How did Florida sales tax apply to a section 501(c)(3) rodeo's admissions, facility rentals, exempt purchases, and merchandise sales?

Subject

Admissions, Purchases, and Rental of Real Property

Plain-English summary

The nonprofit rodeo's ticket admissions and qualifying organizational purchases were exempt, but its rentals and retail sales were not automatically exempt. As a section 501(c)(3) sponsoring organization, it could sell rodeo admissions without sales tax.

Facility rent was generally taxable unless a specific exemption applied, such as qualifying food-and-drink concession space, or the lessee documented its own exemption. Purchases for the rodeo's exempt purposes had to use its exemption certificate, be invoiced directly to it, and be paid with its funds. Its own sales of shirts, food, beverages, and souvenirs remained taxable.

What this means for you

Nonprofit status did not exempt every transaction. Admissions, purchases, leases, and merchandise sales each followed their own rules and documentation requirements.

Common questions

Q: Were rodeo tickets taxable? No.

Q: Was renting the facility automatically exempt? No.

Q: Were T-shirt and food sales taxable? Yes.

Citations and references

• Fla. Stat. § 212.04(2)(a)2.a. — nonprofit sponsoring-organization admissions
• Fla. Stat. § 212.031(1)(a), (c), and (5) — real-property rentals
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-021

Original ruling text

SUMMARY

QUESTION 1: Are the sale of admissions by a s. 501(c)(3)
not-for-profit sponsoring organization to a rodeo, subject
to tax?

ANSWER 1 - Based on Facts Below: Pursuant to section
212.04(2)(a)2.a., F.S., sales of ticket admissions by a
not-for-profit sponsoring entity under the provisions of s.
501(c)(3) of the Internal Revenue code of 1954, as amended,
are exempt from sales tax.

QUESTION 2: Are real property leases of such a not-forprofit sponsoring organization's rodeo facilities subject
to tax?

ANSWER 2 - Based on Facts Below: As is the case with
admissions, a lease or a license to use real property is
generally taxable unless there is a specific exemption from
the tax. For example, if the not-for-profit sponsoring
organization rents a portion of its facility to provide
food and drink concessionaire services, such rental is
exempt from tax. However, if the not-for-profit sponsoring
organization leases its real property facilities to another
organization (lessee), the lease is taxable, unless the
lessee is exempt from tax. In this case, the lessee should
present a copy of its Florida Consumer's Certificate of
Exemption to the not-for-profit sponsoring organization
(lessor).

QUESTION 3: Are purchases made by such not-for-profit
sponsoring organization subject to tax?

ANSWER 3 - Based on Facts Below: Purchases made by a s.
501(c)(3) qualified not-for-profit sponsoring organization
with a valid Florida Consumer's Certificate of Exemption
can be made free of Florida's sales tax. Items or services
purchased by such organization exempt from sales tax must
be used in fulfilling the organization's exempt purposes.

QUESTION 4: Are sales made by such a not-for-profit

sponsoring organization subject to tax?

ANSWER 4 - Based on Facts Below: Items of tangible personal
property sold by such an organization, such as T-shirts,
food and drink, souvenirs, etc., are subject to sales tax.

Apr 27, 2001

Re: Technical Assistance Advisement 01A-021
Sales Tax
Admissions, Purchases, and Rental of Real Property
Section 212.04(2)(a), F.S.
Section 212.031(1)(a), (c), (5), F.S.

Dear:

This is a response, styled a Technical Assistance Advisement, to
your letter sent via facsimile transmission on April 20, 2001.
You have asked the Florida Department of Revenue to provide
clarification and guidance on the application of sales and use
tax with respect to XXX.

XXX (hereinafter "Rodeo"), is a Florida non-profit corporation
holding a 501(c)(3) tax exempt status from the Internal Revenue
Service. Rodeo sponsors approximately three rodeos per year and
occasionally rents its facilities to other organizations for a
fee.

Your letter requests an opinion on the recent exemption on
ticket admissions along with guidance on the rental of the
facility. The Department will also provide direction on
purchases made by Rodeo.

Admissions

Generally, the sale or receipt of anything of value by way of an
admission is subject to sales tax. However, there is a specific
exemption for non-profit sponsoring organizations. Section

212.04(2)(a)2.a., F.S., provides:

No tax shall be levied on dues, membership fees, and
admission charges imposed by not-for-profit sponsoring
organizations. To receive this exemption, the sponsoring
organization must qualify as a not-for-profit entity under
the provisions of s. 501(c)(3) of the Internal Revenue Code
of 1954, as amended.

Based on this statutory provision, sales of ticket admissions by
Rodeo are exempt from sales tax.

Real Property Rental

Section 212.031(1)(c), F.S., provides in part:

For the exercise of such privilege, a tax is levied in an
amount equal to 6 percent of and on the total rent or
license fee charged for such real property by the person
charging or collecting the rental or license fee. The
total rent or license fee charged for such real property
shall include payments for the granting of a privilege to
use or occupy real property for any purpose and shall
include base rent, percentage rents, or similar charges.
Such charges shall be included in the total rent or license
fee subject to tax under this section whether or not they
can be attributed to the ability of the lessor's or
licensor's property as used or operated to attract
customers....

As is the case with admissions, a lease or a license to use real
property is generally taxable unless there is a specific
exemption from the tax. For example, if Rodeo rents a portion
of its facility to provide food and drink concessionaire
services, such rental is exempt from tax. Here, section
212.031(1)(a)10., F.S., provides in part:

(1)(a) It is declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of renting, leasing, letting, or granting a
license for the use of any real property unless such

property is:

10. Leased, subleased, licensed, or rented to a person
    providing food and drink concessionaire services within the
    premises of a convention hall, exhibition hall, auditorium,
    stadium, theater, arena, civic center, performing arts
    center, publicly owned recreational facility, or any
    business operated under a permit issued pursuant to chapter
    550....

If Rodeo leases its facility to an organization, the lease is
taxable unless the organization is exempt from tax. In this
case, the organization should present to Rodeo its Consumer's
Certificate of Exemption. If the organization subleases the
facility, the organization should present a copy of its Annual
Resale Certificate to Rodeo in lieu of remitting tax.

Purchases

Rodeo applied for and received a Florida Consumer's Certificate
of Exemption. This exemption certificate grants Rodeo the right
to make purchases free of Florida's sales tax. Items or
services purchased by Rodeo that are used in carrying out its
exempt purposes are exempt from tax.

Rodeo is required to give the seller a copy of its exemption
certificate, Form DR-14, at the time of sale. Please make sure
that the person giving the seller a copy of the certificate is
an official authorized to make exempt purchases. Also, make
sure that the purchases are invoiced directly to Rodeo and are
paid for by Rodeo funds. Please note that purchases made with
personal funds on behalf of Rodeo are taxable even if the
purchaser presents the seller with Rodeo's exemption certificate
and the purchaser will be reimbursed at a later date by Rodeo.

Also, please note that if Rodeo itself sells any items of
tangible personal property such as T-shirts, food, beverages,
souvenirs, etc., those sales would be subject to sales tax.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only

under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

If you have any further questions with regard to this matter and
wish to discuss them, you may contact me directly at (850) 9224746 or Gary Gray (850) 922-4729.

Sincerely,

Charles Strausser
Revenue Program Administrator II
Technical Assistance & Dispute Resolution

GLG\
Control No: 44974