Title: PF Golf, LLC v. Dir. of Revenue

State: missouri

Issuer: Missouri Supreme Court

Document:

SUPREME COURT OF MISSOURI 
en banc 
 
 
 
PF Golf, LLC, 
 
 
 
) 
 
 
 
 
 
 
) 
 
 
Respondent,  
 
) 
 
 
 
 
 
 
) 
vs. 
 
 
 
 
 
) 
No. SC92663 
 
 
 
 
 
 
) 
Director of Revenue, 
 
 
) 
 
 
 
 
 
 
) 
 
 
Appellant. 
 
 
)  
 
APPEAL FROM A DECISION OF THE ADMINISTRATION HEARING 
COMMISSION   
 
Opinion issued July 16, 2013 
 
 
The Director of Revenue appeals a decision of the Administrative Hearing 
Commission holding that PF Golf, LLC, owes no sales tax on golf cart rentals.  
The commission determined, pursuant to section 144.020.1(8)1and Westwood 
Country Club v. Director of Revenue, 6 S.W.3d 885 (Mo. banc 1999), that PF Golf 
                                                 
1 All statutory citations are to RSMo Supp. 2012.  
owes no sales taxes on golf cart rentals because PF Golf previously paid sales tax 
on its purchase or lease of the carts.  The commission’s decision is affirmed.  
I. Facts 
 
At all relevant times, PF Golf owned and operated the Golf Club at Pevely 
Farms.  The golf course is open to the public.  PF Golf purchased and paid sales 
tax on golf carts for use at the Pevely Farms course.  PF Golf requires its 
customers to pay for and use a golf cart.  The only exceptions are golfers who 
elect to walk and participants in competitive events in which the rules of 
competition prohibit the use of golf carts.  For daily play, the cart fee was $22.50 
per round.  For those with an annual pass, the cart fee was fifty percent of the 
charge for the annual pass.    
 
 
PF Golf priced its daily and annual golf fees and cart rentals as one price.  
However, all golfers receive a receipt which separately itemizes the greens fees 
and the cart rental.  PF Golf collected and remitted sales tax for the greens fees, 
but did not collect or remit sales tax for the cart rentals.   
 
The director issued an assessment of unpaid sales taxes on the golf cart 
rentals.  The director asserted that the cart rentals were mandatory, and, therefore, 
subject to sales tax regardless of the fact that PF Golf had paid sales tax when it 
purchased the golf carts.  The director’s unpaid assessments totaled $121,925.95 
plus interest.   
 
PF Golf filed a petition appealing the director’s decision.  The commission 
issued a decision finding that PF Golf “is not subject to sales tax for its rental of 
golf carts to customers” during the relevant tax periods.  The director appeals.  
This Court has jurisdiction.  Mo. Const. Art. V, section 3.  
II. Standard of Review 
  
The commission’s decision shall be affirmed if: (1) it is authorized by law;  
(2) it is supported by competent and substantial evidence on the whole record;  (3) 
mandatory procedural safeguards are not violated;  and (4) it is not clearly 
contrary to the reasonable expectations of the General Assembly.  Section 
621.193.  The commission’s interpretation of revenue laws is subject to de novo 
review.  Custom Hardware Engineering & Consulting Inc. v. Dir. of Revenue, 358 
S.W.3d 54, 56 (Mo. banc 2012).    The commission’s findings of fact will be 
upheld if the findings are supported by substantial evidence on the whole record.    
Id.  
III. Analysis 
 
Resolution of this case relies on the interplay between sections 
144.020.1(2) and 144.020.1(8).  The director asserts that section 144.020.1(2) 
governs this case because it levies “[a] tax equivalent to four percent of the 
amount paid for admission and seating accommodations, or fees paid to, or in any 
place of amusement.”  A golf course is a “place of amusement.”  See Old Warson 
Country Club v. Director of Revenue, 933 S.W.2d 400, 403 (Mo. banc 1996).  
Golfers paid fees for the use of carts.  Therefore, the director argues that PF Golf 
should have collected and remitted sales taxes on the fees charged for use of the 
golf carts.  
 
