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St. Louis Rams LLC v. Director of Revenue

Supreme Court of Missouri, En Banc

August 1, 2017

THE ST. LOUIS RAMS LLC, f/k/a THE ST. LOUIS RAMS PARTNERSHIP, Respondent,
v.
DIRECTOR OF REVENUE, Appellant.

         PETITION FOR REVIEW OF A DECISION OF THE ADMINSTRATIVE HEARING COMMISSION The Honorable Sreenivasa Rao Dandamudi, Commissioner

          GEORGE W. DRAPER III, JUDGE

         The Administrative Hearing Commission (hereinafter, "Commission") determined The St. Louis Rams LLC f/k/a The St. Louis Rams Partnership (hereinafter, "the Rams") were entitled to a refund of state sales tax paid, plus statutory interest, for the period from February 1, 2007, through January 31, 2010. The Commission also determined the Rams were not liable for state sales tax and interest assessed by the director of revenue (hereinafter, "the director") for periods from February 1, 2010, through January 31, 2013. The director seeks judicial review of the Commission's decision. This Court has jurisdiction pursuant to article V, section 3 of the Missouri Constitution. The Commission's decision is reversed, and the cause is remanded.

         Factual and Procedural History

         The Rams sold tickets for the exhibition of National League Football games played in the City of St. Louis (hereinafter, "the city"). Pursuant to ordinance No. 65669, ordinance No. 68380, and the city's revised code chapter 8.08, the city imposed upon the Rams an "entertainment license tax" (hereinafter, "the ELT"). The ELT provides:

Any person or persons, partnership of whatever form, or corporation in the business of admitting persons or groups upon payment of an admission charge to a … sporting event, including but not limited to … football … are taxed upon the amount of gross receipts derived from such admission charges at the rate of five percent ….

         Chapter 8.08.010. Chapter 8.08.060 requires those subject to the ELT to apply for a "gross receipts license" prior to commencing business. Upon payment of the ELT, the city "shall issue the license as hereinafter provided …." Chapter 8.08.020. The Rams chose to pass their obligation to pay the ELT through to ticket purchasers who sought admission to football games played in the city. When the Rams collected and remitted the ELT to the city, the city issued the Rams a gross receipt license to operate their business in the city.

         From February 1, 2007, through January 31, 2013, the Rams collected and remitted the ELT to the city. The Rams included the ELT they collected as part of their gross receipts in their sales tax returns filed with the director for the period of February 1, 2007, through January 31, 2010. In April 2011, the Rams applied for a refund of state sales tax paid equal to the ELT they included in their gross receipts, alleging the ELT was included erroneously. The director denied the Rams' application. In December 2011, the Rams petitioned for a refund and requested an evidentiary hearing before the Commission.

          The Rams did not include the ELT they collected in their gross receipts when calculating state sales tax for the period of February 1, 2010, through January 31, 2013. The director audited the Rams, determined the Rams failed to collect or remit sales tax on five percent of the ticket sales, and found the Rams owed state sales tax. In August 2013, the Rams filed a petition challenging the assessment and requested an evidentiary hearing before the Commission. The Rams asserted similar legal arguments and defenses for their December 2011 refund petition in this action. The parties filed a joint motion to consolidate the cases, which the Commission sustained.

         The parties filed two joint stipulations. The first stipulation stated the Rams remitted state and local sales tax, as well as the ELT, on the amounts charged for admission from February 1, 2007, through January 31, 2013. The second stipulation contained an authentic copy of the city's ordinance governing the ELT.

         The parties filed competing motions for summary decision. The Commission issued a decision in the Rams' favor. The Commission stated the issue to be resolved was whether the ELT was included in "the amount paid" as stated in section 144.020.1(2).[1] The Commission found the ELT was an occupational tax because it required the Rams to obtain a license to conduct the business of charging admission to professional football games and, as a condition of maintaining the license, to pay a portion of their gross receipts to the city through the ELT. The Commission determined the taxing statute was ambiguous and construed it against the director, finding, in both cases, the director attempted to impose a tax upon a tax. The Commission ordered the director to issue a refund to the Rams for the ELT erroneously included in the February 2007 through January 2010 periods. The Commission also found the Rams were not liable for sales tax based on the ELT collected and remitted from February 2010 through January 2013. The director seeks judicial review of the Commission's decision.

         Standard of Review

         This Court will affirm the Commission's decision when it is "authorized by law and supported by competent and substantial evidence upon the record as a whole unless clearly contrary to the reasonable expectations of the General Assembly." Krispy Kreme Doughnut Corp. v. Dir. of Revenue, 488 S.W.3d 62, 67 (Mo. banc 2016) (quoting 801 Skinker Blvd. Corp. v. Dir. of Revenue, 395 S.W.3d 1, 3-4 (Mo. banc 2013) (internal quotation omitted)); see also section 621.193. This Court reviews the ...


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