Does a city have to collect sales tax on concessions it sells at its own city parks through its parks and recreation department, when all the proceeds benefit the city?

Plain-English summary

The Missouri Department of Revenue ruled that a city does not have to collect sales tax on concessions it sells at its own city parks through its parks and recreation department. The city asked because it runs a concession operation at the parks and wanted to confirm its tax obligations before continuing to sell.

The key facts were simple: the city sold the concessions itself (through its parks and recreation department), all of the proceeds from those sales were used solely for the benefit of the city, and the city had no revenue-sharing agreement with any outside party over those proceeds. Missouri generally taxes retail sales of tangible personal property, and normally there'd be no dispute that concessions (food, drinks, snacks, etc.) count as tangible personal property. But Missouri also has a specific exemption for admission, participation, and other fees or charges at places of amusement, entertainment, or recreation that are owned or operated by a municipality, as long as all the proceeds benefit that municipality.

The Department concluded that this municipal-recreation exemption in Section 144.030.2(17), RSMo, is broad enough to cover the city's concession sales — not just admission or entry fees — because the concessions were part of a place of recreation operated by the city and all proceeds benefited the city with no outside revenue split. The Department pointed to a 1992 administrative hearing decision, City of Jefferson v. Director of Revenue, as precedent for this reading, noting that an earlier contrary ruling had since been overturned by a legislative amendment to the statute.

What this means for you

Cities and municipal parks & recreation departments

If your city sells concessions (food, drinks, or similar items) directly at a city-owned park, pool, or recreational facility, and all the proceeds go to the municipality with no revenue-sharing arrangement, this ruling suggests those sales can fall under the Section 144.030.2(17) exemption for municipally-operated places of amusement or recreation. The exemption is not limited to ticket or admission charges — it can reach related sales like concessions when the facts line up this way.

Revenue-sharing arrangements matter

The ruling specifically noted that the city "has not entered into any revenue sharing agreements related to the proceeds of any of these sales." If a municipality contracts with a private concessionaire or splits proceeds with an outside vendor, the facts — and possibly the outcome — could be different. Municipalities structuring concession operations should keep the sales in-house and keep all proceeds within the municipality if they want to rely on this reasoning.

Accountants and tax professionals advising local governments

Note that the general rule is that sales tax exemptions are strictly construed against the taxpayer, with doubt resolved in favor of taxation. Here, the Department still found the exemption applied because the statutory text of Section 144.030.2(17) is specifically written for municipally-owned places of amusement, entertainment, or recreation, and case law (City of Jefferson) supported extending it to concession sales, not just admission fees.

Common questions

Q: Does this mean all city concession sales are automatically tax-exempt?
A: Not automatically — it depends on the facts. Here, the city itself operated the concessions at its own parks, and all proceeds benefited the city with no revenue-sharing agreement. Change those facts (for example, an outside vendor or a private revenue split) and the answer could differ.

Q: What statute creates this exemption?
A: Section 144.030.2(17), RSMo, exempts admission, participation, and other fees or charges at places of amusement, entertainment, or recreation owned or operated by a municipality or other political subdivision, where all the proceeds benefit the municipality or political subdivision.

Q: Can other Missouri cities or counties rely on this exact ruling?
A: No. This letter ruling is binding on the Department only as to the requesting Applicant (this particular city), and only for three years from its date, and only so long as the underlying facts and law don't change. Other municipalities cannot rely on it directly, though it illustrates how the Department reasons about similar facts.

Q: What was the "prior case holding the opposite" the ruling mentions?
A: The ruling notes that an earlier decision reached the opposite conclusion but was reversed by a legislative amendment to the statute. The Department relied on the current version of Section 144.030.2(17) and the City of Jefferson v. Director of Revenue decision interpreting it.

Citations and references

Statutes and regulations:

• Section 144.020.1, RSMo (imposition of sales tax on retail sales of tangible personal property)
• Section 144.010.1, RSMo (imposition of tax on the sale of tangible personal property)
• Section 144.030.2(17), RSMo (exemption for fees/charges at municipally-owned places of amusement, entertainment, or recreation where all proceeds benefit the municipality)
• Section 536.021.10, RSMo (statutory authority for letter rulings)
• 12 CSR 10-1.020 (letter ruling procedure)

Case law:

• City of Jefferson v. Director of Revenue, 1992 WL 390471 (Mo. Admin. Hearing Comm'n No. 92-000424RV)

Subject

Taxability of Concession Sales by Municipalities

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8364

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 16, 2025.

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

Applicant sells concessions at the city parks through its parks and recreation department.  All proceeds from sales are used solely for the benefit of the city. The city has not entered into any revenue sharing agreements related to the proceeds of any of these sales.

ISSUE:

Must sales tax be collected on sales of concessions sold by the city?

RESPONSE:

No. Sales tax need not be collected on sales of concessions sold by the city.

Section 144.020.1, RSMO, provides that "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."  Section 144.010.1, RSMo, also provides for the imposition of a tax on the sale of tangible personal property.

Sales of tangible personal property are subject to tax unless a specific exemption applies, and tax exemptions and exclusions are strictly construed against the taxpayer, with any doubt to be resolved in favor of the tax.

Section 144.030.2(17), RSMo, provides, that "all amounts paid or charged for admission or participation or other fees paid by or other charges to individuals in or for any place of amusement, entertainment or recreation, games or athletic events [...] owned or operated by a municipality or other political subdivision where all the proceeds derived therefrom benefit the municipality or other political subdivision [...]"  are not subject to sales taxes.

The exemption contained in Section 144.030.2(17) applies to all fees paid by individuals in a place of amusement and therefore exempts the city's sales of tangible personal property.  City of Jefferson v. Director of Revenue , 1992 WL 390471 (AHC No. 92-000424RV).  (A prior case holding the opposite was reversed by legislative amendment.)

Therefore, pursuant to Section 144.030.2(17), RSMo, sales tax need not be collected on proceeds of sales of concessions at city parks.

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