3
 
PF Golf relies on section 144.020.1(8) and this Court’s opinion in 
Westwood Country Club v. Director of Revenue, 6 S.W.3d 885 (Mo. banc 1999).  
Section 144.020.1(8) imposes a tax on fees charged for the rental or lease  of 
personal property unless the property was purchased under “sale at retail” 
conditions or sales taxes were previously paid by the renter or seller on the 
original purchase or lease of the property.  Westwood, 6 S.W.3d at 888.  In 
Westwood, this Court applied section 144.020.1(8) to a similar situation in which 
the director assessed sales taxes against a private golf club’s rental of golf carts to 
its members.  This Court rejected the director’s argument that section 144.020.1(2) 
applied and, instead, held that “section 144.020.1(8) is a more specific statute than 
section 144.020.1(2) in that it expressly deals with the lease or rental of personal 
property upon which sales tax has already been paid.”  Id. at 889.  As was the case 
in Westwood, section 144.020.1(8) is the applicable statute in this case.  
 
Applying section 144.020.1(8) to the facts of this case demonstrates that the 
commission reached the correct result.  PF Golf paid sales tax on its purchases or 
leases of golf carts prior to renting the carts to its customers.  The fact that PF Golf 
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.  
Westwood, 6 S.W.3d at 889.  PF Golf, like the golf club in Westwood, did not have 
to charge a sales tax on cart rentals to its customers.    
 
Alternatively, the director argues that PF Golf did not rent golf carts and, 
instead, sold rounds of golf that included the use of a golf cart.  If PF Golf did not 
 
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rent carts and simply sold rounds of golf, then section 144.020.1(8) is inapplicable.  
This argument fails because there is substantial evidence in the record supporting 
the commission’s factual determination that PF Golf rents golf carts.  PF Golf, like 
the golf club in Westwood, grants golfers the right to use its golf carts for a fee 
pursuant to certain terms and conditions.  Each golfer’s receipt separately itemized 
the green fees and the golf cart rental.  Although it is true that almost every golfer 
at Pevely Farms elects to use a cart, this fact does not alter the nature of the 
transaction.  A mandatory rental is still a rental.  The commission’s finding that PF 
Golf rented golf carts is supported by substantial evidence in the record. 
 
The director also argues that this case is analogous to Southern Red-E-Mix 
Co. v. Director of Revenue, 894 S.W.2d 164 (Mo. banc 1995), in which this Court 
held that a delivery charge for concrete was taxable because it was part of the 
“gross receipts” for the taxable sale of the concrete.  Similarly, the director asserts 
that the cart rentals at Pevely Farms are mandatory, are essentially a part of the 
greens fee and, therefore, are subject to the sales tax.  Southern Red-E-Mix is 
inapposite because that case did not involve the application of section 
144.020.1(8) regarding taxation on fees charged for the rental or lease of personal 
property.   
 
Finally, the director argues that section 144.020.1(8) does not apply 
because of the “Boat and Outboard Motor” exception in the statute.  This 
exception provides that the “rental or lease of boats and outboard motors” is never 
considered a “sale, charge, or fee to, for or in places of amusement” and that all 
 
5
 
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such rentals shall be taxed under the provisions of the sales tax laws applicable to 
motor vehicles and trailers.  The “Boat and Outboard Motor” exception does not 
apply because the “exception is merely intended to be sure that boats and outboard 
motors are taxed under the ‘laws for motor vehicles and trailers.’”   Six Flags 
Theme Parks, Inc. v. Director of Revenue 179 S.W.3d 266, 270 (Mo. banc 
2005)(quoting section 144.020.1(8)).    
 
IV. Conclusion 
 
PF Golf paid sales tax on its purchase or lease of the golf carts rented to 
customers.  Therefore, pursuant to section 144.020.1(8) and Westwood, PF Golf 
was not required to charge sales tax on the golf cart rentals.  The commission’s 
decision is affirmed.  
 
 
 
 
 
 
 
_________________________________  
 
 
 
 
 
 
Richard B. Teitelman, Judge 
 
Russell, C.J., Breckenridge, Fischer and Draper, JJ., concur; 
Stith, J., dissents in separate opinion filed; Wilson, J., concurs 
in opinion of Stith, J.  
 
 
SUPREME COURT OF MISSOURI 
en banc 
 
 
 
 
 
 
 
PF Golf, LLC, 
 
 
 
) 
 
 
 
 
 
 
) 
 
 
Respondent,  
 
) 
 
 
 
 
 
 
) 
vs. 
 
 
 
 
 
) 
No. SC92663 
 
 
 
 
 
 
) 
Director of Revenue, 
 
 
) 
 
 
 
 
 
 
) 
 
 
Appellant. 
 
