When Missouri Municipalities Are in Business

Missouri sales tax does not apply to charges for admissions to places of amusement, entertainment, or recreation when the places are owned or operated by a municipality or other political subdivision, so long as all the proceeds benefit the owner. In other words, if Town X charges admissions for a museum that it owns, the charge is exempt from sales tax.

However, a sales tax exemption does not inherently apply to all charges imposed by municipality-owned enterprises.

According to a letter ruling (LR 7676) recently published by the Missouri Department of Revenue, the gross receipts received by a municipality for the short-term rentals of its lakefront cabins to the general public are subject to sales tax. It references RSMo, Sections 144.020.1 and 144.020.1(6):

• “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.”
• Tax is imposed on “the amount of sales or charges for all rooms, meals and drinks furnished at any hotel, motel, tavern, restaurant, eating house, drugstore, dining car, tourist cabin, tourist camp or other place in which meals or drinks are regularly served to the public.”

Letter rulings can be instructive but they are binding only with respect to the applicant and only for a period of 3 years.

Simplify sales tax compliance with an automated solution. Learn more.