doesn't apply.

What this means for you

Businesses that rent out equipment they already own and paid tax on

If you paid Missouri sales tax when you bought equipment, and you now rent that same equipment to customers, Section 144.020.1(8), RSMo generally means you don't have to charge sales tax again on the rental fees. This applies broadly to tangible personal property rentals, not just recreational equipment -- but confirm your specific facts (that tax was actually paid at purchase, and that you're the same taxpayer doing the renting) match this ruling's fact pattern.

Golf courses, entertainment venues, and other recreation businesses

Recreational equipment rentals (like golf simulators, cart rentals, or similar amusement equipment) can otherwise fall under the admission/recreation-fee tax in Section 144.020.1(2), RSMo. But if you already paid sales tax buying the equipment, the previously-taxed-property exception in Section 144.020.1(8) can eliminate the need to also tax the rental income.

Accountants and tax professionals

This is a straightforward application of the "tax once" principle built into Section 144.020.1(8), RSMo -- confirm your client actually paid tax at acquisition (rather than claiming a resale or other exemption at purchase) before relying on this exception for rental income.

Common questions

Q: Does this mean rental income is never taxable in Missouri?
A: No. This exemption only applies when the lessor already paid sales tax (or use tax) on the property when it was purchased, leased, or rented. If a business bought equipment tax-free (for example, under a resale exemption) and then rents it out, the rental receipts would typically be taxable instead.

Q: Does this apply to other recreational equipment besides golf simulators?
A: The statute isn't limited to golf simulators -- it applies broadly to rentals of tangible personal property where tax was already paid at the time of purchase, lease, or rental. But this specific ruling only addresses golf simulators for this Applicant's facts.

Q: Can another golf course or recreation business rely on this ruling directly?
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 business should confirm its own purchase history and consult a tax professional.

Citations and references

Statutes:

• Section 144.020.1, RSMo (imposition of sales tax on retail sales of tangible personal property)
• Section 144.020.1(2), RSMo (tax on admission, seating, and fees for places of amusement or recreation)
• Section 144.020.1(8), RSMo (no tax on rental receipts if tax was already paid when the lessor purchased the property)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8342

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 January 3, 2025.

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

A pplicant is a golf course which rents golf simulators to its patrons by the hour.   It purchased the simulators itself and paid sales tax on the purchase at that time.

ISSUE:

Must Applicant collect sales tax on the proceeds of the rental of golf simulators to customers?

RESPONSE:

No. Sales tax need not be collected on the rental of the golf simulators.

Section 144.020.1, RSMo, provides : “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.”   In addition , Section 144.020.1(2) , RSMo, imposes a sales tax on fees paid for admission and seating or paid in any place of amusement or recreation, games, or sporting event.

Despite these broad impositions of sales tax, an exemption is created by subsection (8):

[…] [P]rovided 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. Section 144.020.1(8), RSMo.

In light of the above statutes and cases, no sales tax is due on the rental of the golf simulators in the context posed by your question.

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 Senior Counsel Kent L. Brown, General Counsel’s Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.

Sincerely,

Trish Vincent