 
)  
 
 
 
 
 
 
 
 
 
 
 
DISSENTING OPINION 
 
 
The majority holds that tax is not owed on PF Golf’s rental of the golf carts to its 
customers because PF Golf previously had paid tax on its initial purchase of the carts.  
While I agree that double taxation should be avoided, I disagree that Missouri’s taxing 
statutes give the taxpayer the choice whether it would prefer to pay tax when it purchases 
an item of personal property that it then intends to rent to others or instead to collect tax 
from its rental customers at the time it rents the item of personal property to them.  Yet that 
is what the majority holds when it states: 
The fact that PF Golf 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.  Westwood, 6 S.W.3d at 889. 
 
Slip op. at 4.  This statement is based on Westwood’s paraphrasing of the language of 
section 144.020.1(8) to state that it imposed a tax on purchases unless “sales taxes were 
previously paid by the renter or seller on the original purchase or lease of the property.”  
Westwood, 6 S.W.3d at 888.  While Westwood was accurate in its description of what 
section 144.020.1(8) provides when the one who is renting equipment to customers itself 
previously rented or leased the equipment, it is incomplete in its statement of what occurs 
when one who purchased personal property subsequently rents it – the case before us 
today.1 
 
Section 144.020.1(8) states in relevant part that the state shall levy: 
(8) A tax equivalent to four percent of the amount paid or charged for rental 
or lease of tangible personal property, provided that if the lessor or renter of 
any tangible personal property had previously purchased the property under 
the conditions of “sale at retail” or leased or rented the property and the tax 
was paid at the time of purchase, lease or rental, the … renter … shall not 
apply or collect the tax on the subsequent …rental … receipts from that 
property. (emphasis added). 
 
 
As is self-evident, section 144.020.1(8) provides that a company that rents out 
personal property to another must pay a 4-percent tax on the rental charge unless the renter 
previously had paid taxes when either: (1) it had itself initially purchased the property 
under the conditions of “sale at retail,” or (2) it had itself initially leased or rented the 
property.   
  
Because PF Golf purchased rather than leased or rented the golf carts that it then 
rented to those who played on its course, the relevant provision of subdivision (8) is the 
portion governing those who purchase an item of personal property under the conditions of 
“sale at retail.”  It therefore can take advantage of this exception only if it purchased the 
personal property under conditions of sale at retail.  Westwood, and the majority in reliance 
                                             
 
1 Westwood references the RSMo. Supp. 1998 version of section 144.020.  The relevant 
portions of the 1998 version are identical to those in the current RSMo. Supp. 2012 
publication.   All statutory citations in this dissent are to RSMo Supp. 2012. 
 
2
on it, simply ignore the “sale at retail” requirement when stating that any previous 
purchase invokes the exemption.  
 
The record shows that PF Golf did not purchase the carts under conditions of a sale 
at retail.  A sale at retail is defined by Missouri law as “any transfer … of the ownership 
of, or title to, tangible personal property to the purchaser, for use or consumption and not 
for resale in any form as tangible personal property, for a valuable consideration.”             
§ 144.010(11) (emphasis added).  “Sale” is defined to include “any transfer, exchange or 
barter, conditional or otherwise, in any manner or by any means whatsoever, of tangible 
personal property for valuable consideration ….”  § 144.010(10).   
 
Therefore, a sale at retail occurs when the purchaser takes ownership of tangible 
personal property for the purchaser’s own use or consumption.  A sale at retail does not 
occur if the property instead is held for resale, whether that resale is in the form of another 
sale or in the form of some other exchange or barter, conditional or otherwise – such as a 
rental or lease – because a sale at retail is for consumption, not resale.  
 
Here, PF Golf agrees that it bought the golf carts in question so it could rent them to 
its customers, as confirmed by the fact that it charged for their use.  Because PF Golf did 
not purchase them under conditions of a sale at retail, it does not qualify for the tax 
exception set out in section 144.020.1(8). 
 
Again, the majority’s contrary holding is based on its reading of Westwood to 
permit the purchaser of a golf cart simply to choose whether to pay tax at the time of 
purchase or instead to collect tax at the time of rental regardless of whether its purchase 
 
3
qualified as a “sale at retail.”  Westwood, 6 S.W.3d at 889 (quoted by majority ante, slip 
op. at 4).   
 
