Daily Tax Report: State

Kansas City Chiefs to Appeal $930,000 Loss in Tax Dispute

Feb. 1, 2019, 5:16 PM

The Kansas City Chiefs will appeal a $930,000 loss in a tax dispute with the state of Missouri arising from Arrowhead Stadium renovations a decade ago.

The state Administrative Hearing Commission ruled Jan. 29 that the team owes that amount in unpaid sales and use taxes for a variety of purchases made during the $400 million stadium-renovation project.

Included are purchases of furniture for the stadium’s administrative offices used by the team, furniture for luxury suites, scoreboards and scoreboard video equipment, televisions located throughout the stadium, display cases for memorabilia, and a statute of the team’s founder, Lamar Hunt.

The items at issue in the dispute weren’t construction materials used in repair or renovation of the stadium, but rather were purchased by the team for use in its for-profit business, AHC said.

Ownership Dispute

The team argued before the commission that it wasn’t subject to sales and use tax because the items were owned by Jackson County, which owns the stadium and surrounding complex, and were paid for by county funds.

But that argument fell short because the team itself ordered and paid for the items under dispute, and because there was no evidence that the team transferred title or ownership of the items to Jackson County upon being reimbursed, the commission said.

In addition, the project fund from which the team was reimbursed included funds contributed by the team, the commission said.

The Chiefs contributed $125 million to the renovation project, according to information on the Jackson County website.

A Chiefs’ spokesman told Bloomberg Tax Jan. 31 that the team will appeal.

The case is Kansas City Chiefs Football Club, Inc. v. Dir. of Revenue, Mo. Admin. Hearing Comm’n, No. 14-1973 RS, 1/29/19.

To contact the reporter on this story: Christopher Brown in St. Louis at ChrisBrown@bloomberglaw.com

To contact the editor responsible for this story: Jeff Harrington at jharrington@bloombergtax.com

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