When did RR 94-3 require paid-admissions receipts to be reported, and were restaurant-package handling fees taxable?

Plain-English summary

South Carolina Revenue Ruling 94-3 addressed when places of amusement had to report advance-ticket and gift-certificate receipts, and whether a theater's separate restaurant-package handling fee was part of taxable admissions.

For an advance ticket, the ruling required reporting in the month the patron received the ticket or was told a ticket would be provided. If the ticket had not yet been paid for, reporting instead occurred in the month payment was made.

For a gift certificate redeemable for a ticket, the ruling treated redemption—not the certificate's original sale—as the point when the admission right was granted and the receipt became reportable for admissions-tax purposes.

The theater's $1-per-person handling fee for arranging and paying a restaurant was not taxable because customers could buy admission and arrange the restaurant separately. The ruling distinguished that optional service from a charge everyone had to pay to enter.

Common questions

Q: Did the event date control when advance-ticket revenue was reported? No. The ruling focused on when the paid admission right was granted through a ticket or ticket promise, subject to the payment exception.

Q: When was an unpaid ticket reported? In the month the patron paid.

Q: When was a gift certificate reported? When it was exchanged for a ticket.

Q: Were all service charges excluded? No. The ruling said a charge tied to admission, rather than an optional separate service, could be part of taxable paid admissions.

Citations and references

• S.C. Code Ann. § 12-21-2410 (admission defined)
• S.C. Code Ann. § 12-21-2420 (historical admissions tax)
• South Carolina Revenue Ruling 90-10 (ticket-service and credit-card fees, discussed in the ruling)
• South Carolina Private Letter Ruling 92-5 (dinner-theater allocation, discussed in the ruling)
• Ticketron, Inc. v. Director, Division of Taxation (N.J. Division of Tax Appeals, April 5, 1979)

Subject

Paid Admissions

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR94-3.pdf

Original ruling text

SC REVENUE RULING #94-3

SUBJECT:

Paid Admissions
(Admissions Tax)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous documents and any oral directives in conflict
herewith.

REFERENCE:

S.C. Code Ann. Section 12-21-2410 (1976)
S.C. Code Ann. Section 12-21-2420 (1976; Supp. 1992)
S.C. Code Ann. Section 12-21-2420 (1976)
S.C. Code Ann. Section 12-4-320 (Supp. 1992)
SC Revenue Procedure #93-6

AUTHORITY:

SCOPE:

Revenue Ruling is the Department of Revenue's official
interpretation of how laws administered by the Department are to
be applied to a specific issue or a specific set of facts, and applies
to all persons or a particular group. It is valid and remains in effect
until superseded or modified by a change in the statute or
regulations or a subsequent court decision, Revenue Ruling or
Revenue Procedure.

Questions:

1. Is revenue from paid admissions reported to the Department of Revenue ("Department") on
   the admissions tax return for the month in which the patron pays for the ticket, the month in
   which the patron is issued the ticket, or the month the event is held?
2. If a place of amusement sells gifts certificates that can be redeemed for tickets prior to the
   event, is revenue reported to the Department for admissions tax purposes in the month the gift
   certificate is sold; the month the gift certificate is redeemed for a ticket; or the month the event is
   held?
3. Is a handling fee charged by a place of amusement for a "restaurant package", as described in
   the Facts, subject to the admissions tax?

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Conclusions:

1. Revenue from paid admissions must be reported to the Department on the admissions tax
   return for the month in which the patron is issued the ticket, or is notified that he will
   receive a ticket, to attend the event.
   However, if the admissions price has not been paid at the time the patron is issued the
   ticket or is notified he will receive a ticket, then the revenue from the admissions must be
   reported to the Department on the admissions tax return for the month in which the
   patron paid for the ticket.
2. If a place of amusement sells gifts certificates that can be redeemed for tickets prior to
   the event, the revenue is reported to the Department for admissions tax purposes in the
   month the gift certificate is redeemed for a ticket.
3. The handling fee charged by a place of amusement for a "restaurant package", as
   described in the Facts, is not subject to the admissions tax.
   Facts:
   Many sporting events, theaters, and other entertainment activities and facilities sell tickets in
   advance either through season tickets or passes or on an individual ticket basis. In some
   instances, groups that make reservations for a large number of people are allowed to pay for their
   tickets after the event. In addition, many places of amusement sell gift certificates that can be
   redeemed for tickets prior to the event. The question has arisen as to when the receipts from
   these sales must be reported to the Department for admissions tax purposes.
   Also, several theaters in the State, that offer live entertainment, are offering "restaurant
   packages" to groups. Under these packages, theaters have entered into agreements with local
   restaurants. The theater will collect from the group the entire amount for the package in advance.
   The theater will then book the reservation for the restaurant for the group and will remit the
   restaurant's portion of the package to the restaurant. For booking the restaurant reservation and
   paying the restaurant, the theater charges a nominal handling fee, usually one dollar ($1.00) per
   person in the group. Of course, the group has the option of purchasing the tickets for the theater
   and booking the restaurant reservation on their own. The question has arisen as to whether this
   handling fee is subject to the admissions tax.
   Discussion:
   The first issue concerns when the receipts from advance ticket sales and from gift certificates
   must be reported to the Department for admissions tax purposes.
   Code Section 12-21-2420 imposes the admissions tax and reads, in part:
   There must be levied, assessed, collected and paid upon paid admissions to places of
   amusement within this State a license tax of five percent. (Emphasis added.)

