Is the equipment a touring circus-style show rents (tent, stage, costumes, lighting, sound) exempt from New York City sales tax as property used in a dramatic or musical arts performance?

Plain-English summary

Cirque du Soleil's touring show Quidam played in a Big Top tent in Battery Park in 1998, part of a national tour that included dates in Canada, California, Colorado, Texas, and later Chicago and beyond. To stage the show, Cirque du Soleil America rented all of its scenery, stage, costumes, lighting, sound equipment, acrobatic gear, and props -- plus the tent itself, seating, trailers, and generators -- from a sister company. Cirque asked whether those New York City rental charges qualify for the state exemption for tangible personal property used directly and predominantly in producing a live dramatic or musical arts performance.

The answer turned on a question the Department had already decided a year earlier in a companion ruling about the same touring show: is Cirque du Soleil's production really a "dramatic or musical arts performance," or is it a circus? That 1998 ruling (TSB-A-98(1)S) concluded that while Cirque's shows do have dramatic and musical elements -- an original score, choreography, costuming, lighting design, and a connecting theme -- those elements don't predominate over the show's core circus elements: acrobats, gymnasts, trapeze artists, and clowns. Because dramatic/musical elements have to predominate for the exemption to apply, and here they don't, this ruling simply carried that same conclusion over to the equipment-rental question: since the show itself isn't predominantly dramatic or musical, the property rented to produce it doesn't qualify for the § 1107(d)(1) exemption either. The Department's own regulations reinforce this by expressly listing circuses among the performance types excluded from the "dramatic or musical arts" tax break.

What this means for you

Circus, variety-show, and hybrid live-performance producers

Adding genuine theatrical elements -- an original score, choreography, elaborate costuming and lighting design, a connecting narrative theme -- doesn't automatically convert a circus-style show into an exempt "dramatic or musical arts performance." The Department looks at what predominates: acrobatics and circus skill acts vs. traditional dramatic/musical content. If the traditional circus elements are still the main draw, both admission charges and equipment purchases/rentals used to stage the show stay outside the exemption.

Touring production companies renting equipment for New York engagements

If your show has already been classified (by ruling or by its own nature) as something other than dramatic or musical arts -- a circus, variety show, magic show, ice show, or aquatic show -- don't assume the property-use exemption under § 1107(d)(1) applies just because your equipment (tent, lighting, sound, costumes) resembles what a theatrical production would use.

Accountants and tax professionals

This ruling shows how a single factual classification (is the show predominantly dramatic/musical, or circus/variety) controls multiple separate tax questions for the same taxpayer -- here, both an earlier admission-charge ruling and this later property-rental ruling reached the same "not predominantly dramatic or musical" conclusion and simply applied it to a new set of facts.

Common questions

Q: Why doesn't Cirque du Soleil qualify for the dramatic/musical arts exemption when its shows clearly use theatrical elements like lighting design, costuming, and an original score?
A: The exemption requires those elements to predominate over the production's other, more traditional characteristics. The Department already found that Cirque's acrobatic/circus elements (acrobats, gymnasts, trapeze artists, clowns) predominate, so the dramatic/musical elements -- however sophisticated -- don't control the classification.

Q: Does this ruling reopen the question of whether Cirque's shows are a circus?
A: No -- it relies on and applies the Department's prior determination in TSB-A-98(1)S rather than re-deciding that question.

Q: Would a different touring show with less traditional circus content get a different answer?
A: Possibly -- the outcome depends on the specific show's own mix of dramatic/musical vs. circus elements, which is a factual question the Department resolves case by case.

Citations and references

Statutes, regulations, and prior rulings:

• Tax Law § 1107(d)(1) (exemption for property used in live dramatic or musical arts performances)
• 20 NYCRR § 527.10(d)(2) (dramatic/musical arts performances exclude circuses)
• Cirque du Soleil America, Inc., TSB-A-98(1)S (prior admission-charge ruling for the same touring show)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1999.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a99_25s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(25)S
Sales Tax
April 21, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980707A

