Did a section 501(c)(3) nonprofit have to collect Florida admissions tax on live theater performances it actively sponsored?

Subject

Admissions by 501(c)(3) Entity

Plain-English summary

The Department concluded that the nonprofit did not have to collect Florida sales tax on its live-theater admissions. Section 501(c)(3) status was necessary, but the organization also satisfied the rule's sponsorship criteria.

The nonprofit actively participated in planning and conducting the theater events, accepted responsibility for their safety and success, was entitled to gross proceeds and net proceeds after costs, and was responsible for event costs and any net losses. Those facts made it the sponsoring organization rather than merely an exempt entity lending its name to someone else's production.

The ruling contrasted this exemption with a separate, limited live-theater, opera, or ballet exemption for qualifying organizations with more than 10,000 subscribers. If the taxpayer did not satisfy the sponsorship criteria and reached that subscriber threshold, it would need to apply in writing before March 1 each year for a Department certificate and comply with the limited exemption rules.

What this means for you

Federal nonprofit status alone did not decide the admissions-tax result. The organization needed operational and financial responsibility for the events it claimed to sponsor.

Records had to support who planned the performances, who bore risk and expenses, and who received proceeds, as well as the organization's exempt status.

Common questions

Q: Was the nonprofit actively involved in the performances? Yes. It planned the events and was responsible for their safety and success.

Q: Who received the admissions proceeds? The nonprofit was entitled to gross proceeds and net proceeds after paying costs.

Q: Who bore losses? The nonprofit did.

Q: When would an annual exemption certificate be required? The ruling described that process for an organization that did not meet the ordinary sponsorship requirements and instead sought the separate limited exemption after reaching 10,000 or more subscribers.

Citations and references

• Fla. Stat. § 212.04(1)(a), (2)(a)2.a., and (2)(a)6. — admissions tax, nonprofit sponsor exemption, and limited live-performance exemption
• Fla. Admin. Code R. 12A-1.005(3)(h) and (3)(k) — sponsorship criteria and annual certificate process
• Fla. Stat. §§ 212.13(2), 212.12(6), and 213.35 — recordkeeping sufficient to establish exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-010

Original ruling text

SUMMARY

The taxpayer qualified as a 501(c)(3) not-for-profit entity
and complied with s. 212.04(2)(a)2a., F.S., and Rule 12A1.005(3)(h), F.A.C. Therefore, it is exempt from
collecting tax on the admissions it sells. However, where
a taxpayer does not meet the sponsorship requirements
stated in Rule 12A-1.005(3)(h), F.A.C., and reaches 10,000
or more subscribers, it will have to comply with the
requirements of s. 212.04(2)(a)6., F.S., and Rule 12A1.005(3)(k), F.A.C., and make a written request from the
Department each year for a certificate of exemption in
order to be entitled to the limited exemption provided
therein.

Feb 25, 1997

Re: Technical Assistance Advisement 97(A)-010
Sales and Use Tax - Admissions by 501(c)(3) Entity
Sections: 212.02, 212.04, F.S.
Rule: 12A-1.005, F.A.C.
Petitioner: XXX (herein "Taxpayer")
FEI: XX

Dear :

This is a response to your petition received December 3, 1996,
for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced 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.

STATED FACTS

Taxpayer is a non-profit organization qualified under the
provisions of Section 501(c)(3) of the United States Internal

Revenue Code. Taxpayer hosts live performances at a theater.
Revenue is generated by admissions charges to individuals
attending the performance. Taxpayer is not registered with the
Department of Revenue for Sales Tax purposes. You have
indicated via telephone that Taxpayer has less than 10,000
subscribing members, is actively involved in the planning of
events at the theater, is responsible for the safety and success
of the events, is entitled to the gross proceeds from the events
and is responsible for payment of costs and net losses of the
events.

REQUESTED ADVISEMENT

You ask whether Taxpayer is required to collect Sales tax on the
admissions charge. You state, in part:
Since [Taxpayer]... is a 501(c)(3) exempt organization that
sponsors/conducts performances, it seems quite evident that
the revenues from admissions charges for these events are
exempt from Florida Sales Tax.

LAW AND ANALYSIS

Section 212.04, F.S, provides in part:

*212.04 Admissions tax; rate, procedure, enforcement.-(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 dues, membership fees, and
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....

