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Taxation Law in Missouri

John P. Barrie, Esquire

Use Tax - Purchase of personal property, including furniture, appliances, and linens for use of guests in taxpayer's cabins and cottages did not constitute a purchase for resale. Worlds of Fun, et al. v. Director of Revenue, No. 08-1935RS (Mo. AHC, July 21, 2011), Dandamudi, C.

Taxpayer operated both an amusement park and Worlds of Fun Village, which consisted of cabins and cottages rented to its customers on a nightly basis. In connection with the rental of the cabins and cottages, the taxpayer purchased various items of personal property for customer use in the cabins and cottages, including furniture, appliances and linens, and paid use tax with respect to same. The taxpayer subsequently sought a refund on the basis that the purchases constituted purchases for resale because the items were used and consumed by its customers. The director denied the refund claim.

Held: Denial of refund claim upheld.
The Commission, relying upon  Brinker Missouri v. Director of Revenue, 319 S.W. 3d 433 (Mo. banc 2010), denied the refund claim on the basis that there was never a transfer to the end users of the property in question because the end users (the taxpayer's customers) never had the right to either consume or control the property sufficient to satisfy the requirements of Section 144.605(7), RSMo.

Income Tax - Taxpayers lacked standing to challenge constitutionality of a tax credit. Manzara, et al. v. State of Missouri, No. 91025 (Mo. banc, August 2, 2011), Russell, J.

Taxpayers filed a petition for declaratory judgment challenging the validity of the Distressed Areas Land Assemblage Tax Credit Act ("Act") Section 99.1205, RSMo, on the basis that the tax credits provided in the Act constituted an unconstitutional grant or lending of public money to private persons. The trial court determined that the taxpayers did not have standing to challenge the Act.

Held: Affirmed.
The Supreme Court of Missouri held that the test for standing in a tax case is whether there was a direct expenditure of funds generated through taxation and that since tax credits do not involve a direct expenditure of funds through taxation (see Arizona Christian School Tuition Organization v. Winn, 131 S. Ct. 1436 (2011)), the taxpayers lacked standing to challenge the Act.

The Missouri Bar Courts Bulletin, 11-Aug

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