The Georgia Department of Revenue issued a determination on whether a sale of tickets for admission to a performance was subject to Georgia sales and use tax.  Taxpayer is exempt from federal income taxation pursuant to section 501(c)(3) of the Internal Revenue Code.  Taxpayer enters into an agreement with a theater owner, whereby Taxpayer agrees to perform a ballet production in the theater.  The theater owner, operating as a nonprofit corporation, is also exempt from federal income taxation under section 501(c)(3).  In accordance with their agreement, the tickets for admission to the performance were being by the theater’s box office.  Taxpayer would receive the net proceeds from the ticket sales, less any expenses to be paid as provided by the contract.  However, sales tax was not being assessed on the ticket sales.

Georgia imposes a tax, subject to certain specific exemptions, on the retail purchase, retail sale, storage, use, or consumption of tangible personal property, certain enumerated services, and utilities.  Specifically, the term “retail sale” means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent.  It also includes the sale of tickets, fees, or charges made for admission to places of amusement, sports, or entertainment.

The sale of tickets, fees, or charges for admission to certain fine arts performances or exhibitions are exempt from sales and use tax from April 25, 2017 until July 1, 2020.  To satisfy the requirements of this exemption, the fine arts performance or exhibition must be performed or exhibited by, or within a facility owned by, a tax exempt 501(c)(3) organization or a museum of cultural significance.  Furthermore, the organization’s or museum’s primary mission must be to advance the arts in the state and to provide arts, educational, and culturally significant exhibits for the benefit of the state’s citizens.  The term “fine arts” expressly includes ballet, dance, and music performed by a symphony orchestra.

Based on the information provided by Taxpayer, the sale of tickets to the performance amounted to retail sales, since the tickets are for admission to a place where entertainment is offered.  Despite this, the Department found that the nature of the performance, a ballet, expressly fell under the fine arts definition.  Taxpayer, the performing entity, is also exempt from federal income taxation.  Additionally, Taxpayer’s mission is to serve a Georgia community by providing arts education, a range of fine arts performances, honor the past, and contribute to the legacy of ballet.  Based on these factors, Taxpayer satisfied the requirements set forth in the exemption.

Due to Taxpayer’s performance being considered a “fine arts” performance, being performed by a tax exempt 501(c)(3) organization with a primary mission that falls within the requirements set forth in Georgia legislation, the sales admission tickets are exempt from sales and use tax.

If you have erroneously remitted taxes on qualifying fine arts performances and you qualify as a 501(c)(3) exempt organization, you may qualify for a tax refund.  To apply for a tax refund with the Georgia Department of Revenue, Taxpayers may submit the applicable ST-12 Claim for Refund. A qualified tax attorney can assist with the execution of the application and potential questions or concerns that may arise in the process.

Jeanette Moffa is an attorney who concentrates on state and local taxes at Moffa, Sutton, & Donnini, P.A. She is an executive council member of the American Bar Association Tax Section State and Local Tax Committee and the Florida Bar Tax Section. Ms. Moffa is an author of both the CCH’s Expert Treatise Library: Sales and Use Tax as well the ABA’s Sales and Use Tax Deskbook. In addition, her regular columns on state and local tax issues can be found in State Tax Notes and Actionline, a publication from the Florida Bar’s Real Property, Probate, and Trust Law Section. She also serves as assistant editor to the Sales and Use Tax Deskbook and Actionline. Ms. Moffa is a regular speaker at the American Bar Association Tax Section conferences, the Institute of Professionals in Taxation, the Florida Bar Tax Section, the Florida Bar Real Property, Probate, and Trust Law Section, and the FICPA. In her free time, she teaches as an adjunct professor at Broward College. She can be reached at JeanetteMoffa@MSDTaxLaw.com.

Posted in Georgia Sales Tax, Multi-state sales and use tax