Excursions (Rescinded July 30, 2018)

AUTHORITY: section 144.270, RSMo 1994. S.T. regulation 010-85 was last filed Oct. 28, 1975, effective Nov. 7, 1975. Refiled March 30, 1976. Rescinded: Filed Jan. 18, 2018, effective July 30, 2018. Fostaire Harbor, Inc. v. Missouri Director of Revenue, 679 SW2d 272 (Mo. banc 1984). Taxpayer first challenged the commission’s finding that fees paid for helicopter flights around the City of St. Louis were taxable fees paid to or in a place of amusement, entertainment or recreation, rather than fees paid for a taxexempt educational service. Secondly, taxpayer asserted that even if tax liability existed, the finding of the commission that there was no neglect or refusal to file sales tax returns relieved it of any duty to pay interest on the amounts due. With respect to the first issue, the court held that the tax applies generally to fees paid in or to a place of amusement despite the fact that some educational benefit is derived at that place of amusement. That some educational value might be derived from the expenditure of a particular fee does not make it exempt from tax. With respect to the second issue, the court held that interest is not a penalty and therefore a finding of neglect or refusal was not required before interest could be imposed. While interest might be a penalty under some circumstances, and thus could only be imposed upon a finding of neglect or refusal, such is not the case under Missouri’s sales tax law. Richard Lynn, d/b/a Kansas City Excursion v. Director of Revenue, No. 66130 (Mo. banc 4/30/85). The issues in this case were whether 1) the taxpayer’s receipts from its Missouri River boat excursions were exempt from sales tax under section 144.030.1. as receipts from activities in interstate commerce; 2) the director was estopped from assessing sales tax and penalties because of certain prior actions and statements by the director’s agents; 3) the taxpayer was shielded from penalties by the exercise of good-faith; and 4) the two-year statute of limitations applied to limit assessment prior to 1978. The court resolved the interstate commerce issue by citing the decision in Fostaire Harbor, Inc. v. Missouri Director of Revenue, 679 SW2d 272 (Mo. banc 1984). Fostaire held that fees paid for admission to helicopter rides for sightseeing purposes are fees paid in or to a place of amusement and thus are taxable. The fees paid to the taxpayer in Kansas City Excursion were intended to provide a sightseeing tour, not transportation to a point outside the territorial waters of the state of Missouri; the interstate commerce provision of section 144.030.1. was therefore inapplicable to these local transactions. Regarding the estoppel issue, the court noted the long-standing rule that the director of revenue and his subordinates have no power to vary the force of statutes. Therefore, the actions of prior directors and their subordinates will not estop subsequent directors from collecting taxes due and owing the state except in situations where manifest injustice would otherwise occur. In determining the issue of good-faith, the court found that the taxpayer had received an earlier assessment on the same issue and had been advised by counsel of a possible collection action. As the taxpayer was clearly on notice of a possible tax liability, failure to file in years subsequent to that assessment did not constitute good-faith, imposition of the penalty under section 144.250.1 for neglect to file a tax return was therefore appropriate. In addition, neglect or refusal to file returns tolls the statute of limitations in section 144.220, thereby permitting the assessment of sales tax in this case beyond the statutory period.