The state of Missouri contends the former St. Louis Rams owe hundreds of thousands of dollars in taxes.
Supreme Court of Missouri, Photo courtesy of Missouri Supreme Court
The Missouri Supreme Court heard arguments Wednesday morning in a dispute between the state Department of Revenue and the team, which relocated last year to Los Angeles. At issue are sales taxes.
The city of St. Louis imposes a five percent entertainment license tax on admission charges to sporting events. The Rams included this tax, as well as state sales taxes associated with it, in the price of tickets it sold. It continued this practice for three years, before changing policy.
Over the next three years, the team did not collect or remit state sales taxes associated with the city’s 5% license tax and reduced the amount of sales it reported by five percent.
After an audit, the Department of Revenue determined that the Rams should have collected and remitted the sales taxes tied to the city tax and assessed the team $352,000 for not doing so.
The Rams then sought a refund of $401,000 on the sales taxes it had paid during the first three years and challenged the Revenue Department’s assessment.
Such litigation in Missouri is heard before the Administrative Hearing Commission instead a traditional court. The commission sided with the Rams, concluding the team was subject to a refund, plus interest, and was not liable for the state sales tax on the five percent city license tax.
Assistant Attorney General Emily Dodge represented the state in its appeal of the commission’s decision Wednesday. She said the Rams were subject to the tax because the team included the cost of the city’s tax into the price of tickets.
“However it may be set out on the receipt or the print-out that the customer receives, whether you look at it as an amount paid for admission or for seating accommodation, or whether, depending on how it’s printed out on the sheet, you look at that as a fee paid in a place of admission” said Dodge. “This is clearly subject to sales tax.”
She further stated state law does not support the Rams claim that the city’s license tax is not subject to state sales taxes. Dodge argued the price of the sales of tickets for admission to football games is subject to sales tax, and noted the Rams do not appear to dispute that the city tax was included in the ticket price.
Representing the team before the court Wednesday, Matthew Mock acknowledged the inclusion of the city tax in the ticket price. He went on to note that state law stipulates taxes collected from a purchaser as tax, are not subject to the state sales tax.
“It was not for admission” said Mock. “That’s not why it was paid, to use the term of the statute, ‘the amount paid’. It was collected as tax and paid as tax by the purchaser. And so it shouldn’t be included in the included in the sales tax base.”
Mock also contended the state erred in claiming the amount charged by the Rams for admission included the city tax. He said the city tax is not a charge for admission, and by law is not subject to Missouri taxation, and argued the state’s case draws on the illegal practice of double taxation.
The Missouri Supreme Court will render a decision in the case at a later date.