6. Also exempt from the tax imposed by this section to the
   extent provided in this subparagraph are admissions to live
   theater, live opera, or live ballet productions in this

state which are sponsored by an organization that has
received a determination from the Internal Revenue Service
that the organization is exempt from federal income tax
under s. 501(c)(3) of the United States Internal Revenue
Code of 1954, as amended, if the organization actively
participates in planning and conducting the event, is
responsible for the safety and success of the event, is
organized for the purpose of sponsoring live theater, live
opera, or live ballet productions in this state, has more
than 10,000 subscribing members and has among the stated
purposes in its charter the promotion of arts education in
the communities which it serves, and will receive at least
20 percent of the net profits, if any, of the events which
the organization sponsors and will bear the risk of at
least 20 percent of the losses, if any, from the events
which it sponsors if the organization employs other persons
as agents to provide services in connection with a
sponsored event. Prior to March 1 of each year, such
organization may apply to the department for a certificate
of exemption for admissions to such events sponsored in
this state by the organization during the immediately
following state fiscal year. The application shall state
the total dollar amount of admissions receipts collected by
the organization or its agents from such events in this
state sponsored by the organization or its agents in the
year immediately preceding the year in which the
organization applies for the exemption. Such organization
shall receive the exemption only to the extent of $1.5
million multiplied by the ratio that such receipts bear to
the total of such receipts of all organizations applying
for the exemption in such year; however, in no event shall
such exemption granted to any organization exceed 6 percent
of such admissions receipts collected by the organization
or its agents in the year immediately preceding the year in
which the organization applies for the exemption. Each
organization receiving the exemption shall report each
month to the department the total admissions receipts
collected from such events sponsored by the organization
during the preceding month and shall remit to the
department an amount equal to 6 percent of such receipts
reduced by any amount remaining under the exemption.

Tickets for such events sold by such organizations shall
not reflect the tax otherwise imposed under this section.
(E.S.)

The Department has promulgated Rule 12A-1.005, F.A.C., which
interprets s. 212.04, F.S. Section (3)(k)&(h) provide, in part:

(3)...
(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.

(k) Admissions to live theater, live opera, or live ballet
productions to the extent provided in s. 212.04(2)(a)6.,
F.S., are exempt. In order to receive this exemption, the
organization must make written request [to the Department
of Revenue] prior to March 1 of each year for a certificate
of exemption....

Upon receipt and approval of the application, the
department will issue a certificate of exemption to the
organization and advise the organization of its pro rata
share of the exemption.

Based on the information you have provided, Taxpayer does
qualify as a 501(c)(3) not-for-profit entity. Because it

complies with s. 212.04(2)(a)2a, F.S. and Rule 12A-1.005(3)(h),
F.A.C, above, taxpayer is exempt from collecting tax on the
admissions it sells.

However, if taxpayer does not meet the sponsorship requirements
stated in Rule 12A-1.005(3)(h), F.A.C. reaches 10,000 or more
subscribers, it will have to comply with the requirements of s.
212.04(2)(a)6., F.S., and Rule 12A-1.005(3)(k), F.A.C., and make
a written request from the Department each year for a
certificate of exemption in order to be entitled to the limited
exemption provided therein.

RECORD KEEPING

According to Florida law, every taxpayer has the legal
obligation to maintain adequate books and records.

Section 212.13(2), F.S., provides in part:

(2) Each dealer, as defined in this chapter, shall secure,
maintain, and keep as long as required by s. 213.35 a
complete record of tangible personal property or services
received, used, sold at retail, distributed or stored,
leased or rented by said dealer, together with invoices,
bills of lading, gross receipts from such sales, and other
pertinent records and papers as may be required by the
department for the reasonable administration of this
chapter; all such records which are located or maintained
in this state shall be open for inspection by the
department at all reasonable hours at such dealer's store,
sales office, general office, warehouse, or place of
business located in this state.... Any dealer subject to
the provisions of this chapter who violates these
provisions is guilty of a misdemeanor of the first degree,
punishable as provided in s. 775.082 or s. 775.083. (E.S.)

Section 213.35, F.S., provides:

Each person required by law to perform any act in the
administration of any tax enumerated in s. 72.011 shall
keep suitable books and records relating to that tax, such

as invoices, bills of lading, and other pertinent records
and papers, and shall preserve such books and records until
expiration of the time within which the department may make
an assessment with respect to that tax pursuant to s.
95.091(3). (E.S.)

Section 212.12(6), F.S., expressly provides, in part:

(6)(a) ... It shall be the duty of every person required to
make a report and pay any tax under this chapter,... to
keep and preserve suitable records of the sales, leases,
rentals, license fees, admissions, or purchases, as the
case may be, taxable under this chapter; such other books
of account as may be necessary to determine the amount of
the tax due hereunder; and other information as may be
required by the department.... (E.S.)

As clearly provided by the above law, Taxpayer must maintain
records adequate to establish the taxable or nontaxable status
of its transactions.

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 on 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 than
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 which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect confidential
information, we request you notify the undersigned in writing
within 15 days of any deletions you wish made to the request or
this response.

Should you have any further questions concerning this matter,
please do not hesitate to contact me.

Sincerely,

Eric A. de Moya, Esq.
Tax Law Specialist
Tax Policy and Dispute Resolution
(904)922-4714

NOTICE UNDER THE AMERICANS WITH DISABILITIES ACT

Persons needing an accommodation to participate in any
proceeding before the Department of Revenue, should contact the
Department at (904)488-0717 (voice), or 1-800-DOR-8331 (TDD), at
least five working days before such proceeding. You may also
call via the Florida Relay System at 1-800-955-8770.

Control No. 27218