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Sales and Use Tax - 16A004 - Admissions

QUESTION: WHETHER PARTICIPATION FEES CHARGED TO MEMBERS OR NON-MEMBERS, TO PARTICIPATE IN A BRIDGE GAME, ARE TAXABLE?

ANSWER: THE PARTICIPATION FEE CHARGED TO PLAY IN THE BRIDGE GAMES ARE TAXABLE, AS PROVIDED IN S. 212.02(1), F.S., WHEN ONLY THOSE WISHING TO PARTICIPATE IN THE BRIDGE GAMES ARE CHARGED A FEE AND NO CHARGE IS MADE TO THE SPECTATORS. HAD THE SPECTATORS BEEN CHARGED A TAXABLE ADMISSION TO VIEW THE BRIDGE GAMES, THE PARTICIPATION FEES TO PLAY WOULD BE EXEMPT. SEE RULE 12A-1.005(3)(J), F.A.C.

March 3, 2016

Re: Technical Assistance Advisement 16A-004
Sales and Use Tax- Admissions
Section: 212.02; 212.04, Florida Statutes (F.S.)
Rules: 12A-1.005, Florida Administrative Code (F.A.C.) XXXX (“Taxpayer”)

FEI: XXXX Dear XXXX:

This letter is a response to your petition received on XXXX, for the Department’s issuance of a Technical Assistance Advisement (“TAA”) concerning the above referenced party and matter. Your petition has been carefully examined and the Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes a TAA and is issued to you under the authority of s. 213.22, F.S.

Requested Advisement

Whether participation fees charged to members or non-members, to participate in a Bridge game, are taxable?

Facts

...The transaction in question is the payment of a fee by a person wishing to participate in an American Contract Bridge League (“ACBL”) sanctioned Bridge game offered at the XXXX. This is located on the second floor of an office building and everyone is allowedpage1image17648 page1image17808

Your letter provides the following in part:

entry to watch the activities and socialize with the members. The fee of $6.00 ($8.00 for non XXXX members) is only charged to those who wish to play in the game scheduled for that day and time. Those wishing to play sit at designated tables with up to four persons per table. A table fees form is completed by those participating listing the names of the players and their position at the table. ...The person running the game collects the fee and form from each table upon the start of the game. The only awards for playing are “ACBL master points” given to those whose performance ranks in the top 40% of those playing. ... The determination we are asserting is that our receipts are exempt from sales tax. The reason being that “admissions are taxable but a fee to play is exempt.” ...

Law and Discussion

The determination of whether a participation fee is taxable or tax exempt depends on a variety of factors, namely whether the participants are charged a fee or a fee is charged to spectators for admissions or whether both spectators and participants are charged admission to the event. In addition, the taxability of fees paid and admission charges also depends on whether the membership organization is for profit or not-for-profit.

Section 212.04(l)(a), F.S., indicates, “. . . [it is] the legislative intent that every person is exercising a taxable privilege who sells or receives anything of value by way of admissions.”

Section 212.02(1), F.S., provides in part:

The term “admissions” means and includes the net sum of money after deduction of any federal taxes for admitting a person or vehicle or persons to any place of amusement, sport, or recreation ... or any place where charge is made by way of sale of tickets, ... participation fees, entrance fees, or other fees or receipts of anything of value measured on an admission or entrance ....

Rule 12A-1.005(3)(j), F.A.C. provides in part:

Charges made for the privilege of entering or engaging in any kind of activity for which no admission charge is made to spectators are subject to tax. When spectators are charged a taxable admission to a game, ... or recreational event, the participation or entrance fees are exempt. ...

Section 212.04(2)(a)2., F.S., provides a specific exemption on admission charges imposed by not-for-profit sponsoring organizations. To receive this exemption, the sponsoring organization must qualify as a not-for-profit entity under s. 501(c)(3) of the Internal Revenue Code.

In this case, the ACBL is a not-for-profit membership organization for bridge players throughout North America, Mexico, and Bermuda, however, XXXX is a local branch of the ACBL, which does not necessarily make XXXX a tax exempt entity. In order to qualify as a not-for-profit entity, XXXX should have a letter of determination from the Internal Revenue Service (“IRS”) verifying that it qualifies as tax exempt under the Internal Revenue Code (“IRC”).

In addition, when contacted by the Department regarding its request for advisement, Taxpayer’s representative stated that anyone is allowed entry into the XXXX to watch the bridge games and there is no admission charge. However, the XXXX does charge a participation fee of $6.00 for members ($8.00 for non XXXX members) who wish to play in the bridge game scheduled for that day and time. When asked if the XXXX was a not-for-profit entity, Taxpayer’s representative stated that the center did not currently hold that classification.

Sponsoring not-for-profit organizations qualifying as a 501(c)(3) of the Internal Revenue Code (I.R.C.) receive an exemption on admission charges. See s. 212.04(2)(a)2., F.S. Since XXXX is not a not-for-profit entity, under s. 501(c)(3), IRC, and charges a fee for participating in its bridge game but does not charge an admission fee to spectators, the participation fees collected are subject to tax.

Conclusion

The participation fee charged to play in the bridge games are taxable, as provided in s. 212.02(1), F.S., since this is a situation where only those wishing to participate in the Bridge game are charged a fee and no charge is made to the spectators. Had the spectators been charged a taxable admission to view the bridge games, the participation fees to play would be exempt. See Rule 12A-1.005(3)(j), F.A.C.

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 upon 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 from that which is expressed in this response.

You are further advised that this response, your request and related backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your response should be received by the Department within 15 days of the date of this letter.

Sincerely,

Taylor Hikes
Senior Attorney
Technical Assistance and Dispute Resolution (850) 717-7756

Control #208611

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