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By Che Odom
The former St. Louis Rams must pay sales tax on the full ticket price of games and aren’t eligible for a refund on the portion used to pay an entertainment license tax to the city of St. Louis, Mo., according to the Missouri Supreme Court ( St. Louis Rams LLC v. Dir. of Revenue , Mo., No. SC95910, 8/1/17 ).
Rejecting the Rams’ argument that the team was subject to double taxation, the high court ruled Aug. 1 that the Rams are liable for $736,000 in state sales tax payments from 2007 to 2013.
The city required the Rams to pay an entertainment license tax to sell game tickets. The Rams included the tax cost in its fixed ticket price, passing the cost to purchasers and then collecting and remitting the tax to the city.
The state Supreme Court ruled that because the Rams included the entertainment license tax in the fixed price of the ticket, the entire ticket price was subject to state sales tax. State statutes provide for sales tax to be imposed on the amount paid for admission and seating accommodations, or fees paid to games and athletic events, the court said.
Under the court’s ruling, the Rams are required to pay the tax, not the purchaser.
The Rams argued that the portion of the ticket price that went to pay for the city’s entertainment license tax shouldn’t be subject to state sales tax.
The Administrative Hearing Commission agreed in a 2013 ruling, finding that the Rams should receive a $401,000 refund for taxes it paid and didn’t have to pay $335,000 in additional taxes.
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 argument 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.”
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.
The high court agreed, finding that the cost of the entertainment tax wasn’t excluded.
The Rams returned to Los Angeles before the start of the 2016 National Football League season. The Rams called St. Louis home from 1995 through the 2015 season.
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