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Focus on State and Local Taxation: Missouri Instructional Classes Update

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During the 2016 veto session the Missouri legislature acted to protect taxpayers by overriding Governor Nixon’s veto of a senate bill related to the taxability of instructional classes.
January 17, 2017

During the 2016 veto session the Missouri legislature acted to protect taxpayers by overriding Governor Nixon’s veto of a senate bill related to the taxability of instructional classes.

Under previous sales tax law, a “sale at retail” included charges and fees paid to or in places of amusement, entertainment or recreation. Due to widespread taxpayer objection and the Department’s inconsistency in administration of sales tax on this issue, Senate Bill 1025 was passed to exempt instructional classes from sales tax. The bill went into effect October 14, 2016.

Missouri has recently released several letter rulings illustrating their position regarding this change. Instructional classes that are no longer subject to Missouri sales tax include classes that “show, guide, or direct, i.e. teach” participants. Such classes could include gymnastics, dance, tumbling, competitive cheerleading, fitness classes and personal training. Camp fees, sports leagues, birthday parties and member events would most likely remain subject to sales tax as they are designed to provide recreation and amusement.

Please contact any of our State and Local Tax (SALT) professionals at RubinBrown today to assist you in understanding the impact that this law change may have on your business.

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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