2020-09-02
The Missouri Administrative Hearing Commission (“AHC”) held that the fees paid for the taxpayer’s guide service were not paid to or in a place of amusement and not taxable. Angler Outfitters v. DOR, AHC No. 18-1143, August 20, 2020.
Anglers only contested tax on guided trips, not tax on personal property sales or supply rentals.
Anglers charged first-time customers the same rate it charges repeat customers. The charge included fishing gear, tied flies, use of a boat and transportation if applicable, and the guide’s knowledge of where to find fish.
Anglers did not offer classes, but the guide may help customers assemble their rods and reels, teach them how to cast their lines and read the water, react appropriately when a fish “strikes,” and provide other information intended to help them catch a fish. The AHC noted that even though the taxpayer offered some instruction, the fees it charged were not exempt as “instructional fees.”
Fly fishing on foot involved wading into the water at points along three miles of the waters from Table Rock Dam flowing into Lake Taneycomo. Fly fishing by boat involved use of a 19-foot watercraft owned and operated by Anglers and riding to a point on Table Rock Lake selected by Anglers’ guide.
Table Rock Lake and Lake Taneycomo are both federally navigable waterways under the jurisdiction of the U.S. Coast Guard, and open to the public free of charge.
The AHC noted that the meaning of “place of amusement, entertainment or recreation” as used in §144.020.1 is ambiguous. L & R Distributing, Inc. v. Missouri Dep’t of Rev., 529 S.W.2d 375, 377 (Mo. banc 1975).
The Director argues that the waterways on which Anglers operates are places of amusement, entertainment or recreation, relying on Surrey’s on the Plaza, Inc. v. Dir. of Revenue, 128 S.W.3d 508, 510 (Mo. banc 2004), that “a business that controls the locality of amusement or entertainment is liable for sales tax.” Surrey‘s offered rides in horse-drawn carriages along Kansas City public streets, and argued that it was not and did not operate in a place of amusement or entertainment because the entertainment occurred, as in Moon Shadow, on public property. The Court discounted that argument, first because “horse-drawn carriages are places of amusement,” (emphasis added), and second, because Surrey’s, and not the customer (as in Moon Shadow), controlled the entertainment by controlling the route the carriage followed. The Court analogized the carriage rides to taxable sightseeing helicopter and boat tours, operating in public air space and waterways: Helicopter tours are taxable “because the operator controls where the helicopter flies, where entertainment occurs,” and “[e]ntertaining boat rides are subject to tax, because the operator controls the location of amusement— the boat.”
The Director pointed to the part of the Court’s holding distinguishing Moon Shadow, which did not restrict its customers to a specific part of the waterway, from Surrey’s, which restricts customers’ entertainment to certain streets, whereas Anglers controls where its customers fish on each outing, the fishing spot is a “place” under Anglers’ control, pursuant to §144. 020.1(2).
The AHC discussed the Missouri Supreme Court ruling in Moon Shadow, Inc. v. Dir. of Revenue, 945 S.W.2d 436, 437 (Mo. banc 1997), that an “eight-mile stretch of river—owned and controlled mostly by the federal government—is not a locality used as a ‘place of amusement’ within the meaning of section 144.020, subd.1(2).” Moon Shadow provided customers with inner tubes, drove them to a put-in point on the river, and left them to entertain themselves. Relying on the dictionary, the Court defined “place” as a “building or locality used for a special purpose,” and cited examples of “places” of amusement, entertainment or recreation found in prior case law, including a billiard hall, helicopter, and bowling alley.
The AHC noted that while in Surrey’s the carriages and the route are each an integral part of the passengers’ amusement and entertainment, and passengers derive their amusement on helicopter or boat tours from the route chosen for its entertainment value, and from the experience of riding on the helicopter or tour boat, but the same is not true of Anglers’ customers. Anglers’ boat, like Moon Shadow’s bus, is a means of transportation, not an essential part of the entertainment or recreation. The Director did not provide evidence that the boat plays more than an incidental role in the excursion—an optional means of accessing the lake.
The AHC also noted that fishing is an enjoyable recreational activity for many people, and presumably, Anglers’ customers often have fun on their excursion. While a carriage ride transforms travel down Kansas City’s streets into an amusing or entertaining activity, Anglers’ guide does not cause fishing to become amusing, entertaining or recreational.
Customers do not patronize Anglers because Anglers controls admission to the waterway. Angler’s customers can fish in Missouri lakes for amusement, entertainment or recreation without paying Anglers a fee. Anglers does not charge a fee to or in a place of amusement because Anglers is not the place of amusement and does not control the place of amusement.
Nor are customers seeking entertainment or amusement in the form of a boat ride or walk along the shore provided by Anglers. Rather, customers intend to have an entertaining day of fishing, using Anglers’ equipment, expertise, and/or transportation. Customers may rely on Anglers to offer pointers on where to find fish and how best to catch them, or they may fish independently at the site, but in either case, customers do the fishing.
Anglers enhances customers’ experience, but unlike Surrey’s, Angler’s services are not an indispensable element of the amusement, entertainment, or recreation found in fishing on Table Rock Lake or Lake Taneycomo.
Because Anglers is not a place of amusement, entertainment or recreation pursuant to §144.020.1(2), fees paid for Anglers’ guide service are not taxable.