Missouri Administrative Hearing Commission Rules Movie Theater Concessions Do Not Quaify for Reduced Sales Tax Rate for Food

Friday, February 1st, 2013


The Missouri Administrative Hearing Commission (AHC) released a ruling confirming the term "food" should not include food sold by an establishment for the purposes of the reduced sales tax rate and therefore denied a refund of sales tax paid on concession sales at movie theaters. Mo. Admin. Hrg. Commn., Dkt. No. RS-09-0420 (Nov. 28, 2012).

The taxpayer American Multi-Cinema (AMC) operates movie theaters in the state of Missouri. The movie theaters contain concession stands where food items are prepared. AMC claims the food items sold at the concession stand should be eligible for the reduced sales tax rate because less than 80% of the movie theaters gross receipts are from the sale of food. AMC was denied a refund claim for the sales tax paid on concession sales at its movie theaters by the Department of Revenue and filed a complaint with the Administrative Hearing Committee challenging the Director of Revenue's decision.

While Missouri does have a reduced sales tax rate for food, the term "food" does not include "food or drink sold by any establishment" nor can food "constitute more that 80% of the total gross receipts of that establishment." Mo. Rev. Stat. sec. 144.014. In considering the statutory language in context, the AHC concluded that the concession stand itself is an establishment apart from the movie theater. Furthermore, the concession stand receives all of its receipts from concession sales. Therefore, more than 80% of the total gross receipts from the establishment were from sales of food prepared by the establishment meaning that food sold at the concession stand does not qualify for the reduced sales tax rate. The AHC also cited Wehrenberg v. Director of Revenue confirming that "the food sold at the theater concession stand is for consumption at the theater and are not sold for home consumption" which further concludes the fact that food sold at the concession stand is not eligible for the reduced sales tax rate.

Ultimately, the AHC agreed with Director of Revenue's decision to deny AMC's refund claim for the sales tax paid on the concession sales at its move theater. The AHC found that "food" should not include food sold by an establishment, and the legislative intent was to exclude items sold by commercial food service establishments from the term "food" for purposes of the reduced sales tax rate.

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