LR 8181
Wine Club Digital Memberships are Subject to Sales Tax
January 28, 2022
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 December 13, 2021.
The facts as presented in your letter ruling request and a review of your website are summarized as follows:
Applicant sells wine and other liquor at retail. Applicant also sells foods that can be eaten with the purchased wine, beer and other liquors. Applicant hosts wine tasting events for individuals to taste the various wines Applicant sells. Individuals may purchase wine, spirits, and beer by the glass, bottle, or by the case.
Along with its wine sales, Applicant offers various clubs (Club) individuals may enroll in, which allows them to receive various benefits. The clubs are Flagship, Cellar, Luxe, Tasting, Case, Spirits, and Digital. Individuals pay a monthly fee and after joining, a Club member can receive bottles of wine, discounted wine tastings, discounts on cases of wine, discounted appetizers, a complimentary tasting on the member's birthday, invitations to Applicant's Oktoberfest, discounted admissions to other Applicant events, and membership in Applicant's Digital Plus Club (Digital Club).
Applicant offers a Digital Club which individuals may join for a monthly fee. Joining the Digital Club provides members a library of electronic materials on wine, cooking, reviews, travel tips, special offers, business and personal development resources, and discounts from Applicant's affiliate partners. If an individual joins one of Applicant's other clubs, access to the Digital Club is free and included in the other club memberships.
ISSUE:
Are Applicant's digital memberships subject to Missouri state and local sales tax?
RESPONSE:
Yes. Applicant's digital memberships are subject to Missouri state and local sales tax.
Section 144.020.1, RSMo, imposes a sales tax on sales of tangible personal property and certain enumerated services. Section 144.021.1, RSMo, provides "[t]he purpose and intent of sections 144.010 to 144.510 is to impose a tax upon the privilege of engaging in the business, in this state, of selling tangible personal property and those services listed in section 144.020[.]" Section 144.010.1(4), RSMo defines "Gross Receipts" as:
The total amount of the sale price of the sales at retail including any services other than charges incident to the extension of credit that are a part of such sales made by the businesses herein referred to, capable of being valued in money, whether received in money or otherwise; except that, the term gross receipts shall not include the sale price of property returned by customers when the full sale price thereof is refunded either in cash or by credit.
Applicant offers various memberships through Applicant's website, where individuals can receive wine, liquor, discounts on bottles and cases, admission to special events, free tastings, food discounts, as well as access to Applicant's Digital Club. Individuals who join Applicant's Digital Club also receive member special offers, discounts from affiliate partners, as well as access to online wine and liquor references. A free membership to the Digital Club is also provided if they join one of Applicant's other clubs.
Applicant charges its Digital Club fees on a monthly basis. The monthly Digital Club fee charge includes sales at retail as well as access to Applicant's digital material. The charge for the Digital Club includes both taxable and non-taxable items without separating them. Therefore, Applicant's digital memberships are subject to Missouri state and local sales tax.
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 Thomas A. Houdek, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.
Sincerely,
Wayne Wallingford