Tax Alert: Important Updates and Changes in March 2023

Listen to the Facts or Pay Your Tax

The D.C. Court of Appeals upheld that the taxpayer, George Washington University Hospital, was not eligible for a refund of sales tax on purchases of prepared meals, from 2016 to 2019, due to a resale certificate not being provided at the time of purchase. Even though these meals were purchased for resale, the D.C. statute clearly and explicitly states failure to present a resale certificate at the time of purchase results in a mandatory payment of sales tax.

It All Starts with Charity

The Texas Comptroller of Public Accounts ruled that charges for tickets or admission to events presented and provided by a Texas nonprofit corporation operated exclusively for charitable purposes, and also recognized as an exempt organization under IRC § 501(c)(3), are exempt under Tex. Tax Code Ann. § 151.3101(a)(3). The exemption is not affected by the nonprofit entering into a promotional agreement with a for-profit organization to promote and produce the events. The for-profit organization will perform services under the promotional agreement as an independent contractor. The nonprofit must hold itself out as the provider of the amusement service and not engage in a joint venture with the for-profit entity.

Game Changers

The Wisconsin Tax Appeals Commission (WTAC) determined that the taxpayer was liable for sales tax due on the secondary sale of admissions to Wisconsin sporting and entertainment events via tickets listed on its online marketplace. The taxpayer operated an online marketplace where tickets to live entertainment tickets were bought and sold. The taxpayer also charged a seller fee, and recognized only buyer fees, seller fees, and logistic fees that it collected as revenue. The WTAC noted that Wis. Admin. Code Tax 77.52(2)(a)(2) imposes a sales tax upon all persons selling at retail admissions to state entertainment events, and that the taxpayer's role in the sales of tickets was not entirely passive since it had agents who were involved in the physical mailing of tickets and had proprietary software that could issue QR codes for electronic tickets sold on the online marketplace. The taxpayer contended that it did not transfer property or taxable services, and characterized its role as entirely passive. As such, the WTAC determined that the taxpayer was selling at retail admissions to various Wisconsin entertainment events and was taxable on all such transactions. However, the Department's imposition of penalties was not supported by facts or law and was thus inappropriate.

Sales and Use Update

The Tennessee Department of Revenue has updated the sales and use tax manual. The manual now states that credit card processing fees included in the sales price are now subject to tax. Because of a law change, the manual was also updated to confirm that contracts covering equipment used primarily in agricultural operations are tax exempt.

 

If you have any specific questions regarding one of the news updates, ask a tax expert here

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