Is a sports-event planning company's package charge, its fees for arranging athlete appearances, and its corporate-sponsorship commissions subject to New York sales tax?

Plain-English summary

An accountant asked the Department to sort out sales tax for three business models of a sports-and-entertainment company ("Company A"). First, Company A designs custom sporting-event packages for clients -- bundling event tickets, branded merchandise, hotel rooms, limousines, and pre-event party invitations into one prearranged price, without maintaining its own inventory and without claiming a resale exemption on what it buys. Second, Company A arranges paid appearances or speeches by sports personalities (like an autograph-signing event), billing the client one flat fee. Third, Company A brokers corporate sponsorships for sports facilities and health clubs, earning a commission from the facility for finding the sponsor.

In each scenario, the Department found the company is providing a service -- event planning, appearance arranging, or sponsorship brokering -- and none of these fall within New York's list of specifically taxed services. Because the company's overall charge to its client is for a non-enumerated service, none of the three revenue streams are subject to sales tax, regardless of where the underlying event or appearance takes place. However, the event-planning company's own purchases of tickets, merchandise, and similar items used to assemble a package are not purchases for resale -- they're consumed in providing the planning service -- so the company must pay sales tax to its own suppliers on those items. The Department also flagged that this conclusion supersedes a much older 1985 opinion (Outdoor Pursuits, TSB-A-85(33)S) to the extent it suggested a contrary result.

What this means for you

Event planners, sports/entertainment agencies, and appearance brokers

If your business model is bundling tickets, merchandise, travel, and similar items into a single service package, or arranging a personal appearance, or brokering a sponsorship for a commission, your overall charge to the client is a non-taxable service charge -- but don't try to claim a resale exemption on the tickets and merchandise you buy to build the package, since you're the end consumer of those items for sales tax purposes, not a reseller.

Businesses receiving sponsorship-brokering services

A facility paying a broker a commission solely for finding a corporate sponsor isn't paying for a taxable service, so no sales tax applies to that commission.

Accountants and tax professionals

Note the Department's explicit statement that this opinion supersedes any contrary suggestion in the 1985 Outdoor Pursuits opinion (TSB-A-85(33)S) -- a useful reminder to check whether an older advisory opinion on similar facts has been implicitly or explicitly overtaken by later guidance before relying on it.

Common questions

Q: Does it matter where the sporting event, appearance, or facility is located?
A: No -- the Department's answer in all three scenarios doesn't depend on whether the event, appearance, or facility is inside or outside New York, because the charge is for a non-enumerated service either way.

Q: Can the event-planning company buy tickets and merchandise tax-free using a resale certificate?
A: No -- those purchases are used or consumed in providing the planning service rather than resold as such, so the company must pay sales tax to its suppliers on them.

Q: Does this mean sports-event planning is never taxable in New York?
A: This opinion addresses only the specific service structures described (package planning, appearance arranging, sponsorship brokering); a business that instead resells specific taxable items or performs an enumerated taxable service would be analyzed differently.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4)(i) (definition of "retail sale")
• Tax Law § 1105(a), (e), (f)(1) (tangible personal property; hotel occupancy; admission charges)

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_6s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(6)S
Sales Tax
January 28, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980504A

On May 4, 1998, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Henry Goldwasser, CPA, M.R. Weiser and Co., LLP, 135 West 50th Street, New York,
New York, 10020.
The issues raised by Petitioner, Henry Goldwasser, CPA, are whether the transactions
described below are subject to sales tax.
Petitioner submits the facts in three scenarios below as the basis for this Advisory Opinion.
In all scenarios the services are performed at the taxpayer’s New York City offices.
Scenario 1
Company A performs a service of designing a specific event package to meet the request of
a client. The client may or may not be located in New York City or State. The package, as designed
by Company A, includes tickets to a sporting event and some merchandise (hats, T-shirts, etc.). In
most instances the sporting events are held outside of New York State, however it is possible that
an event is held in New York State. The tickets are purchased by Company A either from the box
office or through a ticket broker. The merchandise is purchased by Company A separately and
exclusively for each event. Company A does not maintain its own inventory. Other items that may
be added to a package are the use of limousines, hotel rooms, invitations or tickets to pre-event
parties and sports memorabilia. Reservations for hotel rooms and limousines are made in the
customer’s name. Company A does not claim a resale exemption on any of the merchandise or
services it purchases and pays sales tax to the vendor when required. Company A charges the client
one prearranged price for the entire package.
Questions

1. Whether any portion of a charge for the service of event planning is subject to sales tax.
2. Whether a resale exemption may be claimed when purchasing tickets or merchandise
   used in providing the event planning service.

