On July 16th, the Supreme Court of Missouri in PF Golf, LLC v. Director of Revenue ruled that a Golf Club owed no sales tax on golf cart rentals.  The Golf Club paid sales tax on the golf carts when it purchased them.  It required customers to pay for and use a golf cart, except those customers who elected to walk or participated in competitions prohibiting use of carts.  Golfers received a receipt separately itemizing the greens fees and cart rentals, but Golf Club collected and remitted sales tax only for the greens fees.  The Director assessed sales tax of approximately $122,000 plus interest, arguing the rentals were mandatory and therefore taxable.   The state’s Administrative Hearing Commission reversed the Director, who then appealed to the Supreme Court.

Taxpayer’s argument is par for the course.  On appeal, the Director argued that sales tax applies to fees paid to a “place of amusement” and that a golf course is a “place of amusement.”  Slip op. at 3 (citations omitted).  Accordingly, Golf Club should have collected and remitted sales tax on the fees paid for cart rentals.  Golf Club countered that that the tax does not apply where property was purchased under “sale at retail” conditions or where sales taxes were previously paid by the renter on the original purchase of the property.  Slip op. at 4.   Looking to its decision in Westwood Country Club v. Director of Revenue, which involved  a “similar situation in which the director assessed sales taxes against a private golf club’s rental of golf carts to its members,” the Supreme Court agreed with Golf Club and held:  “The fact that [Golf Club] paid sales tax on its initial acquisition of the golf carts means that it is not required to collect sales tax on the subsequent rental of those carts to its customers.”  Id.

Director’s arguments hit the sand trap.  The Director also argued that Golf Club really sold rounds of golf that included the use of a cart, which made the statute relied upon by the Court “inapplicable.”  Slip op. at 5.  The Court, however, observed that “substantial evidence in the record,” including the itemization of cart rentals on golfers’ receipts, supported the Commission’s finding that Golf Club rented carts.  Id.  Further, even if most golfers were compelled to rent carts, a “mandatory rental is still a rental.”  Id.  The Director misfired on two other arguments as well.

Dissent misses the cut.  The lone dissent in the case opined that the cart rentals were not exempt because the carts had not been acquired by Golf Club in a “sale at retail,” which occurs when a purchaser takes ownership of tangible personal property for the purchaser’s own use or consumption.  Dissent op. at 3.  When the purchased property is held for leasing, as in the present case, there is no “sale at retail.”  Id.

(Image credit:  Randy Rowe)