Court affirms bowling shoe tax in 4-3 decision

JEFFERSON CITY, Mo. -- A St. Louis-area bowling alley narrowly ended up with a gutter ball Tuesday in its effort to recover state taxes paid on proceeds from shoe rentals.

Relying on a 1977 precedent, the Missouri Supreme Court ruled 4-3 that such income is taxable under state law.

However, in dissent Judge Stephen N. Limbaugh Jr. of Cape Girardeau said the majority overlooked more recent case law.

The result for bowling alley operators is they must continue paying the tax. The managers of Jackson Bowling Lanes and West Park Lanes in Cape Girardeau said they were unaware of the legal effort to overturn the rental tax and that they have always paid it.

"That's just the way it goes," said West Park Lanes manager Darryl James. "We just do whatever we have to do."

Double payment

The issue of double payment was at the core of the legal challenge Tropicana Lanes of St. Louis County brought against the Missouri Department of Revenue.

Since it had already paid sales taxes on the shoes it purchased, Tropicana claimed it was entitled to a refund of $23,890 in taxes paid on fees it charged customers to rent the shoes.

The revenue department rejected that claim, but the Administrative Hearing Commission, which considers appeals of decisions made by state agencies, overruled the department and ordered a refund. The department appealed.

The majority opinion, written by Judge Michael A. Wolff, said the court had already determined that such income was subject to taxes in a 1977 case brought by another bowling alley. Since the relevant statute hasn't changed since that time, there was no reason to change the court's interpretation, Wolff wrote.

Judges Duane Benton, Laura Denvir Stith and Chief Justice Ronnie L. White joined the majority decision.

Limbaugh, along with Judges William Ray Price Jr. and Richard B. Teitelman, said the majority's finding contradicted a 1999 ruling. In that case, the court said a country club that paid taxes on the purchase of golf carts didn't have to pay taxes on income from fees charged for their usage.

"There is simply no principled distinction between the rental of golf carts from a country club and the rental of bowling shoes from a commercial bowling establishment," Limbaugh wrote.

The case is Eighty Hundred Clayton Corp., dba Tropicana Lanes v. Director of Revenue.

mpowers@semissourian.com

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