Were an entertainment agency's fees for booking independent bands at Connecticut locations subject to sales and use tax?

Note -- revoked historical guidance. DRS marks this information "not current" and states that Policy Statement (PS) 93(3) revoked the ruling.

Plain-English summary

X Company booked independent bands for clients. The bands had no written or oral contracts with X Company, kept their own styles and names, and could contract directly with the clients after booking.

DRS treated X Company as an employment agency because it procured jobs for the bands. X Company had to charge tax on its fees for bookings at Connecticut locations whether it billed the client or the band. Payments that third-party clients made directly to the bands were not subject to sales and use tax.

What this means for you

The historical ruling focused on job procurement, not ongoing control over performers. PS 93(3) later revoked the guidance.

Common questions

Were the agency's booking fees taxable? Yes for Connecticut-location bookings.

Did it matter whether the client or band paid the agency? No.

Were direct client payments to the bands taxable? No under the ruling.

Citations and references

• Conn. Agencies Regs. § 12-426-27(b)(3) and § 12-426-27, as cited in the ruling.
• Policy Statement (PS) 93(3) -- identified by DRS as revoking this ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-205

Original ruling text

Ruling 89-205, Personnel Services

This information is not current and is being provided for reference purposes only

Ruling 89-205

Personnel Services

This Ruling has been revoked by   PS 93(3)

Conn. Agencies Regs. § 12-426-27(b)(3) provides as follows:

Employment services mean and include the procurement or offer to procure for a consideration: Jobs or positions for those seeking employment; or employees for employers seeking the services of employees.

According to the information presented in your letter, X Company operates an entertainment agency whereby it books independent bands for its clients. These bands do not have contractual agreements, either written or oral, with X Company and have their own individual styles and names. Once the bands have been booked by X Company, they may enter into contracts directly with X Company's clients.

Based on the above set of facts, X Company procures jobs for bands at the request of its clients. X Company operates as an employment agency pursuant to Conn Agencies Regs. § 12-426-27. The regulation does not require that an employment agency renders its services on an ongoing basis and does not provide a distinction between entertainment agencies that have strict control over its employees versus the entertainment agencies that only book first time bands. X Company must apply tax to its fees for booking the bands at Connecticut locations whether it charges the clients or the bands. However, payments received directly by the bands from the third party clients are not subject to the sales and use tax.

LEGAL DIVISION

November 8, 1989