Balloons Over the Rainbow, Inc. v. Director of Revenue
427 S.W.3d 815
Mo.2014Background
- Balloons Over the Rainbow, Inc. seeks review of the AHC's denial of a refund and the assessment of sales and use taxes.
- Balloons argues AHTA prohibits Missouri from taxing gross receipts from untethered hot air balloon rides under §144.020.1.
- Balloon sales occur directly in Missouri and via out-of-state flight certificates sold by third-party vendors; third-party payments flow to Balloons upon certificate redemption.
- Missouri assessed sales taxes on Missouri-direct rides and use taxes on out-of-state purchases (balloon and inflator) made in Texas.
- Court holds sales taxes on balloon rides are preempted by AHTA; use tax on Texas purchases upheld; case remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the AHTA preempt Missouri sales tax on balloon rides? | Balloons: sales tax on rides falls within gross receipts taxed by §144.020.1 and is prohibited by AHTA §40116(b)(4). | Director: state may levy sales tax notwithstanding AHTA, as preemption arguments are narrow or not triggered. | Yes; AHTA prohibits the tax on gross receipts from air commerce. |
| Are sales taxed on flight certificates sold by out‑of‑state vendors taxable under Missouri law given preemption? | Assessment on certificates would be taxable unless preempted by AHTA. | Taxes may apply if not preempted; resale exemption possible if not preempted. | Reversed/mooted in light of preemption on all balloon ride gross receipts. |
| Whether Balloons qualifies for a use tax exemption as a common carrier for the Texas purchases. | Balloons argues exemption under §144.030.2(3) or (20) as a common carrier. | Balloon not shown to hold itself out as a common carrier; exemption not satisfied. | Use tax exemption not available; Balloons is not a common carrier. |
| Did Balloons meet the common carrier standard under Missouri law for the use tax exemptions? | Balloon asserts it carries any paying customer as weather permits. | Evidence shows Balloons exercises discretion and does not hold itself out to all comers. | No; Balloons did not establish common carrier status. |
Key Cases Cited
- Cook Tractor Co., Inc. v. Dir. of Revenue, 187 S.W.3d 870 (Mo. banc 2006) (defines 'common carrier' for §144.030 exemptions)
- Emerson Elec. Co. v. Dir. of Revenue, 133 S.W.3d 31 (Mo. banc 2004) (interprets 'common carrier' in §144.030.2(20))
- Anderson v. Witthaus, 102 S.W.2d 99 (Mo. banc 1937) (historic definition of 'common carrier')
- Hill v. National Transportation Safety Board, 886 F.2d 1275 (10th Cir. 1989) (broad construction of 'air commerce' to protect safety)
- Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) (preemption analysis: congressional purpose and intent)