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