The Illinois Department of Revenue (DOR) issued a General Information Letter (GIL) providing guidance on the taxability of sporting event ticket sales. The business in question holds sporting events and was looking to confirm whether its sales of all-inclusive tickets that include admission to the sporting event and food/drink in one bundled price are subject to Illinois Retailers’ Occupation Tax (ROT). The Illinois ROT applies to sales of tangible personal property at retail to purchasers for use or consumption. Generally, sellers of meals incur ROT on the sales. However, quoting a previous court ruling, the GIL notes that the test for determining the nature of a transaction involving the sales of tangible goods and services is one of proportion. For example, if a taxpayer’s business is the selling of food, and entertainment is offered only to induce customers to dine, then ROT is assessed. The GIL states that in this situation, a sporting event would not necessarily be considered an inducement for customers to dine. Depending on the facts, a sporting event where food/drink are included in the ticket price and not separately stated may be considered a sale of service (providing entertainment) that includes a relatively insignificant or incidental transfer of tangible personal property. If that is the case, then Service Occupation Tax applies to the transaction. The Service Occupation Tax base would be determined using the standard analysis based on whether the serviceman is a de minimis or a registered serviceman.
(General Information Letter ST 22-0029-GIL, Illinois Department of Revenue, November 22, 2022, released February 2023)