Are admission charges and food and drink sales on a Missouri River riverboat cruise subject to Nebraska sales and use tax, and how is the Nebraska share determined?

Plain-English summary

A riverboat cruising the Missouri River crosses back and forth over the Iowa-Nebraska line, which raises a "where did the sale happen?" question for tax. This ruling sorts out which of the boat's charges Nebraska can tax: admissions collected in Nebraska, and food and drink sold on the Nebraska side of the river.

The core holding: "Admissions and charges for food and drink collected on the Nebraska side of the Missouri River are subject to the Nebraska sales and use tax."

How the Department breaks it down:

• Admissions. Boarding charges for the cruise are admissions as defined in Nebraska Sales and Use Tax Regulation 1-44. All admissions collected in Nebraska (passengers boarding in Nebraska) are subject to Nebraska sales and use tax.
• Food and drink -- where the line is. Charges for food and drink made on the Nebraska side of the Iowa-Nebraska boundary are taxable. That boundary is the middle of the main channel of the Missouri River, fixed by the Iowa-Nebraska Boundary Compact (Laws 1943, c. 130, p. 434).
• When you can't tell which side. If there is no way to determine which food-and-drink sales were made in Nebraska, the operator makes an approximation: apply a percentage to all such sales based on the amount of time the boat is in Nebraska waters. That percentage determines the Nebraska-taxable share of the food-and-drink receipts.
• Bundled charges. If food and drink are included in the admission charge, the entire amount is subject to Nebraska sales and use tax.

What this means for you

Riverboat, dinner-cruise, and excursion operators

If passengers board in Nebraska, collect Nebraska tax on the admission. For onboard food and drink, tax the sales made while on the Nebraska side of the main channel; if you cannot separate them, use a time-in-Nebraska-waters percentage to approximate the taxable share. And if you sell an all-in ticket that bundles the meal into the admission, tax the whole ticket.

Any business operating across the Missouri River boundary

The ruling is a useful marker of where Nebraska's taxing line sits -- the middle of the main channel -- and of the Department's willingness to accept a reasonable time-based approximation when point-of-sale location cannot be pinned down.

Accountants and tax professionals

Two mechanics matter here: admissions are taxed based on where they are collected (Regulation 1-44), and mobile food-and-drink sales are sourced to the side of the channel where they occur, with a time-based proration allowed as a fallback. Because the ruling dates to 1977, confirm current sourcing rules and Regulation 1-44 before relying on it.

Common questions

Q: Is a riverboat cruise admission taxable in Nebraska?
A: Yes, if collected in Nebraska. Boarding charges are admissions under Regulation 1-44, and admissions collected in Nebraska are subject to Nebraska sales and use tax.

Q: How is onboard food and drink taxed when the boat crosses the state line?
A: Sales made on the Nebraska side of the main channel are taxable. If you cannot tell which sales were in Nebraska, approximate the taxable share using the percentage of time the boat spends in Nebraska waters.

Q: What if the meal is included in the ticket price?
A: Then the entire admission charge is subject to Nebraska sales and use tax.

Q: Where exactly is the Nebraska-Iowa line?
A: The middle of the main channel of the Missouri River, as fixed by the Iowa-Nebraska Boundary Compact (Laws 1943, c. 130, p. 434).

Citations and references

• Nebraska Revenue Ruling 01-77-7, "Sales and Use Tax -- Location of Sale" (Nebraska Department of Revenue, issued July 1977; approved by the State Tax Commissioner).
• Nebraska Sales and Use Tax Regulation 1-44 -- definition of taxable admissions.
• Iowa-Nebraska Boundary Compact, Laws 1943, c. 130, p. 434 -- the Nebraska-Iowa border is the middle of the main channel of the Missouri River.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr017707_location_of_sale.pdf

Source-quality note: This ruling survives only as a low-quality scan, and the machine-extracted text below has minor OCR artifacts (garbled headings and signature block). The holding, the Regulation 1-44 admissions rule, the main-channel boundary and Boundary Compact citation, the time-based approximation, and the bundled-charge rule are legible and are the basis for this summary.

Original ruling text

Revenue Ruling L-77-7

Sa1es and Use Tax - Location of SaIe. ADMISSIONS AND

CHARGES FOR FOOD AND DRINK COLI,ECTED ON THE NEBRASK.A SIDE OF
THE MTSSOURI RIVER ARE SUBJECT TO THE NEBRASKA SAI,ES AND USE

TAX.

Advice has been requested, concerning the applicable Nebraska
sales and, use tax to be charged on ríverboat cruises on the
Missourí Ríver. The taxpayer collect,s an admission from
passengers board,Íng in Nebraska and meals and drinks are
provid,ed while the boat is cruising on the Missouri River.
Board,ing charges collected for a riverboat cruise are
admissions as defined in Nebraska Sales and, Use Tax Regulation L-44. All such admissions collected Ín Nebraska are
subject to Nebraska sales and. use tax.

Charges f,or food and drink purchased on Èhe Nebraska side of
the boundary between lowa and Nebraska are subject, to
Nebraska sales and use tax. The Nebraska-Iowa border is the
midd,le of the main channel of the Missouri River (IowaNebraska Bound,ary Compact,, Laws L943t C. 130 p. 434). If
there is no way of determíning which sales are made in
Nebraska, an approximation should be mad,e with a percentage
applied. to all sales based, on the amount of Èime the boat is
in Nebraska waÈers. This approximation will determine the
amounË of the gross receipts from food and, d,rink which are
subject to Nebraska sales and use tax.

If food and, drink are included in the admissíon charge, the
entire amount is subject to Nebraska sales and use tax.
APPROVED:

am

¡t

State Tax Commissioner

ruly J.l

,

L977