Did a 501(c)(3) nonprofit have to collect Florida sales tax on tickets to its scholarship-benefit rodeo?

Plain-English summary

Florida allowed the 501(c)(3) nonprofit to sell rodeo tickets without sales tax if it actually sponsored the event under the Department's four-part test.

The nonprofit ran an annual rodeo and used the proceeds for student scholarships. Qualifying as a 501(c)(3) satisfied the organizational requirement, but the exemption also depended on the nonprofit's role in the event.

It had to actively participate in planning and conducting the rodeo, assume responsibility for its safety and success, receive both gross and net proceeds, pay the costs, and bear any net loss. If those conditions were met, it did not collect tax on ticket sales.

What this means for you

• Federal nonprofit status did not by itself establish the admission exemption.
• The organization had to be the real sponsor, not merely lend its name to the event.
• Financial upside, costs, losses, operational participation, and liability all mattered.

Common questions

Q: Were the rodeo tickets exempt?
A: Yes, if the nonprofit met all four sponsorship criteria.

Q: Was 501(c)(3) status enough by itself?
A: No.

Q: Did the nonprofit have to bear event losses?
A: Yes.

Citations and references

• Fla. Stat. § 212.04(1)(a), (2)(a)2.a. — admissions tax and nonprofit exemption
• Fla. Stat. § 212.02(1) — definition of admissions
• Fla. Admin. Code r. 12A-1.005(1), (3)(g)1., (h) — admissions and sponsorship criteria
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-021

Original ruling text

Mar 19, 1996

Re: Technical Assistance Advisement 96A-021
Sales and Use Tax - Admissions to Rodeos
Sections: 212.02, 212.04, F.S.
Rule: 12A-1.005, F.A.C.
Petitioner:

XXXX (herein "Taxpayer")

FEI: XXX

Dear :

This is a response to your petition received January 31,
1996, for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced party and
matter. Your petition has been carefully examined and the
Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of s. 213.22, F.S..

DISCUSSION OF FACTS

Taxpayer is a non-profit organization qualified under the
provisions of Section 501(c)(3) of the United States Internal
Revenue Code. Taxpayer sells tickets to and sponsors an annual
rodeo from which the proceeds are used to give scholarships to
deserving students.

REQUESTED ADVISEMENT

Based on the information provided, is Taxpayer required to
collect sales tax on rodeo ticket sales?

Discussion, Analysis, and Conclusion of Law

Section 212.04, F.S, provides in part:

(1)(a) It is hereby declared to be the legislative intent

that every person is exercising a taxable privilege who
sells or receives anything of value by way of
admissions....

(2)(a)2.a. No tax shall be levied on... admission charges
imposed by not-for-profit sponsoring organizations. To
receive this exemption, the sponsoring organization must
qualify as a not-for-profit entity under the provisions of
s. 501(c)(3) of the United States Internal Revenue Code of
1954, as amended.

Section 212.02, F.S., provides in part:

(1) The term "admissions" means and includes the net sum of
money after deduction of any federal taxes for admitting a
person or vehicle or persons to any place of amusement,
sport, or recreation or for the privilege of entering or
staying in any place of amusement, sport, or recreation,
including,... any place where charge is made by way of sale
of tickets,... or other fees or receipts of anything of
value measured on an admission or entrance or length of
stay... in any place where there is any exhibition,
amusement, sport, or recreation....

The Department has promulgated Rule 12A-1.005, F.A.C.,
which interprets Section 212.04, F.S., and provides in part:

(1) Every dealer is exercising a taxable privilege who
sells or receives anything of value by way of admissions
except those admissions which are specifically exempt....

(3)(g)1.... [N]o tax shall be levied on... admission
charges imposed by not-for-profit sponsoring organizations
or community or recreational facilities. To receive this
exemption, the organization making any such charges must
qualify as a not-for-profit entity under the provisions of
s. 501(c)(3) of the United States Internal Revenue Code of
1986, as amended....

(h) For the purposes of this rule, sponsorship of an event
or program is determined by using the following criteria:

1. Active participation by the entity in the planning and
conduct of the event or program;

2. Assumption by it of responsibility for the safety and
   success of the event or program, such that it will be
   subject to a suit for damages for alleged negligence in its
   conduct;

3. Entitlement by it to the gross proceeds from the event
   or program and to the net proceeds after payment of its
   costs; and

4. Responsibility by it for payment of costs of the event
   or program and for bearing any net loss if the costs exceed
   gross proceeds.

Based on the information provided, Taxpayer does qualify as
a 501(c)(3) not-for-profit entity. Therefore, pursuant to the
above statutory and regulatory cites, Taxpayer will not be
required to charge tax on its ticket sales if it meets the
following criteria: 1) actively participates in the planning and
conduct of the rodeo; 2) assumes responsibility for the safety
and success of the rodeo such that it will be subject to a suit
for damages for alleged negligence in its conduct; 3) is
entitled to the gross proceeds from the rodeo and to the net
proceeds after payment of its costs; and 4) is responsible for
the payment of the costs of the rodeo and for bearing any net
loss if the costs exceed gross proceeds.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the department only
under the facts and circumstances described in the request for
this advice, as specified in s. 213.22, F.S. Our response is
predicated upon those facts and the specific situation
summarized above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment from that
which is expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details that might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. I am in receipt of your request that the
following information be deleted from this TAA: 1) the name of
the taxpayer - ; 2) the address - ; and 3) the taxpayer's
identifying number -.

Sincerely,

Leigh L. Ceci
Senior Tax Specialist

Enclosure
Control #24587