Are admission tickets to an exempt organizations charity softball game subject to New York sales tax?

Plain-English summary

A minor league baseball team that owns a stadium rented its facilities to a registered exempt non-profit for a charity softball game. The team promoted and sold the tickets ($11-$20 each) through its own ticketing system, collected the price plus sales tax, and paid the net proceeds to the non-profit. It asked whether the ticket sales were taxable.

The Office of Counsel concluded the admissions were taxable:

• Sales tax applies to admission charges to places of amusement and entertainment, including sporting events (Tax Law section 1105(f)(1); 20 NYCRR 527.10).
• Exempt organizations usually neednt collect tax on admissions, but that exclusion does not reach athletic games or exhibitions unless all proceeds go exclusively to an elementary or secondary school (Tax Law section 1116(d)(2)(A)). Here the money went to the non-profits foundation fund, not a school — so the admissions were taxable.
• Even though the team didnt organize the game, it sold the tickets and collected the charges, making it the recipient of the amusement charge (section 1101(d)(11)) and a person required to collect tax (section 1131(1)).
• Separately, because the team actually collected sales tax, it was required to remit it to the Department regardless (section 1137(a)(iii)).

What this means for you

Venues and ticket sellers handling someone elses event

If you sell admissions and collect the money, you can be the person responsible for collecting and remitting the tax — even if a different (exempt) organization runs the event. Dont assume the organizers exempt status flows through to admissions you sell.

Exempt organizations running athletic fundraisers

The admissions exemption has a specific carve-out: athletic games and exhibitions are taxable unless 100% of proceeds benefit a K-12 school. A charity game for your own fund does not qualify.

If you collect tax, you must remit it

Tax you actually charge customers must be paid over to the State, even if it later turns out the charge was arguably exempt.

Common questions

Q: The non-profit is a registered exempt organization — why is the admission taxable? A: The exempt-org admissions exclusion does not apply to athletic games or exhibitions unless all proceeds go exclusively to an elementary or secondary school. These proceeds went to the non-profits foundation, so the admissions were taxable.

Q: The baseball team didnt organize the game. Why is it on the hook? A: It promoted and sold the tickets and collected the charges, so it is the recipient of the amusement charge and a person required to collect and remit the tax.

Q: What if the proceeds had gone to a high school?
A: Then the admissions could have qualified for the exemption — the regulation gives that exact example.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(f)(1) (tax on admission charges to places of amusement)
• Tax Law section 1101(d)(2) (definition of admission charge)
• Tax Law section 1101(d)(11) (recipient of amusement charge)
• Tax Law section 1116(d)(2)(A) (exempt-organization admissions exclusion does not cover athletic games unless proceeds benefit a school)
• Tax Law section 1131(1) (person required to collect tax)
• Tax Law section 1137(a)(iii) (tax collected must be remitted)
• 20 NYCRR 527.10 (admission charges)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2017.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a17_8s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-17(8)S
Sales Tax
June 21, 2017

Office of Counsel
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S150921A

The Department of Taxation and Finance received a Petition for an Advisory Opinion from REDACTED REDACTED RE (Petitioner). Petitioner asks whether ticket sales for a charity softball game are subject to sales tax. We conclude that the admissions charges to the charity softball game are subject to sales tax. Facts Petitioner is a minor league baseball team that owns a stadium. In its stadium, Petitioner holds baseball games, as well as other outside events. Petitioner rented its facilities to a non-profit organization to hold a charity softball game. The non-profit organization is registered with the Department as an exempt organization for sales tax purposes. Petitioner states that the softball game was held for the purpose of raising money for the non-profit’s foundation fund, and not for the benefit of an elementary or secondary school. Petitioner promoted and sold tickets on behalf of the organization through its in-house ticketing system. The ticket prices ranged from $11.00 to $20.00 per ticket and Petitioner collected the selling price, including sales tax on the sales of the tickets. The proceeds from the ticket sales after rent, other out-of-pocket expenses of Petitioner and sales tax were paid to the non-profit organization. Analysis Tax Law § 1105 imposes New York State and local sales tax on receipts from tangible personal property, enumerated services, and other items. Specifically, Tax Law § 1105 (f)(1) imposes a tax on the receipts from admission charges to or for the use of, places of amusement and entertainment that are in excess of ten cents. See 20 NYCRR 527.10 (a). Tax Law § 1101(d)(2) defines “admission charge” as the amount paid for admission, including any service charge and any charge for entertainment or amusement or for the use of the facilities therefore. Charges for admission to sporting events and exhibitions are within the scope of amusement charges subject to sales tax. See 20 NYCRR 527.10 (b)(1)(ii). Although exempt organizations generally are not required to collect sales tax on admission charges to places of

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TSB-A-17(8)S
Sales Tax
June 21, 2017

amusement and entertainment, the exemption for admissions charges by an exempt organization does not include admissions to athletic games or exhibitions, unless all the proceeds inure exclusively to the benefit of an elementary or secondary school. See Tax Law § 1116 (d)(2)(A) and 20 NYCRR 527.10 (e)(2)(ii)(a). The Sales and Use Tax Regulations provide several examples that illustrate when admission charges to athletic games and exhibitions are subject to sales tax. The regulation provides: Example 5: The employees of radio station R challenge the employees of television station T to a softball game. Spectators are charged $1.50 admission. All proceeds from the game are to be given to a local high school for its benefit. The
$1.50 admission charge is exempt.
Example 6: All the facts are the same as in example 5, except that the proceeds of the game will be given to the United Fund. The $1.50 admission charge is taxable. Example 7: Admission charges to a basketball game between two high schools inure exclusively to the benefit of the school. Such admission charges are exempt. 20 NYCRR 527.10 (e)(2)(ii)(a) While the non-profit organization that rented the Petitioner’s facilities is registered as an exempt organization for sales tax purposes, and generally would not be required to collect sales tax on admission charges, the admissions charges to the non-profit’s charity softball game are subject to sales tax because the game was played to benefit the non-profit organization and to further its goals, and the proceeds were not for the benefit of an elementary or secondary school. Under these facts, even though Petitioner was not the organizer of the charity softball game, Petitioner sold the tickets and collected the admission charges for that game. Accordingly, Petitioner is the recipient of an amusement charge that is subject to sales tax. See Tax Law § 1101(d)(11). Thus, Petitioner is a “person required to collect sales tax,” and was required to collect tax on the tickets sold for the charity game and remit the tax to the Department. See Tax Law § 1131 (1). In addition, even if the admissions to the charity event had been determined to be exempt, because Petitioner collected sales tax on the admission

TSB-A-17(8)S
Sales Tax
June 21, 2017

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charges, it was required to remit the tax collected to the Department. 1137(a)(iii).

See Tax Law §

DATED: June 21, 2017

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

Note:

An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts set forth therein and is binding on the Department only with respect to the person or entity to whom it is issued and only if the person or entity fully and accurately describes all relevant facts. An Advisory Opinion is based on the law, regulations, and Department policies in effect as of the date the Opinion is issued or for the specific time period at issue in the Opinion. The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning.