LR 8262
Determining Proper Location for Purposes of Tax Collection
July 31, 2023
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 6, 2023.
The facts as presented in your letter ruling request are summarized as follows:
Applicant operates a resort that provides accommodations to its guests, along with certain amenities and activities. Applicant operates on one contiguous property, which is primarily located in one municipality ("Locality A"), although a small portion of such property is located in a second municipality ("Locality B"). Applicant's primary operations - including its reservation booking system and payment processing system - are located in Locality A. The vast majority of Applicant's amenities and activities are located within Locality A. The vast majority of Applicant's sleeping accommodations are located in Locality A, although a small number of sleeping accommodations are located in Locality B (the "Cottages"). Although the check-in/check-out desk for the Cottages is located in Locality B, the reservations for the Cottages and all payments related thereto are processed by Applicant in Locality A. Guests of the Cottages travel within Locality A to enjoy activities and amenities provided by the resort. Locality A is part of a community improvement district ("CID") and a transportation development district ("TDD") (the CID and TDD are referred to collectively as the "Districts"), while Locality B is not included in either the CID or TDD. As part of a CID and TDD, Locality A imposes a special local sales tax (the "District Tax").
ISSUE:
Is Applicant required to collect the District Tax with respect to the sales of reservations for the Cottages located in Locality B?
RESPONSE:
Yes. Applicant should collect the District Tax with respect to the sales of reservations for the Cottages located in Locality B.
The relevant sales tax is imposed under section 144.020.1(6), RSMo, which provides:
A tax equivalent to four percent on the amount of sales or charges for all rooms, meals and drinks furnished at any hotel, motel, tavern, inn, restaurant, eating house, drugstore, dining car, tourist cabin, tourist camp or other place in which rooms, meals or drinks are regularly served to the public.
There are separate rules for determining the applicable local sales tax with respect to the sale of tangible personal property or the provision of taxable services. Regardless of whether the sales of reservations for the Cottages are considered the sale of tangible personal property or the provision of taxable services, the District Tax applies.
With respect to the provision of taxable services, Missouri Code of State Regulations section 10-117.100(3)(A)(5) provides that the "sale of services subject to state sales tax is subject to the local sales tax in effect where the service is rendered or delivered." The management activities, amenities, and guest activities are located within Locality A. When guests make reservations for the Cottages, the reservations and payments are processed within Locality A. Thus, the provision of services occurs within Locality A.
With respect to the sale of tangible personal property, section 32.087.12(1), RSMo, determines the applicable local sales tax:
For the purposes of any local sales tax imposed by an ordinance or order under the local sales tax law, all sales...shall be deemed to be consummated at the place of business of the retailer... [i]n the event a retailer has more than one place of business in this state which participates in the sale, the sale shall be deemed to be consummated at the place of business of the retailer where the initial order for the tangible personal property is taken, even though the order must be forwarded elsewhere for acceptance, approval of credit, shipment or billing.
Missouri Code of State Regulations section 10-117.100(2)(A) defines "place of business" as "a place where business is transacted in Missouri and that is maintained, occupied or used, directly or indirectly, by a seller or agent of the seller."
Based on the foregoing, the District Tax applies to the taxpayer's reservations, including those at the Cottages in which the sleeping accommodations are outside the Districts.
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 Legal Counsel J. Ross Shelton General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford