In a recent decision by the Missouri Administrative Hearing Commission, Balloons Over the Rainbow, INC., vs. Director of Revenue, No 11-1342RS (11/27/2012), the Commission found Balloons Over the Rainbow liable for sales and use taxes assessed by the Department of Revenue based on the gross receipts from hot air balloon rides.
The state of Missouri levies a privilege sales tax on the gross receipts of sales of tangible personal property and taxable services. RSMo 144.020.1. That tax applies to amounts paid for admission or fees paid to any place of amusement. Id at (2). Balloons conceded that the amounts paid by customers were amounts paid for amusement, but argued that the Federal “Anti-Head Tax Act,” 49 U.S.C. 40116 preempted Missouri’s attempted taxation on the balloon rides.
Balloons argued that the balloon rides, though amusement, were a form of air commerce. Opinion at 7. The Commission found that the balloon rides in question, which began and ended at the same location, did not constitute travel or transportation. Id at 10. Having thus determined that the direct sales of balloon rides were taxable, the Commission found that receipts from third-party sales of flight certificates were also subject to tax. The flight certificates represented an intangible right to use Balloons Over the Rainbow’s services within the state of Missouri, and are subject to Missouri’s Use Tax. Id at 17.
Read the full opinion at: oa.mo.gov/ahc/case/Balloons11-1342RS.KAW.doc
On behalf of Kelvin Adkins-Heljeson