Which of a community theatre's fundraising receipts — golf fees, auctions, concessions, ride and admission charges, gift certificates — are subject to Kansas sales tax?

Plain-English summary

A local community theatre asked how Kansas sales tax applies to a range of fundraising activities. The Department worked through each one, starting from K.S.A. 79-3603(a), which taxes "[t]he gross receipts received from the sale of tangible personal property at retail within this state."

Taxable — no nonprofit exemption. "[T]he Kansas sales and use tax law does not provide an exemption from sales tax on the sale of golf tourney fees, auction gross proceeds and concession stand receipts for your local community theatre." The organization must collect and remit tax on those sales.

Not taxable — out-of-state event. "The proceeds from the sale of the Chiefs' tickets at the silent auction would not be subject to Kansas sales tax, since the event is held in the state of Missouri."

Gift certificates — taxed on redemption, not sale. "Gift certificates would not be subject to Kansas sales tax when the certificate is purchased. The consumer or user of the respective certificate will pay any applicable sales tax(es) at the time said certificate is redeemed."

Recreational charges — taxable under K.S.A. 79-3603(m). That statute taxes "the gross receipts received from fees and charges by . . . organizations and businesses for participation in sports, games and other recreational activities." The Department found "[c]arnival and stagecoach rides and other similar rides . . . are considered to be recreational activities," so charges for them are taxable. It added one wrinkle: "since the stagecoach is provided with an operator, you would not be obligated to pay the Mahaffie House sales tax on the $275.00." The admission fee to the "Reading Rodeo" is likewise taxable under (m), though the theatre "would not be obligated to remit sales tax on the donation of books that allows one into the Reading Rodeo."

Not isolated or occasional sales. Finally, "sales of tangible personal property by your organization would not qualify as isolated or occasional, since said property was acquired for resale purposes." So the organization can't avoid tax by calling its sales one-off.

What this means for you

Nonprofit fundraisers

Being a nonprofit does not, by itself, exempt your fundraiser receipts. Golf tournament fees, auction proceeds, and concession sales are taxable, and so are charges for rides and other recreational activities and event admissions under K.S.A. 79-3603(m). Plan to collect and remit Kansas tax on them.

Location and structure change the answer

Proceeds tied to an event held out of state (like auctioned tickets for a Missouri game) are outside Kansas tax. And a ride "provided with an operator" was treated differently from a self-operated ride — details of how an activity is delivered can affect who owes the tax, so look at the specifics.

Gift certificates: don't tax the sale

Do not charge sales tax when you sell a gift certificate. The tax attaches when the certificate is redeemed for taxable goods or services. And because your fundraising inventory is bought for resale, you cannot treat those sales as isolated or occasional to escape the tax.

Common questions

Q: Are a nonprofit's golf tournament fees, auction proceeds, and concession sales taxable in Kansas?
A: Yes. The Department ruled there is no exemption for these community-theatre fundraiser receipts, so the organization must collect and remit Kansas sales tax on them.

Q: Are charges for rides and event admissions taxable?
A: Yes. Carnival and stagecoach rides and rodeo admissions are taxable recreational charges under K.S.A. 79-3603(m). A stagecoach ride provided with an operator was treated differently, and a book donation that admits a person to the rodeo was not taxed.

Q: How are gift certificates and out-of-state event proceeds treated?
A: Gift certificates are not taxed when sold — tax applies on redemption. Auctioned Chiefs tickets for a game in Missouri were not subject to Kansas tax because the event was out of state.

Citations and references

• K.S.A. 79-3603(a) — imposes Kansas sales tax on the gross receipts from the retail sale of tangible personal property; the basis for taxing the fundraiser sales (auction proceeds, concessions, and similar).
• K.S.A. 79-3603(m) — imposes sales tax on fees and charges for participation in sports, games, and other recreational activities; the basis for taxing the ride charges and the rodeo admission.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-265

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

November 18, 1999

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated September 17, 1999, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3603(a) imposes a sales tax upon: “The gross receipts received from the sale of tangible personal property at retail within this state. . .”

Please be advised that the Kansas sales and use tax law does not provide an exemption from sales tax on the sale of golf tourney fees, auction gross proceeds and concession stand receipts for your local community theatre. Therefore, your company would be obligated to collect and remit the appropriate Kansas sales tax(es) on said sales.

The proceeds from the sale of the Chiefs’ tickets at the silent auction would not be subject to Kansas sales tax, since the event is held in the state of Missouri.

Gift certificates would not be subject to Kansas sales tax when the certificate is purchased. The consumer or user of the respective certificate will pay any applicable sales tax(es) at the time said certificate is redeemed.

K.S.A. 79-3603(m) imposes a sales tax upon: “the gross receipts received from fees and charges by . . . organizations and businesses for participation in sports, games and other recreational activities. . .”

Carnival and stagecoach rides and other similar rides, are considered to be recreational activities. Webster’s defines “recreation” as “a means or refreshment or diversion.” Accordingly, charges for these rides are taxable. However, since the stagecoach is provided with an operator, you would not be obligated to pay the Mahaffie House sales tax on the $275.00.

The admission fee to the Reading Rodeo would likewise be subject to sales taxation, pursuant to K.S.A. 79-3603(m). Your organization would not be obligated to remit sales tax on the donation of books that allows one into the Reading Rodeo.

In closing, sales of tangible personal property by your organization would not qualify as isolated or occasional, since said property was acquired for resale purposes.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling.

If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 12/16/1999 Date Modified: 10/11/2001

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