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* * * *
The tax imposed by this section shall be paid by the person or persons paying such
admissions price and shall be collected and remitted to the South Carolina
Department of Revenue and Taxation by the person or persons collecting such
admissions price. ...

Code Section 12-21-2410 defines the various terms used in the admissions tax law and reads in
part:
(1) The word "admission" means the right or privilege to enter into or use a place or
location;
In SC Revenue Ruling #88-11, the Commissioners held that a paid admissions is one in which
money or its equivalent, such as goods or services, are exchanged for the right to enter or use a
place of amusement.
In summary, the admissions tax is imposed upon the paid right or privilege to enter into or use a
place of amusement. Therefore, revenue from paid admissions must be reported to the
Department on the admissions tax return for the month in which the patron is issued the ticket, or
is notified that he will receive a ticket, to attend the event. If a group is allowed to pay the
admissions price after the event, then these receipts must be reported in the month the
admissions price is paid since it is not a "paid admissions" until paid. Finally, the taxpayer for
purposes of this tax is the patron.
With respect to a gift certificate which is redeemed prior to the event, the right to enter or use the
place of amusement is not granted until the gift certificate is exchanged for a ticket.
The second issue concerns a handling fee for "restaurant packages" and whether these fees are
part of "paid admissions". As stated above, "paid admissions", the measure of the admissions tax,
is the amount required to be given for the right or privilege to enter into or use a place of
amusement.
A similar issue was addressed in the New Jersey case of Ticketron, Inc. v. Director, Division of
Taxation, Division of Tax Appeals, April 5, 1979. Ticketron, an independent ticketbroker, used
computer-directed remote terminals located in retail stores and banks to sell tickets. This allowed
customers to purchase tickets at alternative locations at the established box office price plus an
additional separate fee, referred to as a service charge. In determining that the service charge was
not taxable as an admission charge, the Division of Tax Appeals concluded:
Ticketron's fee or "service charge" does not purport to be an admission charge. It is a
separate service charge for which the purchaser receives a separate receipt. It is not
tied to admission since a customer can gain admission to the event involved without
paying Ticketron's fee by simply buying the ticket at the box office in person or by
mail.

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****
From the facts in the case before me, it is clear that the Ticketron fee is not an
admission charge because one need not pay the Ticketron fee in order to gain
admission. The fee is simply a service charge for making tickets available to
customers at remote locations.
The Commissioners, in SC Revenue Ruling #90-10, cited the above case in reviewing the issue
of whether certain service charges and credit card user fees were a part of "paid admissions".
As set forth in SC Revenue Ruling #90-10, for each ticket purchased through remote ticket
outlets, mail or telephone, a separate fee (service charge) was assessed and the service charge
was divided between the remote ticket outlet and the computerized ticket sales company.
Customers purchasing by credit card were charged an additional fee for the system to process the
charge transaction (credit card processing fee)
In the ruling, the Commissioners held:

1. Service charges imposed by computerized ticket sales companies, and paid by all persons
   entering an event, are included in the measure of the admissions tax.
   Service charges imposed by computerized ticket sales companies, but only paid by
   persons purchasing the tickets at remote locations or by mail, are not included in the
   measure of the admissions tax.
2. Credit card processing fees imposed by ticket sales companies are not included in the
   measure of the admissions tax unless all persons entering an event are required to pay by
   credit card.
   While the handling fee in question is charged by the theater, and not a third party as in SC
   Revenue Ruling #90-10, the principle is the same. The handling fee in question is not part of
   "paid admissions" since it is a separate charge "not tied to admission since a [group] can gain
   admission to the event involved without paying [the restaurant package handling] fee by simply
   buying the ticket[s]" and making the restaurant reservation on their own. The fee is simply a
   service charge for booking the restaurant reservation and paying the restaurant.
   It should be noted that any service charge that is merely an expense of the place of amusement,
   and is tied to the admissions, would be part of the "paid admissions" subject to the tax.
   While it is not directly relevant to the question at hand, SC Private Letter Ruling #92-5 states
   that the charge by a dinner theater for a ticket is subject to both the sales tax and the admissions
   tax. However, the dinner theater is only required to remit the sales tax on that portion of the
   charge representing the price of the meal and the admissions tax on that portion of the charge
   representing the price of the admissions, provided the price breakdown is reasonable and
   supported by the records of the taxpayer.

4

With respect to the restaurant packages in question, a theater is only required to remit the
admissions tax on that portion of the charge representing the price of the admissions, provided it
is supported by the theater's records. The restaurant is required to remit the sales tax on the
portion of the ticket that is paid to the restaurant by the theater.

SC Revenue Ruling #94-3

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr., Chairman

s/T. R. McConnell
T. R. McConnell, Commissioner

s/James M. Waddell, Jr.
James M. Waddell, Jr., Commissioner

Columbia, South Carolina
March 1
, 1994

For questions concerning the admissions tax, contact David Shiver of the Office Services
Division at (803) 737-4845 or John P. McCormack at (803) 737-4438.

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