Could a reunion planner buy meals and printed materials tax-free for resale when they were included in a taxable event ticket?

Subject

Admissions

Plain-English summary

The reunion planner's mandatory package was a taxable admission, not a resale of the meals, memory books, decorations, slide show, and other items included in the event. The company assembled the venue, entertainment, mailings, staffing, food, and other elements to create a place of amusement or recreation and sold alumni the right to attend.

Because every attendee paid the package price whether or not the attendee ate the food or received a particular item, the company was the consumer of those inputs. It had to pay sales tax to its vendors and collect admissions tax on the full attendee price. Florida said those were two separate taxable transactions rather than prohibited double taxation.

The company could change the result for particular items by offering them as genuine separate retail sales. The price had to be reasonable, separately identified, and optional to the attendee, and the agreement had to explicitly show that title to the item passed separately from admission. The company could then buy that item for resale and collect tax on its stated selling price while taxing the remaining event charge as admission.

Merely printing an internal allocation between “food” and “admission” did not work when admission without food was unavailable. On those terms, the attendee still bought one mandatory package.

What this means for you

Cost allocation is not the same as a separate sale. An event operator cannot turn inputs into resale inventory simply by listing how much of a mandatory ticket price relates to meals, printing, gifts, or entertainment.

If an item is truly optional and separately sold, the operator needs clear customer-facing pricing and contract language, vendor resale documentation, and records showing the purchase and later retail sale.

Common questions

Q: Was the full reunion package taxable as admission? Yes. The company sold access to an organized reunion event and had to collect tax on the attendee price.

Q: Could the planner give vendors resale certificates for all reunion-specific costs? No. It could do so only for tangible items actually resold through a separate, optional transaction.

Q: Did separately listing a food amount on the order form solve the issue? No. Food remained mandatory, so the listing did not create a separate retail sale.

Q: What if a vendor refused a valid resale certificate? The ruling described paying the vendor tax and later using the then-current return credit or refund process, supported by records of the resale.

Q: Did the company need two sales-tax registrations? No on the stated facts. It operated from one location and was not also commercially renting real property, so one registration covered its activities.

Citations and references

• Fla. Stat. §§ 212.02(1), (15)(a), 212.04, 212.05 — admissions, sales, and tax on event inputs
• Fla. Stat. § 212.12(12) — policy against duplication or pyramiding where practicable
• Fla. Stat. § 672.401(1) — explicit agreement on when title passes
• Fla. Admin. Code rr. 12A-1.005, 12A-1.038, 12A-1.039 — admissions and resale certificates
• Fla. Admin. Code r. 12A-1.013 — return credit described when vendor tax was paid on property later resold
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-039

Original ruling text

SUMMARY

The Department indicated a method whereby Company may, in certain instances, purchase food, beverages, and printed material tax exempt on the basis that these items are resold to attendees of events planned and staged by Company.

May 20, 1998

Re: Technical Assistance Advisement 98A-039 Sales and Use Tax - Admissions Sections 212.02(1) and 212.04, F.S. Rule 12A-1.005, F.A.C. XXX (Company)

Dear :

This is a response, styled a Technical Assistance Advisement (TAA), to a letter dated December 22, 1997, and a settlement agreement between the Department and Company in which the Department agreed to indicate a method whereby Company may, in certain instances, purchase food and beverages and printed material tax exempt on the basis that these items are resold to attendees of events planned and staged by Company.

On the first page of your letter you describe the Company in the following manner:

[Company] is in the business of planning high school reunions. The year-long process is quite intense, involving many services, including but not limited to consulting, conducting searches, data entry, database maintenance, staffing, slide show, nametag and memory book/directory production, production and printing of four mailings per class of approximately 500 alumni, provision of decorations, hiring entertainment and setting up, managing and tearing down the actual event.

[Company] prices the reunion to alumni by adding $45-$50 to the cost of food and beverage, thereby covering profit and expenses in the per person attendee price. The major expenses are food and beverage and printing - food and beverage accounting for approximately 50% of the per person price and printing accounting for approximately 10% of the per person price. All costs and expenses are passed onto the final consumer - the alumni attending their high school reunion. And, alumni are absolutely entitled to the food and beverage and all of the services provided by [Company].

