A Hit to Non-Profit Arts Organizations from the NCGA

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Here’s the operative section of the state’s tax reform legislation that pertains to concert tickets – a subject of possible interest to our readers. For what it’s worth, the primary sponsor of this was a gentleman named Clodfelter. (I am not making this up.)

Ҥ 105.164.4F. Entertainment and recreation.
(a) Tax.–Charges for an entertainment or recreational activity listed in this subsection are taxed at the general rate set in G.S.105-164.4. Charges include admission charges, user charges, registration charges, membership charges, and charges for amenities. Offering an activity listed in this subsection is a service.
(1) Charges for admittance to any of the following entertainment or recreational activities:
a. A live performance or live event of any kind.
b. A movie or another audiovisual work.
c. A museum, a cultural site, a garden, an exhibit, a show, or a similar attraction or a guided tour at any of these attractions.
(2) Charges that enable a consumer to play or participate in, or use property or a facility to play or participate in, any of the entertainment or recreational activities listed in this subdivision. A consumer’s play or participation can be in person or online. Charges for online play or participation include charges to acquire virtual goods or attributes.
a. A game.
b. A sport.
c. A fitness activity.
(b) Exclusion for Membership Charges.– The tax imposed by this section does not apply to the portion of a membership charge that meets any of the following descriptions:
(1) It is deductible as a charitable contribution under section 170 of the Code.
(2) It allows access to a dining facility or other property that does not enable the member to play or participate in an entertainment or recreational activity listed in subdivision (a)(2) of this section.
(c) Ticket Resales. – When an admission ticket is resold and the price of the admission ticket is printed on the face of the ticket, the tax does not apply to the face price. When an admission ticket is resold and the price of the admission ticket is not printed on the face of the ticket, the tax applies to the difference between the amount the reseller paid for the ticket and the amount the reseller charges for the ticket.”

To read the entire bill, click here.

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So what impact will this have on presenters – especially small non-profits with all-volunteer or merely part-time staff – and on patrons – and, ultimately, on ticket sales and the economic viability of our non-profit cultural organizations, large and small? In brief, will the requirement to collect 4.5% tax on tickets result in higher prices, beyond the increased cost of doing business? Let the conversation begin!

A Hit to Non-Profit Arts Organizations from the NCGA
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