Missouri State Usbc v. Director of Revenue
| Decision Date | 29 April 2008 |
| Docket Number | No. SC 88630.,SC 88630. |
| Parties | MISSOURI STATE USBC ASSOCIATION, Appellant, v. DIRECTOR OF REVENUE, Respondent. |
| Court | Missouri Supreme Court |
Carole L. Iles, Edward F. Downey, Jefferson City, for Appellant.
Jeremiah W. (Jay) Nixon, Atty Gen., Gary L. Gardner, Asst. Atty. Gen., James L. Spradlin, Amy T. Bartolomucci, Department of Revenue, Jefferson City, for Respondent.
The Missouri State USBC1 Association ("Bowling Association") seeks review of the Administrative Hearing Commission's ("AHC") decision determining that it is not entitled to a sales and use tax exemption as a not-for-profit charitable, civic, or service organization. The AHC's decision is reversed, and the cause is remanded.
This Court has jurisdiction to review the AHC's decision pursuant to Mo. Const. article V, section 3, as the case involves construction of state revenue laws. The AHC's interpretation of revenue laws is reviewed de novo. DST Sys., Inc. v. Dir. of Revenue, 43 S.W.3d 799, 800 (Mo. banc 2001). The AHC's factual determinations will be upheld if the law supports them, and, after reviewing the whole record, there is substantial evidence that supports them. Id.
Bowling Association was formed in 2006 by the merger of three Missouri bowling associations.2 Bowling Association's bylaws outline that its purposes include: (1) to provide equal opportunity for all in the sport of bowling; (2) to promote the game of American Tenpins; (3) to conduct and support bowling competitions; and (4) to engage in other activities permitted by its federal tax-exempt status. It contends that its efforts to promote the sport of bowling increase physical activity and recreational opportunities for Missourians.
Membership in Bowling Association is open to anyone. It currently has more than 75,000 members. Members join Bowling Association when they join a Missouri-based bowling league and purchase a membership card for a nominal fee.3 In fiscal year 2006, Bowling Association did not charge dues. Its bylaws provide, however, that dues can be charged, but cannot exceed $1.00 annually for adults and $0.25 annually for youth.
Bowling Association encourages all age groups to be active bowlers and annually hosts a number of bowling tournaments. Tournament bowlers pay a fee to participate and cover their bowling costs. The association pays a per-game, per-player "lineage" fee for use of the bowling lanes used in its tournaments. Bowling Association seeks sales tax exempt status, in part, to avoid paying tax on its use of bowling lanes at its tournaments.
Bowling Association annually hosts a bowlers showcase and annual meeting, during which time it hosts a banquet and honors distinguished members with awards. It also awards $4000 annually in scholarships to youth. The scholarships are awarded based on scholastic and bowling ability, community service, and recommendations of teachers and coaches. The bowlers showcase also includes workshops and assistance for bowlers and their local associations, updates on the association's activities, and an opportunity to elect board members.
Bowling Association and its local affiliates make various charitable contributions. Thousands of dollars have been raised by Bowling Association's predecessor organizations and its local affiliates, but its own budget in 2006-2007 included only $1000 for "donations." Bowling Association, however, states that it has not begun all of its intended activities because it is newly formed. It reports plans to increase educational ventures to help local bowling organizations enhance operations and improve public outreach. It also has plans to donate kits to elementary schools that will promote the sport of bowling in physical education classes.
Bowling Association argues that its actions better the State and local communities and serve the public interest. It maintains that it is the kind of organization entitled to tax exempt status under sections 144.030.2(19) and (20), RSMo Supp. 2007.4 The director of revenue responds, however, that Bowling Association is not a charitable, civic, or service organization entitled to tax exempt status under Missouri law.
Tax exemptions should be founded on a rational basis and rest on sound public policy. State ex rel. Transp. Mfg. & Equip. Co. v. Bates, 359 Mo. 1002, 224 S.W.2d 996, 1000 (1949). Exemptions "must be founded upon a reason public in nature" and "must be strictly construed and generally are sustained only upon the grounds of public policy." Id. "They should serve a public, as distinguished from a private, interest." Id.
Taxpayers carry the burden of showing they are entitled to an exemption under the statutes. Branson Props. USA, L.P. v. Dir. of Revenue, 110 S.W.3d 824, 825 (Mo. banc 2003). Exemptions from taxation are to be strictly construed against the taxpayer, and any doubt is resolved in favor of application of the tax. Id.
Section 144.030.2(20) provides an exemption for "all sales made by or to not-for-profit civic, social, service or fraternal organizations ... in their civic or charitable functions and activities...."
Words and phrases in statutes are to be given their plain and ordinary meaning, which can be typically derived from the dictionary. Section 1.090, RSMo 2000; Indian Lake Prop. Owners Ass'n, Inc. v. Dir. of Revenue, 813 S.W.2d 305, 308 (Mo. banc 1991). This Court previously defined "civic" as used in section 144.030.2(20) using its dictionary definition:
Forming a component of or connected with the functioning, integration, and development of a civilized community (as a town or city) involving the common public activities and interests of the body of citizens ... concerned with or contributory to general welfare and the betterment of life for the citizenry of a community or enhancement of its facilities; esp: devoted to improving health, education, safety, recreation, and morale of the general public through nonpolitical means[.]
Indian Lake, 813 S.W.2d at 308 ().
Indian Lake added: Id. In Indian Lake, this Court rejected a claim by a homeowners' association that it was a civic organization entitled to tax exempt status because the association had ...
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