Your request poses a series of questions, after each of which the Department's response appears, with the exception of questions numbered 8 and 9. These specific questions will be addressed in a separate letter by the Department.

In considering all the fact patterns and questions posed, and as previously communicated to you, the Department concludes that 1) Company puts all the necessary ingredients together, such as the entertainment, the advertising, the place, etc., for the purpose of providing amusement to reunion attendees, and that 2) Company sells tickets, purchased by the attendees, which entitle former students to attend the reunion. Thus, the fee charged is for admittance to a place of amusement, taxable under Section 212.04, F.S., as an admission.

Your questions were prefaced with a fact pattern as follows:

As a preface to these questions, when [Company] refers to
`all costs and expenses for the particular class and its reunion,' we are referring only to specific, tangible costs for that particular reunion, [i.e.]: the mailings about that classes' reunion, the balloons for that reunion, the food and beverage for that reunion, the slide show for that reunion, etc. This discussion does not include general costs such as printing of business cards, office equipment, etc.

Question 1.:

"If [Company] collects sales tax on the final "ticket" price, within which are all of the costs and expenses comprising the planning and reunion expenses and resulting "ticket" price, should [Company] pay sales tax to [its] vendors on all the items comprising the service and resulting ticket price?"

Department Response:

The question is answered in the affirmative. Because of the type of activities, such as entertainment, provided by Company, the transaction described is an "admission" taxable under provisions of Section 212.04(1)(b), F.S. As a consequence of the determination that the lump-sum charge for the "ticket" is the price of admission, all goods and services (meals, etc.) provided by Company are part of the admission. Thus, Company cannot be considered as selling meals (consisting of food and beverage), mailings, balloons, slide show, memory books, etc., and may not extend a resale certificate to the vendors for the various elements or components referred to as specific tangible costs for that particular reunion.

On the reservation/order form you provided as an example, the following costs were provided for admission to a reunion: "Reunion Package," $100.70; "Friday Only," $37.10, and "Saturday Only," $79.50. The specific tangible costs, on which the applicable Florida sales tax may have been paid, become elements of the taxable admission. Company is not selling the food, beverage, balloons, memory books, etc., to the attendees, but rather Company is charging an unvarying price which must be paid by all attendees, whether or not they partake of food and beverage, or receive a memory book or other tangible item. Thus this "unvarying price" is within the definition provided in s. 212.02(1), F.S., of "admission" as a charge for admitting a person, or permitting such person to remain in a "... place of amusement... or recreation...."

Question 2.:

"If so, wouldn't this amount to double/triple...multiple taxation to the end consumer who will pay sales tax on the total of all the included items and services which would themselves

include sales tax?"

Department Response:

The question is answered in the negative. Florida case law is clear regarding the matter of double taxation where separate taxable transactions are involved. In American Video Corp. v. Lewis, 389 So.2d 1059, 1061 (Fla. 1DCA 1980), the court stated:

A separate tax is collected by appellant from its customers for the furnishing of the cable television service under Section 212.05(5). Because of this, appellant contends that the Comptroller's ruling creates double taxation - a tax on the drop-in items when purchased by appellant, and a tax on their use or rental when installed on the premises of a customer. Section 212.12(12) contains a declaration of legislative intent that wherever, in construction, administration or enforcement of the chapter on sales taxes there may be a question respecting the duplication of the tax, that the "end consumer, or last retail sale shall be the sale intended to be taxed and insofar as may be practicable there be no duplication or pyramiding of the tax." We conclude, under the facts of this case, that when appellant purchases these items for its use in providing television service to its customers, a taxable transaction occurs; and when the necessary connections are made and the customer receives his television service furnished by appellant, a separate taxable transaction occurs. Under the legislative scheme, the tax on appellant's initial purchases is passed on to its customers as a part of the regular monthly subscription. When there are two taxpayers and two separate taxable transactions or privileges, double taxation does not occur. (E.S.)

See also Ryder Truck Rental, Inc. v. Bryant, 170 So.2d 822 (Fla. 1964), Department of Revenue v Anderson, 403 So.2d 397 (Fla. 1981), and IN RE Advisory Opinion to the Governor, 509 So.2d 292 (Fla. 1987).

