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Tickets Provided to Sponsors are Taxable in Alabama


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In a recent hearing, Alabama court determined that tickets provided to sponsors in conjunction with sponsorships were subject to the gross receipts sales tax. The taxpayer conducted a wine tour that was open to the public. In addition to selling tickets to the different events, the taxpayer sold lump-sum sponsorships that included advertising, tickets to the events, and other miscellaneous tangible items. The taxpayer argued that the fee, in effect, was for non-taxable advertising and that the tickets were merely incidental. The Departments’ position was that the entire charge was taxable because the taxpayer operated a public place of amusement. Both of these arguments were rejected. It was determined that the price of the tickets, not the advertising, was taxable based on the applicable legal principle that states: where a lump-sum amount is paid for both a taxable activity and a separate non-taxable activity, and the value of the taxable and/or non-taxable activity can be reasonably determined, only the amount attributable to the table activity should be taxed. (Ellis v. Alabama Department of Revenue, Alabama Department of Revenue, Administrative Law Division, No. S. 07-834, August 25, 2008)

(10/08/2008)
(Archived)
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