Of course, Westwood could not expand the tax liability provisions beyond those 
provided for in section 144.020.1.  If Westwood did purport to permit one who purchased 
golf carts not under conditions of sale at retail to avoid paying taxes, then it would have 
been in error.  But that issue does not appear to have been raised in Westwood.  The 
opinion nowhere addresses the essential statutory question whether the club’s initial 
acquisition of the golf carts was by sale at retail; to the contrary, it repeatedly notes that the 
carts had come from “purchases or leases” by the club without bothering to clarify which 
was the case or if they were a mix of both.  Without any reason to focus on the distinction 
between purchases under conditions of sale at retail versus purchases for resale, Westwood 
simply used a shorthand paraphrase of section 144.020.1(8).  Such paraphrases can cause 
confusion when applied in a different context, as the majority does here.  They cannot 
change the meaning of the statute.  To the extent that Westwood and similar cases hold 
otherwise, I would overrule them.2 
                                             
 
2 In Six Flags Theme Parks, Inc. v. Dir. of Revenue, 102 S.W.3d 526, 530 (Mo. banc 2003) 
(Six Flags I),  this Court held that the theme park did not owe taxes on the rental of its 
video game machines.  This Court concluded that tax was not owed under subdivision (8) 
because the purchaser paid tax on the machines when purchased.  This would be overruled 
to the extent that it misinterpreted subdivision (8) to hold that simply because tax was paid 
on property at the time of purchase, tax is not thereafter due at the time of rental of that 
property.   
  
In Eighty Hundred Clayton Corp. v. Dir. of Revenue, 111 S.W.3d 409, 410-11 (Mo. 
banc 2003), a bowling alley charged its customers a fee to use bowling shoes.  Relying on 
Blue Springs Bowl v. Spradling, 551 S.W.2d 596 (Mo. banc 1977), this Court held that this 
fee is subject to the amusement tax under section 144.020.1(2).  This outcome is consistent 
with the legal conclusions advocated in this dissent.  
 
4
 
This does not mean that PF Golf is subject to double taxation; it means that it 
should not have paid tax on its purchase of the golf carts because it was a sale at retail.  
Whether it would be entitled to a refund of or credit for that tax is not before the Court. 
 
There are two additional points of the Westwood analysis that are in error and that 
should be corrected now to avoid future confusion.  First, for the reasons more fully set out 
in the comprehensive discussion of this issue in the dissent in Six Flags Theme Parks, Inc. 
v. Dir. of Revenue, 179 S.W.3d 266 (Mo. banc 2005) (Six Flags II) (Stith, J., dissenting), 
Westwood erred in holding that subdivision (8) of section 144.020.1 is narrower than 
subdivision (2) of that statute.3  Subdivision (2) governs taxes on fees or charges paid in or 
to a place of amusement.  It applies, therefore, only in a narrow category of commerce – 
places of amusement.4  Section 144.020.1(8), on the other hand, applies to all sales at 
retail, rentals or leases of personal property.5  Westwood simply was wrong in stating that 
                                             
 
3 Six Flags II involved sales tax paid on fees collected by the operator of a theme park on 
the rental of inner tubes.  This Court held that the inner tubes were not subject to sales tax 
because subdivision (8) does not impose a tax on property rentals when the property was 
subject to taxation at the time of purchase.  Relying on Westwood, this Court further 
determined that the taxes could not be collected under subdivision (2) because   
subdivision (8) is a more specific statute.  179 S.W.3d 266.  I now would overrule Six 
Flags II as to the latter holding.  
4 Subdivision (2) states: “A tax equivalent to four percent of the amount paid for admission 
and seating accommodations, or fees paid to, or in any place of amusement, entertainment 
or recreation, games and athletic events ….”  
5  Subdivision (8) states: 
A tax equivalent to four percent of the amount paid or charged for rental or 
lease of tangible personal property, provided that if the lessor or renter of any 
tangible personal property had previously purchased the property under the 
conditions of “sale at retail” or leased or rented the property and the tax was 
paid at the time of purchase, lease or rental, the lessor, sublessor, renter or 
subrenter shall not apply or collect the tax on the subsequent lease, sublease, 
rental or subrental receipts from that property. The purchase, rental or lease 
of motor vehicles, trailers, motorcycles, mopeds, motortricycles, boats, and 
 
5
subdivision (8) is narrower than subdivision (2).  The contrary is self-evidently true from a 
reading of the two provisions.  Applying these principles here, as subdivision (2) has no 
exceptions for resales or rentals and instead requires tax be paid on all fees paid in or to a 
place of amusement, it requires tax be paid on the rental of carts to customers.  Period. 
 
