The harder the seat, the higher the tax - Wacky Tax Wednesday

When states first instituted sales and use tax, it was imposed primarily on products considered non-essential: meals purchased at restaurants were taxed, for example, while foods purchased for home consumption were exempt. Sales and use tax has become much more complex since then, but vestiges of its original simplicity remain. Many states still exempt or reduce the rate of tax on essentials such as food ingredients and prescription drugs, while others single out more luxurious items like fur coats for tax.

In spite of what some fans might believe, attending sporting events is not a necessity. Accordingly, more than half of the states in the nation tax admissions to these and other events.

Unless a specific exemption prevails, admissions to sporting events in Minnesota are currently taxable no matter where you sit in the stadium. However, a bill currently under consideration would exempt admissions to luxury suites and skyboxes. Seating for the general public (aka, the rabble) would remain taxable.

Under Sections 7 and 8 of H.F. No. 848 – Omnibus Tax Bill, the price of a suite, skybox, or private box seat license is not included in the taxable price of admissions if:

1. The lessee may arrange to use the suite, sky box or private box on non-game or event days, and
2. The sales price for the admission excluding the license is higher than the highest priced general admissions ticket closest to the suite, or box

If enacted both provisions would take effect the day following final enactment.

The bill would also exempt admission to Super Bowl-related events sponsored by the NFL or its affiliates (effective for sales and purchases made after June 30, 2016 and before March 1, 2018) (Section 9). This exemption presumably applies to hard seats as well as luxury boxes.

Governor Mark Dayton has less than 2 weeks to decide whether or not he will sign the bills. Fans must be on the edge of their (comfy) seats.

As I enjoy attending the occasional sporting event, this news got me wondering which states tax admissions and which do not. If you’re similarly curious, read on.

States that tax admissions

Approximately 30 states generally tax admissions to events, including:

• Alabama
• Arizona
• Arkansas
• Connecticut
• District of Columbia (Admissions to some events, like dog shows, are taxable. Admissions to athletic events are exempt)
• Florida
• Georgia (A temporary exemption to major sporting events was recently approved).
• Hawaii
• Idaho
• Kansas
• Kentucky
• Louisiana: admissions to numerous events and locations that used to be fully exempt are temporarily subject to the new 5% state sales tax or a reduced rate of tax. Read more.
• Maryland: admissions and amusement tax rates vary by location and by activity. Read more.
• Missouri
• Nebraska
• Nevada (rates differ with seating capacity)
• New Jersey
• New Mexico
• New York
• North Dakota
• Oklahoma (except certain sporting events)
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Washington
• West Virginia
• Wisconsin
• Wyoming

It should be noted that states may exempt admissions to certain events, such as the Super Bowl or a national collegiate athletic association. Minnesota is set to host the Super Bowl in 2018, so it is not surprising lawmakers are looking to temporarily exempt admissions to “Super Bowl-related events.” Such exemptions are typically promised during negotiations with the NFL and its ilk, to lure high profile events to a state.

In addition, please note that localities in some states, like Pennsylvania, may tax admissions although the state does not.

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