On July 7, 1998, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Cirque du Soleil America, Inc., 8400 2nd Avenue, Montreal, Que H1Z 4M6.
The issue raised by Petitioner, Cirque du Soleil America, Inc., is whether the rental charges
for tangible personal property used by Petitioner in its live performances in New York City are
exempt from New York City sales and use taxes.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner creates international live dramatical circus shows. Petitioner has, from its
beginnings, tried to create a new form of art, a new type of theater-circus. Its first shows were
entitled Re-inventing the Circus, New Experience, Saltimbanco, Alegria, and Mystere. At the time
of this Petition, Petitioner was producing Quidam.
All of Petitioner’s shows are created by a highly innovative team. The costume designer
brings the characters alive with the designs, colors and materials which are chosen for the costumes.
The set designer creates the stage as an environment for the artists to move through to make the Big
Top tent and its structure part of the set design and theme. The composer creates the sound that
envelops the characters and animates the show. The composer imagines sounds that breathe with
the artists' movements. The score creates a cohesion that links a series of diverse acts. While the
stage direction sets the tone and the atmosphere for the show, the choreographer melds the energy
of the acrobatics into the fluidity and expressiveness of dance. Lighting direction helps to create the
ambiance and atmosphere of the show and is linked directly to how the space is used. The lighting
is also used to direct the eyes, influence the perceptions and suggest ideas to the audience.
Each show has its theme and the theme of the show is the connection between the scenes of
the show. It is designed to create and maintain a magical atmosphere that is uninterrupted by the
need to take down and put up new equipment. The props and accessories, the costumes, the artist
dancing, singing and moving about the stage tell a continuing story which is based on the theme.
Petitioner has a touring show that performs in Canada and the USA and goes from one city
to the next with its show. The show Quidam started out in Canada in 1996, went to California from
September 1996 to September 1997, and moved to Colorado and Texas in October 1997 to March
1998. The show was presented in New York City from April 8 to July 5, 1998. After New York
City, it was scheduled to go to Chicago, Fairfax (Virginia) and end up in Atlanta at the end of
December 1998.

-2­
TSB-A-99(25)S
Sales Tax
April 21, 1999

All the property used in the production is rented from Cirque du Soleil Inc. ("CSI"), a sister
company. The property includes scenery, the stage, costumes, lighting and sound equipment,
acrobatic equipment and props. All the above property is used 100% in the production of the show.
Also rented from CSI is the tour equipment which includes the Big Top tent, seating and
stands, trailers, an artistic tent, electric trailers, generators, etc. These assets are all needed to stage
the show.
The performances take place in the Big Top which is installed in Battery Park. The Big Top
has a capacity of 2577 seats and tickets can be purchased for 8 to 10 performances per week.
Petitioner’s show is a unique experience because of the total creative team, and all of the artists who
together make and create the event.
All of the performers in Petitioner’s shows are people. No animals appear in the shows.
Applicable Laws and Regulations
Section 1107(d)(1) of the Tax Law provides:
(d) Certain exemptions. Notwithstanding any contrary provisions of this
section, receipts from every retail sale of, and consideration given or contracted to
be given for, or for the use of, the following tangible personal property and services
shall be exempt from the taxes imposed by this section:
(1) Tangible personal property for use or consumption directly and
predominantly in production of live dramatic or musical arts performances in a
theatre or other similar place of assembly (but not including a roof garden, cabaret
or other similar place) in such a city of one million or more, with a seating capacity
of one hundred or more chairs that are rigidly anchored to the construction or fixed
in place so as to prevent movement in any direction, but only where it can be shown
at the time such tangible personal property is purchased that such performances are
to be presented in such a city to the public on a regular basis of at least five
performances per week for a period of at least two consecutive weeks, the content of
each such performance shall be the same and a charge is or is to be made for
subdivision, the term "place of assembly" shall mean a place of assembly with a
stage in which scenery and scenic elements are used, as described in sections 27-232
and subdivision (a) of section 27-255 of the administrative code of the city of New
York, and for which an approved seating plan is required to be kept under section 27­
528 of such code. Nothing in this paragraph shall be construed to exempt tangible
personal property which is permanently affixed to, or becomes an integral component
part of, a structure, building, or real property.

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TSB-A-99(25)S
Sales Tax
April 21, 1999

Section 527.10(d)(2) of the Sales and Use Tax Regulations provides:
Charges for admission to dramatic or musical arts performances are excluded
from tax. Dramatic and musical arts performances do not include variety shows,
magic shows, circuses, animal acts, ice shows, aquatic shows and similar
performances.
Opinion
In Cirque du Soleil America, Inc., Adv Op Comm T&F, January 30, 1998, TSB-A-98(1)S
it was concluded that while Petitioner's performances do contain some elements of the dramatic or
musical arts, it was deemed that these elements did not predominate over the other traditional
elements that are more characteristic of a circus (i.e., acrobats, gymnasts, trapeze artists, clowns, etc).
Therefore, Petitioner's performances were deemed to be that of a live circus for purposes of Section
1105(f)(1) of the Tax Law and on such basis the admission charges for Petitioner's performances
were not subject to sales tax.
Under Section 1107(d)(1) of the Tax Law, the purchase of tangible personal property for use
or consumption directly and predominantly in production of live dramatic or musical arts per­
formances in a theatre or other similar place of assembly in a city of one million or more is exempt
from the four percent tax imposed by Section 1107. While the live circus shows performed by
Petitioner do contain some elements of the dramatic or musical arts, these elements do not
predominate over the other traditional elements that are more characteristic of a circus (i.e., acrobats,
gymnasts, trapeze artists, clowns, etc). See Cirque du Soleil America, Inc., supra. Accordingly,
since the tangible personal property rented by Petitioner is not for use or consumption directly and
predominantly in the production of a live dramatic or musical arts performance, the exemption under
Section 1107(d)(1) does not apply to tangible personal property rented by Petitioner for its
performances.

DATED: April 21, 1999

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.