December 14, 2007
This is a letter ruling issued by the Director of Revenue pursuant to Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated October 31, 2007.
The facts as you presented them in your letter are summarized as follows:
You represent Applicant. Applicant is in the business of selling event tickets, primarily to sporting events located within and outside of Missouri. Applicant plans to sell its own inventory, and inventory obtained by consignment, from its retail location outside Missouri and through the Internet. Pursuant to Section 67.306, RSMo, Applicant will charge the customer the face value of each ticket plus an additional amount to be determined.
Does Missouri sales tax apply to the difference between the sales price charged by Applicant and the face value of the ticket if the transaction occurs in Missouri?
No, only gross receipts received by Missouri places of amusement or entertainment presenting the sporting or entertainment events are subject to Missouri sales tax. The sponsor or owner of the place of amusement is the party responsible for tax on his gross receipts. Persons reselling tickets are not subject to the sales tax.
Missouri sales tax is imposed upon the privilege of making sales of tangible personal property or rendering a taxable service at retail in this state. Section 144.020, RSMo. The tax rate on retail sales of tangible personal property is set forth in Section 144.020.1(1). The tax rates for taxable services are set forth in paragraphs (2) through (8) of Section 144.020.1.
Section 144.020.1(2) imposes the sales tax on “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.” The admission fee to a place of amusement or entertainment is not paid as a result of a sale of tangible personal property, but to compensate the seller for providing the taxable service. A ticket represents the right to receive the service included in the provision of the entertainment and has no value independent of the customer’s permission to enter the place of amusement or entertainment.
The sellers of the taxable services are the promoters or persons operating the places of amusement or entertainment that put on the sporting events or entertainment events. These sellers should collect state and local sales tax on their ticket receipts. The ticket receipts are the gross amounts actually received by the places of amusement or entertainment and not the price that is printed on the ticket.
Section 67.306 states that no city, county, or political subdivision may prohibit the sale or resale of an admission ticket at any price. Applicant may therefore resell the tickets for more than it paid for the tickets. Any additional amounts over the face value of the tickets charged and retained by Applicant are not paid to the place of amusement and would not be subject to sales tax.
However, on consignment sales where the promoters or persons operating the places of amusement or entertainment receive the full amount of the price charged the customers, the persons operating the places of amusement or entertainment are responsible for Missouri sales tax on the total gross receipts received from the sales, including any amounts above the face value of the tickets.
Does it matter whether the sale of the ticket to a Missouri event occurs in Missouri or in another state?
No, it does not matter where the sale of the ticket occurs.
The admission fee to a place of amusement or entertainment is not paid as a result of a sale of tangible personal property, but to compensate the seller for providing the taxable amusement or entertainment service. The ticket only represents a receipt for the right to receive the service. Admission to the place of amusement or entertainment is the taxable event and the sales tax is incurred at the Missouri location where the promoter or operator of the place of amusement provides the amusement or entertainment.
As explained in Response 1, Missouri sales tax applies to the gross receipts received by the promoter or operator of the Missouri place of amusement or entertainment. The additional amounts above the face value of the ticket charged and retained by Applicant are not subject to sales tax whether the ticket is sold in Missouri or another state.
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 Ron Clements, Office of General Counsel, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.
Julie A. Allen, CPA, PMP