721 - Policy on NC Sales Tax on Admission Charges

Reason for Policy

The sales tax for admission charges is required by N.C. General Statutes.

Policy Statement

Sales taxes must be collected on admission charges to entertainment events effective Jan. 1, 2014, and remitted to the N.C. Department of Revenue. The total sales tax rate is currently 7.5%.

N.C. General Statute 105-164.4(a)(10) imposes a tax on a retailer (including the University) at the current 4.75% general State and applicable local and transit rates (currently 2.75% for Orange County) of sales and use tax to admission charges to an entertainment activity listed below:

  1. A live performance or other live event of any kind, the purpose of which is for entertainment.
  2. A movie, motion picture, or film.
  3. A museum, a cultural site, a garden, an exhibit, a show, or a similar attraction.
  4. A guided tour at any of the attractions listed in subsection 3 above.

Admission Charge

An admission charge includes a charge for a single ticket, a multi-occasion ticket, a seasonal pass, an annual pass; a membership fee that provides for admission; a cover charge; a surcharge; a convenience fee, a processing fee, a facility charge; or any other charges included in gross receipts derived from admission.

Exclusions

The University is not required to collect sales tax on the following:

  1. Amounts paid for the right to participate in sporting activities. Examples of these types of charges include bowling fees, golf green fees, and gym memberships.
  2. Tuition, registration fees, or charges to attend instructional seminars, conferences, or workshops for educational purposes.
  3. A charge for lifetime seat rights, lease, or rental of a suite or box for an entertainment activity, provided the charge is separately stated on an invoice or similar billing document given to the purchaser at the time of sale.

Exemptions

Effective May 29, 2014, an exemption from the sales tax for admission charges is provided for the following entertainment activities:

  1. The portion of a membership charge that is deductible as a charitable contribution under the Internal Revenue Code.
    1. A donation that is deductible as a charitable contribution under the Internal Revenue Code under the Internal Revenue Code.
    2. Charges for amenities. An "amenity" is a feature that increases the value or attractiveness of an entertainment activity that allows a person access to items that are not subject to sales tax and that are not available with the purchase of admission to the same event without the feature. The term includes parking privileges, special entrances, access to areas other than general admission, mascot visits, and merchandise discounts. The term does not include any charge for food, prepared food, or beverages subject to sales tax. If charges for amenities are not separately stated on the face of an admission ticket, then the retailer may use a reasonable allocation to determine the allocated price of the taxable portion of the admission charge.

Effective from Jan. 1, 2014, to Dec. 31, 2014, an exemption from the sales tax for admission charges is provided for the following entertainment activities:

  1. A festival or other recreational or entertainment activity that lasts no more than seven consecutive days and is sponsored by a nonprofit entity that is exempt from tax under N.C. General Statute 105, Article 4 and uses the entire proceeds of the activity exclusively for the entity's nonprofit purposes. This exemption applies to the first two activities sponsored by the entity during a calendar year. Note that the University is not considered a non-profit entity for this purpose.
  2. A State attraction. A State attraction is a physical place supported with State funds that offers cultural, educational, historical or recreational opportunities. For this purpose, State funds are any moneys including federal funds deposited in the State treasury except moneys deposited in a trust fund or agency fund. Note that the Morehead Planetarium and Science Center is the only University facility deemed a State attraction for this purpose.

Effective from Jan. 1, 2015, an exemption from the sales tax for admission charges is provided for the following entertainment activity:

  1. An event sponsored solely by a nonprofit entity that is exempt from NC corporate income tax if all of the following conditions are met:
    1. The entire proceeds of the activity are used exclusively for the entity's nonprofit purposes.
    2. The entity does not declare dividends, receive profits, or pay salary or other compensation to any members or individuals.
    3. The entity does not compensate any person for participating in the event, performing in the event, placing in the event, or producing the event.

Special Situations

None.

Procedures

  • Finance Procedure 721.1 - University of North Carolina at Chapel Hill Procedure on Processing Sales Taxes on Admission Charges

Additional Information

Frequently Asked Questions

Q: How do you handle admission tickets sold prior to Jan. 1, 2014, for events that occur on or after Jan. 1, 2014?
A: Sales tax on admission charges does not apply to events occurring on or after Jan. 1, 2014, if the initial sale of tickets occurs before Jan. 1, 2014; provided that admission charges sold at retail for events occurring on or after Jan. 1, 2015, are taxable regardless of when the initial sale of tickets occurred. If an entertainment performance is added to the schedule for a particular event on or after Jan. 1, 2014, ticket sales for the new performance would be subject to sales tax since tickets were not available prior to Jan. 1, 2014.

Q: If there is an educational component to a performing arts or other live event that is considered the main purpose for the event rather than for entertainment purposes, are the ticket sales subject to sales tax (Examples include a lecture, a University choral group, or a student theatre group)?
A: Entertainment is not defined. Who performs is less relevant than whether or not the performance is entertainment for the audience. So if the event is entertainment for the audience such as a University choral group or a student theatre group, then admission fees are taxable. A charge for a lecture would not be subject to the tax if it is a "registration fee for an instructional seminar, conference or workshop for educational purposes."