In the case at hand, Company is the taxpayer with regard to transactions involving the purchase of items of tangible

personal property utilized in the operation of its reunion business. The reunion attendees are the taxpayers with regards to the purchase of taxable admissions provided by Company.

Question 3.:

"If not, what is the proper wording that [Company] must have in their mailings to alumni so that [Company] will not have to pay sales tax to vendors because these costs are being passed along to the final consumer?"

Department Response:

Company can, of course, market and price its sales to its customers as it chooses, requiring, for example, as it does on the reservation/order form provided, that only those customers who pay the price of $100.70, as admission, are entitled to attend on Friday and Saturday and receive the memory book. However, should Company choose to advertise a separately identified price for, 1) the food and beverage, 2) the balloons, 3) the slide show, 4) the classmate directory, 5) the nametags, 6) the recognition awards, etc., and if such separately stated prices are reasonable and available at the option of the purchaser (reunion attendees), Company may be considered as engaged in the business of selling tangible personal property, including food and beverage for immediate consumption. Company may, in such a circumstance, extend a resale certificate to its vendors and collect the applicable sales tax on the selling price of the separately stated and itemized items of tangible personal property. The remainder of the total price charged its customer should be identified as an admission on which Company would be obligated to collect the applicable sales tax. Realistically, items 1) and 4) above are the most likely to lend themselves to separate itemization.

Based on the advice received from an employee of the Department, Company has added language on the bottom of its Reunion Reservation/Order Form as follows:

"The following information is provided in compliance with the Florida Department of Revenue: Reunion Package pricing

includes the cost of the food and beverage ($55) served at the reunion and an admission fee ($40) which includes all the products and services that are necessary to produce this event. Friday Only pricing includes the cost of the food and beverage ($20) served at the reunion and an admission fee ($15). Saturday Only pricing includes the cost of the food and beverage ($40) served at the reunion and an admission fee($35). Admission fees are comprised of, but not limited to, alumni search fees, data entry, printing, postage, stationary, telecommunications, Internet fees, credit card fees, delivery fees, event labor and staffing, decorations, entertainment, classmate directory, nametags, slide show, recognition awards, and gratuities. Event admission without the cost of food and beverage is not available."

Company is attempting, by this wording, to separately identify and price discrete items, such as food and beverages, printed material, etc., of the admission events. As such, Company seeks to apply the resale exemption to the purchase of these items, when they are purchased by Company, to be included in its lumpsum sale of the admission to its customers. However, this method does not result in the separate sale of a meal, or the separate sale of an admission, etc., as the Company's customer is still required to pay a lump-sum amount for an admission, without any option. In fact, the invoice specifically states that, "... Event admission without the cost of food and beverage is not available." Therefore, Company, by this method, is not separately identifying and separately itemizing items of tangible personal property that it is attempting to sell, at retail, to its customers.

Question 4.:

"If [Company] does not pay tax to vendors whose costs are specifically related to a particular class and their reunion, what documentation should [Company] be prepared to give vendors so that they will feel comfortable in not charging [Company] sales tax?"

Department Response:

Company may extend a resale certificate, as provided in Rules 12A-1.038 and 12A-1.039, F.A.C. Company is alerted, however, that a resale certificate may be used only for those purchases of tangible personal property which are, in fact, resold to its customers, as described in the Department's response to the preceding question. In that regard, the term "sale" is defined in s. 212.02(15)(a), F.S., as "Any transfer of title or possession, or both, exchange, barter, license, lease, or rental, conditional or otherwise, in any manner or by any means whatsoever of tangible personal property for a consideration." (E. S.)

Section 75, Sales and Exchanges of Goods, 45 Fla Jur 2d, 183 provides:

While title to goods ordinarily does not pass under the Uniform Commercial Code before the goods are identified to the contract, the parties are otherwise free to determine by explicit agreement when title passes. Although the code requirement of an "explicit" agreement to ascertain the intention of the parties prevents reading into sales contracts, or into the actions of the parties, agreements based on obscure language or inconclusive actions. Only language drafted with some degree of deliberation would constitute the required explicit agreement.... See Official Comment 3 to UCC s. 2-501.