Second, as previously argued in the dissent in Six Flags II, even were      
subdivision (8) narrower than subdivision (2) – which it is not – nothing in section 
144.020.1 suggests that a sale or rental is taxable under only one of the divisions of that 
provision.  To the contrary, section 144.020.1 sets out eight different situations in which a 
tax will be imposed and particular transactions necessarily will fall into one or more of 
those categories.  If a transaction falls within any one or more of those divisions, it is 
taxable.6  This means that, even were the sale not taxable under subdivision (8), if it is 
                                                                                                                                                    
outboard motors shall be taxed and the tax paid as provided in this section 
and section 144.070. In no event shall the rental or lease of boats and 
outboard motors be considered a sale, charge, or fee to, for or in places of 
amusement, entertainment or recreation nor shall any such rental or lease be 
subject to any tax imposed to, for, or in such places of amusement, 
entertainment or recreation. Rental and leased boats or outboard motors shall 
be taxed under the provisions of the sales tax laws as provided under such 
laws for motor vehicles and trailers. Tangible personal property which is 
exempt from the sales or use tax under section 144.030 upon a sale thereof is 
likewise exempt from the sales or use tax upon the lease or rental thereof.  
6 Section 144.020.1 states, in its entirety: 
A tax is hereby levied and imposed upon all sellers for the privilege of 
engaging in the business of selling tangible personal property or rendering 
taxable service at retail in this state. The rate of tax shall be as follows: 
(1) Upon every retail sale in this state of tangible personal property, 
including but not limited to motor vehicles, trailers, motorcycles, mopeds, 
motortricycles, boats and outboard motors, a tax equivalent to four percent of 
the purchase price paid or charged, or in case such sale involves the 
exchange of property, a tax equivalent to four percent of the consideration 
paid or charged, including the fair market value of the property exchanged at 
 
6
                                                                                                                                                    
the time and place of the exchange, except as otherwise provided in section 
144.025; 
(2) A tax equivalent to four percent of the amount paid for admission and 
seating accommodations, or fees paid to, or in any place of amusement, 
entertainment or recreation, games and athletic events; 
(3) A tax equivalent to four percent of the basic rate paid or charged on all 
sales of electricity or electrical current, water and gas, natural or artificial, to 
domestic, commercial or industrial consumers; 
(4) A tax equivalent to four percent on the basic rate paid or charged on all 
sales of local and long distance telecommunications service to 
telecommunications subscribers and to others through equipment of 
telecommunications subscribers for the transmission of messages and 
conversations and upon the sale, rental or leasing of all equipment or 
services pertaining or incidental thereto; except that, the payment made by 
telecommunications subscribers or others, pursuant to section 144.060, and 
any amounts paid for access to the internet or interactive computer services 
shall not be considered as amounts paid for telecommunications services; 
(5) A tax equivalent to four percent of the basic rate paid or charged for all 
sales of services for transmission of messages of telegraph companies; 
(6) A tax equivalent to four percent on the amount of sales or charges for all 
rooms, meals and drinks furnished at any hotel, motel, tavern, inn, restaurant, 
eating house, drugstore, dining car, tourist cabin, tourist camp or other place 
in which rooms, meals or drinks are regularly served to the public; 
(7) A tax equivalent to four percent of the amount paid or charged for 
intrastate tickets by every person operating a railroad, sleeping car, dining 
car, express car, boat, airplane and such buses and trucks as are licensed by 
the division of motor carrier and railroad safety of the department of 
economic development of Missouri, engaged in the transportation of persons 
for hire; 
(8) A tax equivalent to four percent of the amount paid or charged for rental 
or lease of tangible personal property, provided that if the lessor or renter of 
any tangible personal property had previously purchased the property under 
the conditions of “sale at retail” or leased or rented the property and the tax 
was paid at the time of purchase, lease or rental, the lessor, sublessor, renter 
or subrenter shall not apply or collect the tax on the subsequent lease, 
sublease, rental or subrental receipts from that property. The purchase, rental 
or lease of motor vehicles, trailers, motorcycles, mopeds, motortricycles, 
boats, and outboard motors shall be taxed and the tax paid as provided in this 
section and section 144.070. In no event shall the rental or lease of boats and 
outboard motors be considered a sale, charge, or fee to, for or in places of 
amusement, entertainment or recreation nor shall any such rental or lease be 
subject to any tax imposed to, for, or in such places of amusement, 
entertainment or recreation. Rental and leased boats or outboard motors shall 
 
7
 
8
                                                                                                                                                   
taxable under subdivision (2), then tax will be imposed.  Of course, the state may not 
collect tax under two or more of the subdivisions, but it may collect it once if any of the 
bases for collecting tax are present. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_________________________________  
 
 
 
 
 
 
   LAURA DENVIR STITH, JUDGE 
 
 
 
be taxed under the provisions of the sales tax laws as provided under such 
laws for motor vehicles and trailers. Tangible personal property which is 
exempt from the sales or use tax under section 144.030 upon a sale thereof is 
likewise exempt from the sales or use tax upon the lease or rental thereof.