Former St. Louis Rams Dispute ‘Tax Upon Tax’

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By Christopher Brown

The former St. Louis Rams shouldn’t have to pay state sales tax on a portion of their receipts from ticket revenue that was used to pay an entertainment tax to the city of St. Louis when the team was still located there, an attorney for the Rams told the Missouri Supreme Court ( St. Louis Rams LLC v. Dir. of Revenue, Mo., No. SC 95910, oral arguments 3/8/17 ).

At issue in the lawsuit, which arrived at the Missouri high court on appeal from a ruling in the Rams’ favor by the state Administrative Hearing Commission, was $736,000 in sales taxes, divided between:

  •  $401,000 that the Rams had paid and for which the team sought a refund, and
  •  $335,000 that it hadn’t paid and which the state Department of Revenue assessed as owing following an audit.

The Rams moved from St. Louis to Los Angeles before the 2016 National Football League season began, becoming the Los Angeles Rams once again. The period covered by the lawsuit was 2007 to 2013.

Tax Upon Tax

The sales tax is properly imposed only on amounts received for the use and benefit of the seller, and a court ruling in favor of imposing the sales tax on amounts received to pay the entertainment tax would amount to an impermissible “tax upon a tax,” Matthew S. Mock, a partner with Baker & McKenzie LLP in Chicago who represented the Rams, said in oral arguments March 8.

“The issue here is when you’re dealing with a tax such as” the entertainment license tax or the sales tax, “these are amounts that are collected from the purchaser to be remitted to the taxing authority,” Mock told the court. “And those are not properly included in the base; it’s not an income tax, it’s not a cost of doing business.”

Sales Tax Exclusion

But for the state, the critical issue was whether the Rams qualified for an exclusion from the sales tax under the Missouri tax code, where a taxable “admission” to a place of admission is defined as amounts paid for seating and admission, exclusive of “any admission tax imposed by the federal government or by” the sales tax law, said Emily A. Dodge, an assistant attorney general representing the state.

That language suggests that a non-sales tax can be included within the definition of taxable cost of admission in the sales tax law, and shifts the burden of proof from the state to the taxpayer, Dodge said.

“The law that has been established by the court is that if there’s an exclusion at stake or an exemption then the Rams as taxpayer] have the burden” of proving that they qualify, she said.

Dodge also refuted the Rams’ argument that the imposition would result in an impermissible tax upon a tax, replying that the prohibition didn’t apply to taxes imposed by different taxing authorities.

Separate Item?

Several members of the court asked questions about whether the outcome of the lawsuit would be affected by the manner in which the entertainment tax was presented to individual purchasers, if it was revealed to them at all.

Mock told the court that the factual record of the lawsuit didn’t reveal whether the tax was listed separately on the customers’ receipts, but dismissed the idea that there would be legal significance to doing so.

“I don’t think it matters,” he said. “What matters is the tax was collected and remitted to the city, and the tax was collected with the amount for admission.”

Dodge also said that the outcome would be unaffected by a scenario in which the price of admission was listed on the receipts along with separate amounts for the entertainment tax and the state sales tax.

To contact the reporter on this story: Christopher Brown in St. Louis at

To contact the editor responsible for this story: Ryan C. Tuck at

For More Information

The state's brief is at

The Rams' brief is at

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