Taxability of Hotel Charges Paid by the Federal Government
June 22, 2026
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 36.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated April 17, 2026.
The facts presented in your letter ruling request are summarized as follows:
Applicant operates hotels in Missouri and regularly provides lodging to individuals and groups traveling on official federal government business. Many of these individuals and groups pay using GSA SmartPay. These cards are set up so that the federal government is directly billed for the visitors’ lodgings.
ISSUE 1:
Are Applicant’s lodging charges exempt from Missouri state and local sales and use tax when payment is made directly by the United States government?
RESPONSE 1:
Yes. Applicant’s lodging charges are exempt from Missouri state and local sales and use tax when payment is made directly by the United States government.
Section 144.020.1, RSMo, provides “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 144.030.1, RSMo, provides:
There is hereby specifically exempted [. . .] from the computation of [sales] tax levied, assessed, or payable [. . .] such retail sales as may be made in commerce between this state and any other state of the United States, or [. . .] any retail sale which the state of Missouri is prohibited from taxing pursuant to the Constitution or laws of the United States of America, and such retail sales of tangible personal property which the general assembly of the state of Missouri is prohibited from taxing or further taxing by the constitution of this state.
Therefore, the lodging charges are exempt from Missouri states sales tax when payment is made directly by the United States government.
Yes. Applicant’s lodging charges are exempt from Missouri state and local sales and use tax when payment is made using GSA SmartPay Travel Cards.
GSA’s website provides that for centrally billed account cards, the “[a]gency is invoiced for purchases” and “payments are made directly to the contractor or banks by the federal government.” Further, “[a]ll GSA SmartPay Purchase cards/accounts are Centrally Billed Accounts (“CBA”s) and should be exempt from state sales tax.” Therefore, lodging charges are exempt from Missouri sales tax when payment is made using GSA SmartPay Travel Cards.
ISSUE 3:
Is providing the GSA SmartPay Purchase Card sufficient to show that Missouri state and local sales and use taxes do not apply to the lodging?
RESPONSE 3:
Yes. Providing the GSA SmartPay Purchase Card is sufficient to show that Missouri state and local sales and use taxes do not apply to the lodging. See Response 2.
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 Justin Dussold, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
