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Missouri AMOA Hails Tax Victory

Posted On: 8/18/2007

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JEFFERSON CITY, MO (August 2007) -- When Gov. Matt Blunt signed Senate Bill 30 into law on July 14, it was the culmination of years of struggle by operators that began in 1992. And the new law may just keep the Missouri amusements trade from being taxed out of existence, state association leaders say.

The bill protects amusement machine operators from a sales tax of up to 9% on profits from coin-op amusements. Allowing the sales tax to apply to amusements "could have put legitimate operators out of business," said Missouri AMOA president Jim Turntine, Play-Mor Coin-Op and Wonder Novelty (Sullivan, MO). "You just can't afford to pay those kinds of taxes."

SHAKE ON IT:  Missouri Gov. Matt Blunt and MAMOA president Jim Turntine (right) celebrate signing of Senate Bill 30. Bill codifies a Missouri Supreme Court ruling that decrees sales taxes on machine collections is not due if tax was paid on purchase price of equipment. An advocate of business, governor held signing ceremony at SAF Holland truck factory in Warrenton.

Turntine said he personally has been working on the tax issue for 15 years.

The law is formally known as Sales Tax on Coin-Operated Amusement Devices, and was attached to a larger tax bill.

The national AMOA (Chicago) reported that the new law authorizes an exemption from state and local sales tax for amusement machine revenues, starting September 1, 2007, for the cost of temporarily using coin-op amusement devices (COAD) and removes the exemption for the purchase of the devices and parts. COADs include video, pinball, table and redemption games.

Previously purchased coin-operated amusement machines may face different regulations in certain circumstances. Details may be obtained directly from Missouri AMOA by calling (417) 831-0405

Turntine, in his notice to Missouri AMOA members, stated: "The savings to our industry are enormous and help keep our industry viable. We no longer have to deal with this issue at all, as long as we pay the sales tax on the purchase of the device, plus the parts and the supplies for it. Nothing is due on the revenues."

On its long road to adoption, the amusement-device tax relief language was attached to many pending bills introduced in the Missouri legislature, including HB 921. The bill was necessary to combat expanding taxation by the Missouri Department of Revenue, which became an issue more than a decade ago.

According to Turntine, the Department of Revenue had been steadily expanding the number and type of locations that it deemed "places of amusements." In these venues, the state imposed sales taxes -- ranging from 6% to 9% -- on amusement machine income, in addition to sales taxes on the original purchases of the machines, license fees and other state-mandated expenditures imposed on operators.

"Operators had no way to pass these cashbox sales taxes on to players," said Turntine. "By 2001, all indications were that the department of revenue planned on collecting sales tax in every cashbox of every machine of every location we had. They continued to expand the old rules to cover more and more of our revenue as a taxable bill."

Adding to operators' woes, said Turntine, was the fact that the amount of sales tax varied from town to town. "Tracking and reporting of sales taxes was a nightmare," he said, "not to mention the challenge of determining which locations were subject to the tax and which were not."

A turning point occurred five years ago when the Six Flags amusement park chain won two court cases that incidentally resulted in regulatory relief for amusement operators in regard to sales taxes on many game revenues. Subsequently, Missouri's AMOA worked with officials at the state's department of revenue to modify all applicable regulations to ensure that state tax codes were consistent with the outcome of the Six Flags court cases.

"We thought that would be all we needed to do," said Turntine. "Unfortunately, this last winter, there was a strange turn of events."

Other industries -- Turntine believes they may have been large telephone and cable service providers -- were impacted by the same (new and more favorable) sales tax rules that had provided relief to operators. These non-amusement industries initiated requests to the state for refunds on past sales tax payments they had made.

The result, he said, was that the Missouri government almost reversed its decision, unintentionally putting the amusements industry again at risk of an unsupportable tax burden.

At that point, said Turntine, the Missouri AMOA decided to seek a state law that would formally establish how sales taxes were applied to amusement machine revenues in most locations. The advantage of a law over a regulation was that it would require a vote by a future legislature to overturn, as opposed to a simple change of policy by the executive branch or revenue department personnel.

"We alerted the governor's office and the department of revenue to the danger of unintended consequences if they reversed course, asking them to remember our situation," he said. Response by state officials from the governor on down was strongly positive, he said.

"Both the governor and the revenue department showed vision and leadership on this issue," said Turntine. "They worked closely with us and with our lobbyists in a fashion that was wonderful to behold. We highly commend Gov. Blunt and his staff, and we thank them and the department of revenue for their outstanding assistance to the amusement operators of Missouri."