567 S.W.3d 161
Mo.2019Background
- Myron Green Corporation operates commercial corporate cafeterias and contracted to operate the Federal Reserve Bank of Kansas City’s on-site cafeteria under a cost-plus contract; the bank is a secure facility restricting public entry but anyone with access can buy food.
- Myron Green purchased, stocked, prepared, and sold the food; it ran point-of-sale systems and retained inventory control; the bank set prices, hours, and screened Myron Green employees.
- Customers paid by cash (directly to Myron Green) or by payroll deduction (employees swipe badges; Myron Green transmits charges twice monthly; the bank pays Myron Green and reimburses itself from withheld wages). About 80% of sales used payroll deduction.
- The bank subsidized cafeteria operations by making a monthly shortfall payment to cover below-market prices; the bank is generally exempt from state sales tax under federal law.
- The Director audited and determined Myron Green owed Missouri sales tax on cash and payroll-deduction sales because individual employees — not the bank — were the purchasers; the Administrative Hearing Commission affirmed and Myron Green sought review in the Missouri Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bank cafeteria "regularly serves meals or drinks to the public" under § 144.020.1(6) | Myron Green: Secure facility means cafeteria is not "to the public" | Director: Access for any person admitted makes it "public"; operator regularly serves the public | Court: Held public; J.B. Vending controls — restricted entry does not negate "to the public" when operator serves any entrant |
| Whether the bank (federally tax-exempt entity) was the purchaser of cafeteria goods, making sales exempt under § 144.030.1 and federal law | Myron Green: Bank exercised dominion (set prices, hours, subsidized), so bank purchased goods and exemption applies | Director: Individual customers exercised dominion and paid Myron Green; payroll deduction is merely a payment mechanism | Court: Held purchasers were individual customers; bank did not exercise requisite dominion and control over goods |
| Whether Canteen/retailer-resale analog applies (i.e., bank bought then resold food) | Myron Green: Analogous to retirement-home resale in Canteen Corp. v. Goldberg | Director: Distinction—retirement home paid and resold; here bank did not pre-purchase or control inventory | Court: Held Canteen inapplicable; no pre-purchase or resale by bank |
| Whether the commission’s ruling was "unexpected" making liability only prospective under § 143.903 | Myron Green: Ruling was unexpected, so tax liability should be nonretroactive | Director: Decision follows precedent; not unexpected | Court: Held decision not unexpected (consistent with J.B. Vending); tax liability retroactive |
Key Cases Cited
- J.B. Vending Co., Inc. v. Dir. of Revenue, 54 S.W.3d 183 (Mo. banc 2001) (secure-building cafeterias are "to the public" when operator serves any admitted persons)
- Shelter Mut. Ins. Co. v. Dir. of Revenue, 107 S.W.3d 919 (Mo. banc 2003) (company cafeteria may be nonpublic when meals are incidental to primary business and operator is employer)
- Becker Elec. Co., Inc. v. Dir. of Revenue, 749 S.W.2d 403 (Mo. banc 1988) (purchaser is the party exercising dominion and control over the purchased property)
- Olin Corp. v. Dir. of Revenue, 945 S.W.2d 442 (Mo. banc 1997) (test for dominion: who determines utilization — how, where, when property is used)
- Canteen Corp. v. Goldberg, 592 S.W.2d 754 (Mo. banc 1980) (supplier-to-institution-to-resident resale held treated as institution purchase)