Update on Tax Reform -Tax on ticketing for performances, live events, films

New NC Sales Tax on “Amusements”

As most of you know, the amazing folks at Arts NC keep up with the actions of the NC General Assembly and how it affects the arts community across our State. Last session, the General Assembly pass a Tax Reform Bill which included a requirement that, starting in January of 2014, sales tax be charged for the following:

G.S. 105-164.4(a)(10) imposes a privilege tax on a retailer at the 4.75% general State and applicable local and transit rates of sales and use tax to admission charges to an entertainment activity listed below:

a. A live performance or other live event of any kind.

b. A motion picture or film.

c. A museum, a cultural site, a garden, an exhibit, a show, or a similar attraction or a guided tour at any of these 
attractions.

An admission charge includes a charge for a single ticket, a multioccasion ticket, a seasonal pass, an annual pass, and a cover charge. An admission charge does not include a charge for amenities. If charges for amenities are not separately stated on the face of an admission ticket, then the charge for admission is considered to be equal to the admission charge for a ticket to the same event that does not include amenities and is for a seat located directly in front of or closest to a seat that includes amenities. When an admission ticket is resold and the price of the admission ticket is printed on the face of the ticket, the tax does not apply to the face price at the time of the resale of the ticket. When an admission ticket is resold and the price of the admission ticket is not printed on the face of the ticket, the tax applies to the difference between the amount the reseller paid for the ticket and the amount the reseller charges for the ticket. The reseller must retain in its books and records the amount originally paid for the ticket to be able to substantiate the amount of the resold ticket that is to be excluded from the tax at the time of resale.

Clearly, this new tax is a logistical, not to mention financial, issue for artist and arts groups, particularly ones with small staffs that now have to deal with collecting this tax.

Need help understanding the new law and its application?

NC Center for Nonprofits is hosting a webinar to help explain the impact of this bill.  Topics covered will include:

  1. Explaining which nonprofits and what types of events are subject to the tax and what is exempt.
  2. Describing the process for collecting and remitting sales tax.
  3. Answering all of your questions about the application and implementation of the sales tax on admission fees.

For more information and to sign up, click here.

Arts NC still working on possible delay or clarifications to the law.

Although the bill passed in the last Legislative Session, and is now law, Arts NC holds out hope that, due to the confusion about interpretation of the law, that there may be some movement regarding its application.  They have been working with other advocacy groups to get, at least, a delay in application of parts of the Bill.  So far, with no luck.

Here is the latest update from Arts NC.

The Revenue Laws Study Committee met this morning (Tuesday, October 8) to consider a number of issues related to Tax Reform including the amusements tax on cultural nonprofit organizations.

To follow is a “stream of thought” from meeting notes:

  • Legislative and Department of Revenue staff made presentations to the Committee on the Amusements Tax issue which can be found at NC Leg.net.  You will need to scroll through to the middle of the presentation to get to our issue. Department of Revenue staff also made a presentation on their opinion of who is exempt and who is not exempt under the definition of “state attraction”.  Exempt organizations according to DOR include but are not limited to Museums of Art, History, Science, the Aquariums, the Zoo, Historic Sites, the Battleship, and Grassroots Science Museums.  The 164 grantees of the North Carolina Arts Council that receive yearly state funding and the North Carolina Symphony were ruled by DOR staff to NOT be exempt. 
  • Representative Becky Carney of Mecklenburg was the first to speak and introduce the issue of confusion over the term “state attraction”, the unintended consequences of “winners and losers”, and the suggestion to delay implementation until a better definition of “state attraction” could be developed.  Other Legislators (Rucho, Moffitt, McKissick, Clodfelter, and Rabon) were adamant calling for a more narrow definition or completely eliminating the exemption for “state attractions”.  Please note that this issue does not fall into partisan divide.  
  • Carney also introduced the idea of a “delay”, but it was ruled the Revenue Laws Study Committee does not have the authority to change the law which mandates a January 1, 2014, start date.  However, there is a provision in the tax law that if an entity is making all efforts to implement the law but is unable to do so by the January deadline, the Secretary of Revenue could allow an extension if it is in “the best interest of the state.”
  • A small task force of Representatives Carney and Moffitt and Senator Rucho was appointed by Chair Julia Howard to meet and bring a recommendation on “state attractions” to the full Revenue Laws Study Committee which will meet again in November. 

Arts North Carolina will continue to work with the newly appointed “state attractions” Committee, other Legislative leadership, and the Department of Revenue to fully explore the position of “delay” until a final definition of state attraction is agreed upon and Legislation introduced in the short session to clarify the law as it is written.

Follow the Revenue Laws Study Committee at ncleg.net.

Latest Clarification

Here is the latest info from Arts NC, as of October 28, 2013:

All organizations that sell tickets to live events should pay attention to this information: 
TICKETS SOLD IN 2014 WHICH WENT ON SALE IN 2013 ARE NOT SUBJECT TO THE SALES TAX ON AMUSEMENTS WHICH IS SLATED TO BE IMPLEMENTED ON JANUARY 1, 2014.  

This interpretation was noted and verified by the Department of Revenue and should be passed along to legal departments, marketing departments, and ticketing services.   Find this information in the Tax Reform Bill at –http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H998v7.pdf – Section 5 (f).

The Revenue Laws Committee will meet on November 11, 9:30am, at the North Carolina General Assembly.  The ad hoc committee charged with making a recommendation on “state attractions” (Representatives Carney and Moffitt and Senator Rucho) is slated to have a report for this meeting. 

_________________________________________________________________

Beth

 

Tags: , , ,

Leave a Reply