The above "explicit agreement" requirement is further contained in section 672.401(1), F.S., which provides: "Title to goods cannot pass under a contract for sale prior to their identification to the contract (s. 672.501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this code....
[T]itle to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties." Thus, Company's sales contract and agreement with its customers must be cast in a manner to be clearly understood by all parties, to indicate that the separately itemized and identified items are being sold, separate and apart from the price of the admission.

Company's sales of admissions, at the specifically identified prices of $100.70, $37.10, and $79.50 listed on the sample reservation/order form, which are taxable at the rate of six percent of the sales price pursuant to s. 212.04, F.S, does not include the reselling of its consumable items of tangible personal property. Such items are taxable under s. 212.05, F.S., even though the cost of these items may have been considered in the establishment of the final admission price. Therefore, pursuant to case law, there is no duplication or pyramiding of the tax on these separate taxable transactions and Company is not collecting the state's sales tax, on these taxable purchases, through its admission sales.

Question 5.:

"Should [Company] provide a Blanket Certificate of Resale?"

Department Response:

If Company decides to separately itemize and sell items of tangible personal property, Company may provide a blanket resale certificate to its vendor as provided in Rule 12A-1.038(6), F.A.C., as follows:

In cases where all of the purchases made by a person from a particular dealer are for resale or are to be incorporated as a material or part of other tangible personal property to be produced for sale by manufacturing, assembling, processing or refining, the dealer is authorized to take a blanket certificate of resale from the purchaser stating that all of the purchases made by such person for a definite period will be purchased from the dealer for either of the above mentioned purposes, provided each subsequent order contains the certificate of registration number of the purchaser.

Question 6.:

"If so, how should it be filled out?"

Department Response:

In accordance with the provisions of Rule 12A-1.038(1) and (6), F.A.C., a resale certificate must be signed and dated by the dealer, or authorized representative, stating that the property or services are purchased for resale, containing the dealer name, dealer address, the number of the dealer's certificate of registration, and the effective date of the certificate of registration.

Question 7.:

"What if a vendor refuses to accept the Blanket Certificate of Resale - is there anyone at the Department of Revenue to help with these sorts of situations, or should [Company] pay the tax and take a line 6 Deduction on [its] monthly Sales and Use Tax Returns?"

Department Response:

Pursuant to s. 213.053(10), F.S., the Department is authorized to respond to inquiries whether the specified person holds a valid certificate or whether a specified certificate number is valid and the name of the holder of such certificate. However, the statute also further specifies, "[t]his subsection shall not be construed to create a duty to request verification of any certificate of registration."

Dealers are not required by Florida Statutes to accept a resale certificate, should one be offered by the purchaser. Thus, a dealer may add the appropriate Florida sales tax to the purchase price, collect that tax from its customer, and remit that tax to the Department. Should a vendor refuse to accept Company's resale certificate for an item which is to be resold, Company may, after collecting the appropriate tax on the total sales price of its retail sale of that item, either take a Line 6 deduction on its monthly DR-15, Sales and Use Tax return, for the amount of tax paid on its purchase of such items pursuant to Rule 12A-1.013, F.A.C., or, after receiving an assignment of the rights to refund from the vendor, apply to the Department for a refund of the tax previously paid. Company must maintain

adequate records showing the purchases for resale, on which the tax was paid, and subsequently resold, which form the basis for its credit or refund request.

Question 10.:

"Why should [Company] be required to have two Certificates of Registration, pay two fees and file double the paperwork and how can [Company] offer one Certificate of Registration, pay one fee and file one monthly report?"

Department Response:

Multiple registrations are required in the case of multiple business locations or where a dealer is engaged in the business of commercial rental of real property as well as the retail sales of tangible personal property. In Company's specific case, since it is operating from only one business location and is not also in the business of real property rentals, only one certificate of registration is required. Company is not a printer, even though Company may be, in certain instances, considered to be selling printed information; therefore, the registration ending in kind code "68" is unnecessary and may be cancelled. Company's registration ending in kind code "59" should be sufficient to cover all of Company's business activities.

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 the confidentiality of such information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or the response.

Sincerely,

Horace Royals
Tax Law Specialist
Technical Assistance and Dispute Resolution (850) 922-4842

ctrl No: 32393