Are concert/show tickets given away in barter (for advertising, airtime, or sponsorship) subject to Kansas sales tax?

Plain-English summary

A concert/show promoter asked how Kansas sales tax applies to various tickets it hands out — some free, some traded for advertising, airtime, or sponsorship. The key is whether a ticket is exchanged for value: barter counts as a taxable sale, but truly free tickets do not.

Why barter is taxed. Kansas measures tax on the "selling price," defined at K.S.A. 79-3602(g) as "the total cost to the consumer . . . including freight and transportation charges from the retailer to the consumer." K.A.R. 92-19-46 confirms that selling price is the total consideration given in each transaction — "whether in the form of money, rights, property, promise or anything of value, or by exchange or barter" — without deduction for costs, overhead, or profit, and whether or not separately billed. So when a ticket is traded for something of value, that trade is a taxable transaction.

Applying it to the seven scenarios.

The tax base for the taxable ones. In each taxable scenario, the base is the admission price stated on the ticket. If no price is stated on the ticket, the base is the value of what was exchanged — the fee the sponsor pays (scenario 3), the fair market value of the airtime (scenario 6), or the amount paid for the TV/billboard advertising (scenario 7).

Bottom line: giving tickets away for nothing is not a taxable sale, but swapping tickets for advertising, airtime, or sponsorship dollars is barter — a taxable transaction measured by the ticket's stated price or, absent one, the value received.

What this means for you

Promoters, venues, and event organizers

Don't assume "comp" tickets are always tax-free. Genuinely free tickets (papering the house, employee comps, tickets to the venue and to the performers) are exempt. But tickets you trade for advertising, airtime, or a sponsor's fee are bartered sales and are taxable.

Know your tax base

For a taxable bartered ticket, use the stated admission price on the ticket. If the ticket shows no price, use the value of what you received — the fee, or the fair market value of the airtime/advertising. Keep records that establish that value.

Barter is not a loophole

Because "selling price" includes anything of value given by exchange or barter, structuring a deal as a trade rather than a cash sale does not avoid Kansas sales tax.

Common questions

Q: Are free promotional tickets taxable in Kansas?
A: No. Tickets given away for nothing — papering the house, employee comps, tickets to the venue, and tickets to the band/artist — are exempt.

Q: What about tickets traded to sponsors or media for advertising or airtime?
A: Those are taxable. Trading tickets for advertising, airtime, or sponsorship is barter, which counts as a taxable sale under the "selling price" definition.

Q: How is the tax calculated on a bartered ticket?
A: On the admission price stated on the ticket; if no price is stated, on the value of what was exchanged (the fee paid or the fair market value of the airtime/advertising).

Q: Why does barter get taxed at all?
A: Because K.S.A. 79-3602(g) and K.A.R. 92-19-46 define "selling price" as the total consideration given, including by exchange or barter — not just cash.

Citations and references

• K.S.A. 79-3602(g) — defines "selling price" as the total cost to the consumer (including freight/transportation from the retailer), the measure that brings barter within the tax.
• K.A.R. 92-19-46 — construes "selling price" as the total consideration given in each transaction, including by exchange or barter, without deduction for costs or profit.
• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-025

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 18, 2002

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Dear Mr. TTTTTTTT:

We wish to acknowledge receipt of your letter dated October 8, 2001, regarding the application of Kansas Retailers’ Sales tax.

The Kansas statute that subjects transactions involving bartering to sales tax is K.S.A. 79-3602(g), which defines “selling price” as "the total cost to the consumer exclusive of discounts allowed and credited, but including freight and transportation charges from the retailer to the consumer.” Kansas Administrative Regulation 92-19-46 supports this construction. The regulation provides, in relevant part:

Selling price is the total consideration given in each transaction, whether in the form of money, rights, property, promise or anything of value, or by exchange or barter. . . . The term selling price includes the following:

(2) the total cost to the consumer without any deduction or exclusion for the cost of the property or service sold, labor or service used or expended, materials used, losses, overhead or any other costs or expenses, or profit, regardless of how any contract, invoice or other evidence of the transaction is stated or computed, and whether separately billed or segregated on the same bill. . . .

For clarification, I will provide an answer to your transactions, by way of restating your given transactions.

1. Papering the house/show—Tickets are given away to the general public to fill the house. Exempt from sales taxation.

2. Tickets to the building/venue where the show takes place.
   Exempt from sales taxation.

3. Tickets to the sponsor(s) of the show. For a fee they may place advertisements and signage at the concerts. This transaction would be subject to sales tax. The sales tax base would be the price of admission, as stated on the price of the ticket. If there is not a price stated on the ticket, then the taxable base would be equal to the fee the sponsors of the show pay to place advertisements and signage at the concerts.

4. Tickets to our employees at no charge.
   Exempt from sales taxation

5. Tickets to the Band and Artist performing.

Exempt from sales taxation.

6. Tickets to the Media/PR (radio station airtime) These tickets are in exchange for airtime only. This transaction would be subject to sales tax. The sales tax base would be the price of admission, as stated on the price of the ticket. If there is no price stated on the ticket, the taxable base would be the fair market value of the airtime.

7. Tickets for advertising (TV/Billboard) Fee for advertisements. This transaction would be subject to sales tax. The sales tax base would be the price of admission, as stated on the price of the ticket. If there is not a price stated on the ticket, then the taxable base would be equal to the amount paid for the TV/Billboard advertisements.

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: 03/29/2002 Date Modified: 03/29/2002

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