Q: We sometimes have external entities that pay us money to use our facilities for live performances. We also have situations where the University and an external entity sell admissions tickets to the same University event. Who would be liable for collecting and remitting the tax in such situations?
A: The statute provides that the "retailer" is responsible for remitting the sales taxes to the NC Department of Revenue. The retailer is the entity that operates the venue where the entertainment activity occurs. If admission charges to a certain event are taxable, sales tax will be due on the admission charges regardless of who sells the admission tickets. If an external entity sells tickets for an event at a venue operated by the University, that external entity is known as a "facilitator" under the statute. You will want to enter into a contract with the facilitator requiring the facilitator to charge sales tax on the ticket sales to the event and to send the University the gross receipts the facilitator owes the University plus the taxes on the admission charges by no later than 10 days after the end of each calendar month in which the sales occurred. For instance, TicketMaster is a "facilitator." A visiting baseball team that sells a block of tickets to the event operated by the University is another example of a facilitator.

There may also be occasional situations where the roles of the University unit and the external entity are reversed. A University unit may function as the facilitator by selling a block of tickets on behalf of a retailer operating an event on the University's campus (e.g., NCAA tournament basketball games operated by the NCAA but played in the Smith Center). In this situation, it is the external entity-retailer's responsibility to remit the sales tax to the NC Department of Revenue, but it would be the University's responsibility as the facilitator to charge sales tax as an additional line item on top of the admissions fee and remit that sales tax to the retailer by no later than 10 days after the end of the calendar month in which the sales occurred.

Q: If the University makes group sales to an organization for a theater production and a reception, and the tickets are then sold by the organization to its members, what portion is subject to sales tax?
A: The portion of the fee attributable to the theater production is subject to sales tax as an admission charge. The portion of the fee attributable to any food, prepared food or beverages served at the reception is subject to sales tax as a sale of tangible personal property (See Finance Policy 720 - NC Sales Tax on Tangible Personal Property). To the extent the reception includes "amenities" (e.g., parking privileges, special entrances, access to areas other than general admission, mascot visits and merchandise discounts), such reception amenities are not subject to sales tax. If charges for amenities are not separately stated on the face of an admission ticket, then a reasonable allocation method should be used to determine the taxable portion of the admission charge included in such a bundled transaction.

Q: Are ticket sales for events produced and performed by students through a separate nonprofit entity subject to sales tax? Are tickets for events produced and performed solely by students subject to sales tax?
A: Effective May 29, 2014, gross receipts from admissions charges for events produced and performed by separate nonprofit organizations, including student nonprofit organizations, are subject to sales tax if the event is for audience entertainment.

Q: Is the local portion of the sales tax rate determined by the county of the ticket sale or the county of the performance event?
A: The location of the event determines which county tax to collect and remit.

Q: If a University department schedules lectures and charges a fee to attendees, are the fees assessed for the lectures subject to the sales tax?
A: Registration fees are not subject to sales tax for lectures that are "instructional seminars, conferences or workshops for educational purposes."

Q: When sales taxes are included in the ticket price, is it necessary to state that on the ticket?
A: The fact that the price of the ticket includes sales tax must be stated, but the statement may be on the ticket or other reasonable locations including a website.

Related Data

Contacts

Policy Contacts
Subject Contact Telephone Fax E-Mail
Applicability of Sales Tax University Controller 919-962-7007 919-962-4140 controller@unc.edu
Remittance Process Cash Manager 919-962-1601 919-962-3306 cash_management@unc.edu

History

Revised:

  • May 1, 2015: Updated FAQ on theater productions subject to sales tax.
  • September 8, 2014: Updated Policy Statement information on entertainment activities; updated admission charge information; updated Exclusions and Frequently Asked Questions sections.
  • November 27, 2013

Details

Article ID: 131555
Created
Thu 4/8/21 9:11 PM
Modified
Sun 7/17/22 9:44 PM
Effective Date
If the date on which this document became/becomes enforceable differs from the Origination or Last Revision, this attribute reflects the date on which it is/was enforcable.
02/28/2018 12:00 AM
Issuing Officer
Name of the document Issuing Officer. This is the individual whose organizational authority covers the policy scope and who is primarily responsible for the policy.
Issuing Officer Title
Title of the person who is primarily responsible for issuing this policy.
University Cash Manager
Last Review
Date on which the most recent document review was completed.
02/28/2018 12:00 AM
Last Revised
Date on which the most recent changes to this document were approved.
02/28/2018 12:00 AM
Next Review
Date on which the next document review is due.
02/01/2020 12:00 AM
Origination
Date on which the original version of this document was first made official.
11/27/2013 12:00 AM
Responsible Unit
School, Department, or other organizational unit issuing this document.
Finance and Budget