Are you in the business of selling tickets, or admissions, to entertainment and sporting events?  If so, your sales are likely subject to Georgia sales tax.  Many business owners mistakenly believe that sales tax is limited to the tangible personal property sold at their location.  For example, a restaurant or bar owner likely has POS software that adds sales tax to purchases of food and drinks at the applicable sales tax rate at each restaurant or bar location.  Once in place, this software works effortlessly.  But what if that restaurant or bar charges an admissions fee after a certain time of night or for a particular special event?  Such admissions are likely not properly including sales tax.  Over a three-year audit period, this can result in a substantial tax liability.  Unfortunately, an error in the scenario described above is minor compared to those made by taxpayers in the business of selling tickets to sporting and other entertainment events.

Taxable admissions in Georgia include: (1) sales of tickets, fees, or charges made for admission to, or voluntary contributions made to places of, amusement, sports, or entertainment and (2) charges made for participation in games and amusement activities.  The law provides a non-exhaustive list of places that fall under the definition:

  • Amusement Parks
  • Amusement devices
  • Athletic Contests
  • Billiard and pool rooms
  • Vaudeville
  • Bowling alleys
  • Musical devices
  • Skating Rinks
  • Theaters
  • Race Tracks
  • Opera houses
  • Public Bathing Places
  • Moving picture shows
  • Public Dance Halls

Also included is any other place at which any exhibition, display, amusement, or entertainment is offered to the public or any other place where an admission fee is charged.

Regarding the imposition of sales and use tax on charges made for participation in games and amusement activities, such sales will become nontaxable when spectators are charged a taxable admission fee to the game or amusement activity.  In short, either the participants or the spectators will need to pay tax on admissions, but not both.

The Georgia Administrative Code clarifies that admissions by free pass, which are not subject to the Federal Admission Tax, are exempt from Georgia sales tax.  However, if a service charge, donation, gratuity, or any other charge is required or normally expected for the issuance of a free admission pass, such charge, donation or gratuity is subject to the tax.

For admissions purchased for resale, a standard ST-5 Exemption Certificate may be provided to the venue or ticket vendor, and Georgia sales tax would ultimately be charged and collected on the subsequent retail sale.  Alternatively, ticket sellers may pay sales tax on their purchases from the venue, collect sales tax from the retail sale to the customer, and then take a credit on their sales tax returns for tax paid to the venue.

Fine Arts Exemption

In 2017, Georgia enacted a fine arts exemption which specifically exempted the sale of admissions to certain fine arts performances or exhibitions from April 25, 2017, through July 1, 2020.  Such exempt admissions must be performed or exhibited by, or within a facility owned by, an organization that is exempt from tax under IRC501(c)(3).  Also included in the exemption are museums of cultural significance, if the primary mission of the museum is to advance the arts in Georgia and to provide such exhibits for the benefit and enrichment of the citizens.

For purposes of the fine arts exemption, “fine arts” includes music performed by a symphony orchestra, poetry, photography, ballet, dance, opera, theater, dramatic arts, painting, sculpture, ceramics, drawing, watercolor, graphics, printmaking, and architecture.

Coin-Operated Amusement Device Exemption

Georgia exempts from sales and use tax the gross revenues generated from “bona fide coin-operated machines” that (1) vend or dispense music or are operated for skill, amusement, entertainment, or pleasure; (2) are in commercial use and provided to the public for play; and (3) are subject to the per-machine annual permit fee.  A “bone fide coin-operated machine” is defined as every machine of any kind or character used by the public to provide amusement or entertainment, the operation of which requires the payment of a coin, bill, other money, token, ticket, card, or similar object, when the result of the operation depends wholly or partially on the player’s skill, regardless of whether it provides an aware to a successful player.  The machine also must be able to be legally shipped interstate under federal law.

Worth noting is that any owner or operator of a coin-operated machine located in Georgia and used for commercial purposes must (1) qualify to do business in Georgia; and (2) comply with all taxes, fees, applicable laws, regulations, and ordinances, or face monetary and criminal penalties.

Major Sporting Event Exemption

Georgia exempts from sales and use tax any admissions to nonrecurring major sporting events in the state when they are expected to generate over $50 million in the host locality.  The exemption covers admissions purchased on or after January 1, 2017, and applications for the exemption remain available through December 31, 2022.

Nonrecurring is defined for purposes of the exemption as not having occurred in Georgia more frequently than once every three years.  In addition, “major sporting events” include: (1) NFL championship game; (2) a national collegiate tournament semifinal or championship game; (3) MLB, MLS, or NBA all-star game; or (4) any other nonrecurring major sporting event determined by the commissioner of the Georgia Department of Economic Development and commissioner of State Revenue to be a major sporting event.

Special Admissions Considerations for Hunting Preserves and Hunting Club

Admission or membership charges or fees paid to a hunting preserve, hunting club, or any other similar operation that provides the privilege of hunting stocked and/or wild game is subject to sales and use tax in Georgia.  However, charges or fees for a state-hunting license, guide services, cleaning, processing and packing of game, voluntary gratuities, taxidermy, the boarding of animals, or the training of dogs are not subject to sales tax when they are separately itemized on the seller’s invoice.

Special Admissions Considerations for School Events

Public schools not registered must file a Miscellaneous Sales and Use Tax Report for each quarter that charges for admissions and voluntary contributions and donations in lieu of admissions charges are collected for public school entertainment, lectures, concerts, and similar activities, which are subject to tax.  However, sales by schools of tickets for admissions to a school event or function are exempt from tax.  The exemption applies to any public or private school containing a combination of grade K-12 and all proceeds from such events or functions must benefit the school or its students.

When a school collects ticket sales, fees, charges for admission, and voluntary contributions made in lieu of admission charges to school carnivals, those sales are subject to tax.  The individual or school sponsoring the activity is required to collect and remit the tax.

Admissions is an area of sales tax law full of technicalities and ambiguities.  As exemplified in the examples above, even a single taxpayer must treat events held at his or her facility differently depending on the nature of the event.  Whether the standard is expected revenue past a certain threshold or a goal of benefiting and enriching the citizens of Georgia, the rules surrounding the exemptions are particular.  With the burden of proving an exempt transaction imposed squarely on the taxpayer, it is easy to invalidate an exemption should qualify under the statute by failing to keep proper records.

If you are engaged in the business of selling any of the wide variety of admissions identified in Georgia statutes, your sales may be subject to sales and use tax.  Whether you are under audit or the Georgia Department of Revenue has not yet discovered the errors you are worried your business is making, it is important to consult competent counsel to determine your best strategy going forward.

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