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Understand the exemptions and liabilities of the admission tax and business & occupation tax. Learn how the tax applies to different activities and organizations.
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Admission Tax Follow-Up Presented by Ade Ariwoola, Finance Director February 5, 2019
Authority – RCW 35.21.280 (1) ..paid by the person who pays an admission charge to any place: (2) PROVIDED, No city or town shall impose such tax on persons paying an admission to any activity of any elementary or secondary school or any public facility of a public facility district under chapter35.57or 36.100 (3) Tax authorization under this section includes a tax on persons who are admitted free of charge or at reduced rates to any place for which other persons pay a charge or a regular higher charge for the same privileges or accommodations.
Authority – RCW 35.21.280(Cont’d.) (4) The term "admission charge" includes: (a) season tickets or subscriptions; (b) A cover charge; (c) A charge made for food and refreshment in any place where free entertainment, recreation or amusement is provided; (d) A charge made for rental or use of equipment or facilities if the rental of the equipment or facilities is necessary to the enjoyment of a privilege for which a general admission is charged, the combined charges shall be considered as the admission charge;
Other RCWs The RCWs referenced in the authorizing RCW 35.21.280 35.57 – Public Facilities District 36.100 – Public Facilities District The exception is referencing Public Facilities District.
Exemptions (Cont’d.) City of Tacoma Code 6A.20.030 Tax levied. . . . C. No tax shall be levied on any person who is admitted free and from whom no compensating payment is obtained. The tax on reduced admission charges shall be charged on such reduced charge and not on the regular admission charge. D. Such tax shall not apply to any person paying an admission to any activity of any elementary or secondary school; provided, however, that this exclusion shall apply only to activities conducted at the school and one activity per calendar year not longer than ten days held off the school property. This exclusion shall not include activities covered under Chapter 6A.60 of the TMC.
Exemptions (Cont’d.) City of Tacoma Code 6A.20.030 Tax levied. (Cont’d.) E. Such tax shall not apply to any person attending an event when the principal purpose of the primary sponsor of the event is the public performance or exhibition of visual or performing arts, historical objects, or scientific works and said sponsor is located in the City and is exempt from taxation pursuant to RCW 82.04.3651, nor shall such tax apply to admissions collected by a city or county from any person attending a public celebration sponsored by a city or county. F. Such tax shall not apply to any person paying an admission to any athletic event sponsored or conducted by an elementary or secondary school wherein the athletic participants are students in such school.
Exemptions (Cont’d.) City of Federal Way Code 3.60.020 Exemptions The admissions tax as imposed in this chapter shall not apply to anyone paying an admission charge: In the amount of One Dollar and Fifty Cents ($1.50) or less; or To any activity of any elementary or secondary school as contemplated by RCW 35.21.280; or 3. To any activity of any Parent-Teacher Association (PTA), or similar organization, provided that the proceeds of the activity are used to benefit an elementary or secondary school; or
Exemptions (Cont’d.) City of Federal Way Code 3.60.020 Exemptions (Cont’d.) The admissions tax as imposed in this chapter shall not apply to anyone paying an admission charge: To an organized athletic event such as tournaments, leagues, and other competitions intended for youth less than 19 years of age, sponsored and held by non-profit organizations; or 5. The admission of spectators to an athletic event, including, but not limited to, football games, basketball games, or baseball games; or 6. The admission for recreational activities, including, but not limited to, golf, skating, or swimming.
RCW 82.04.3651 RCW Chapter 82.04 Business & Occupation Tax RCW82.04.3651 - Exemptions—Amounts received by nonprofit organizations for fund-raising activities. (1) This chapter does not apply to amounts received from fund-raising activities by nonprofit organizations, as defined in subsection (2) of this section, and libraries as defined in RCW 27.12.010.
Summary RCW 35.21.280 that authorizes Admission Tax does not exempt any other business other than what is included in City of Federal Way Code. RCW 82.04.3651 that exempts non profit is about Business & Occupation Tax. Admission Tax is paid by the individual that buys a ticket. Business & Occupation Tax is paid by the business. “Fund-raising activity” does not include the operation of a regular place of business. Operational activities to support an organization’s operation are business activities.
Summary (Cont’d.) “Fund-raising activity” will be an event put together by Kiwanis, Rotary, etc., since that is not their business. Activity of organizations like Centerstage is business in nature, even though it is a non-profit. The City may exempt any business, but the City has to be consistent and fair. City’s policy is consistent with Authorizing RCW 35.21.280. Cities that reference RCW 82.04.3651 in their Code also have Business & Occupation (B&O) Tax. The City of Federal Way does not have B&O.
Conclusion Current policy complies with authorizing RCW. I do not ask churches or other non profit organizations like Kiwanis that sell their own tickets for fund raising activities to collect admission tax. No change recommended.