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Scenario 2
Company A contracts with a client to provide the services of a sports personality either to
give a speech or make an appearance. The location of the appearance may be either in or out of New
York City or State. An example of making an appearance might be signing autographs in a
supermarket. Company A pays the personality a prearranged fee for the appearance and pays for any
expenses, such as advertising, associated with the appearance. The client is billed one prearranged
price for the appearance.
Question

1. Whether fees charged by Company A to its clients for arranging the appearance of a sports
   personality in New York City or State are subject to state or local sales tax.
   Scenario 3
   Company A makes an agreement with a private sports facility, private health club or a school
   sports facility to provide a corporate sponsor. The facility may be located either in or out of New
   York City or State. The corporate sponsor will place advertising throughout the facility and pay the
   facility an annual fee directly. The facility pays Company A a percentage of the fee as a
   commission.
   Question
2. Whether commissions received for the service of providing a corporate sponsor are
   subject to sales tax.
   Applicable Law
   Section 1101 (b) of the Tax Law provides, in part:
   When used in this article for the purposes of the taxes imposed by
   subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section eleven
   hundred ten, the following terms shall mean:
   *

*

*

(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such or as a physical component part of tangible
personal property, or (B) for use by that person in performing the services subject to

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tax under paragraphs (1), (2), (3), (5), (7) and (8) of subdivision (c) of section eleven
hundred five....
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax--On and after June first, nineteen hundred seventy­
one, there is hereby imposed and there shall be paid a tax of four percent upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
*

*

*

(e) The rent for every occupancy of a room or rooms in a hotel in this state,
except that the tax shall not be imposed upon (1) a permanent resident, or (2) where
the rent is not more than at the rate of two dollars per day.
*

*

*

(f)(1) Any admission charge where such admission charge is in excess of ten
cents to or for the use of any place of amusement in the state, except charges for
admission to race tracks, boxing, sparring or wrestling matches or exhibitions which
charges are taxed under any other law of this state, or dramatic or musical arts
performances, or live circus performances, or motion picture theaters, and except
charges to a patron for admission to, or use of, facilities for sporting activities in
which such patron is to be a participant, such as bowling alleys and swimming pools.
For any person having the permanent use or possession of a box or seat or a lease or
a license, other than a season ticket, for the use of a box or seat at a place of
amusement, the tax shall be upon the amount for which a similar box or seat is sold
for each performance or exhibition at which the box or seat is used or reserved by the
holder, licensee or lessee, and shall be paid by the holder, licensee or lessee.
Opinion
Scenario 1
Company A provides a service of event planning for its clients. Company A makes all the
arrangements for a sporting event, including tickets, hats, T-shirts, hotel rooms, limousines, sports
memorabilia and invitations to pre-event parties for its clients. Section 1105(a) of the Tax Law
imposes a tax on the receipts from retail sales of tangible personal property. Section 1101(b)(4)(i)
of the Tax Law defines the term "retail sale" as the sale of tangible personal property to any person

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for any purpose other than for resale as such or for use in performing services taxable under
paragraphs (1), (2), (3), (5), (7) and (8) of subdivision (c) of Section 1105 of the Tax Law. Company
A is providing a service which is not one of the specifically enumerated services subject to sales tax
under Section 1105(c) of the Tax Law. Company A’s purchases for use in providing this service,
such as tickets, T-shirts, sports memorabilia, etc. are not purchases for resale, but rather are used or
consumed in providing the service of event planning. As such, these purchases are subject to tax
when purchased by Company A, and Company A should pay sales tax to its suppliers of any taxable
items. Company A’s total charge to its customers for the event planning service including
merchandise, tickets and all other items included in the service package is not subject to sales tax.
(See UM Enterprises, Adv Op Comm T & F, March 24, 1998, TSB-A-98(21)S).
This conclusion represents the current position of the Department. To the extent Outdoor
Pursuits, Adv Op Comm T&F , July 30, 1985, TSB-A-85(33)S or any other advice from the
Department suggests a contrary conclusion, it does not represent current policy.
Scenario 2
The service of arranging an appearance of a sports personality is not one of the specifically
enumerated services subject to tax under Section 1105(c) of the Tax Law. Therefore, fees paid to
Company A for arranging a personal appearance or a speech of a sports personality are not subject
to state or local sales tax regardless of whether the appearance takes place in or out of New York.
Scenario 3
The service solely of providing a corporate sponsor for a sports facility or a health club is not
one of the specifically enumerated services subject to sales tax under Section 1105 (c) of the Tax
Law. Therefore, commissions paid by a facility or health club to Company A solely for providing
a corporate sponsor are not subject to sales tax.

DATED: January 28, 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.