February 14, 2019
The Department of Revenue (“Department”) is issuing this interim guidance statement to provide interim guidance and solicit feedback. This interim guidance statement addresses how the place of sale is determined (sourced) for sales of service charges associated with tickets to professional sporting events (Ticket Services Charges), and thus whether Washington state and local sales tax must be collected.
Ticket Service Charges are retail services subject to retail sales tax. RCW 82.04.050(3)(e) and 82.08.020 (1)(c). Generally, these charges represent a separately stated fee that the customer must pay when acquiring the ticket to an event.
Sales of services subject to retail sales tax are sourced to the place of receipt, which means the place of first use. RCW 82.32.730(9)(f) and WAC 458-20-145(1)(b)(i). This means sellers must use the following rules to determine where the place of sale is deemed to occur for purposes of determining the retail sales tax:
(a) If the service is received by the purchaser at a business location of the seller, the sale is sourced to that business location.
(b) If the service is not received by the purchaser at a business location of the seller, the sale is sourced to the location where received by the purchaser or the purchaser's donee occurs.
(c) If (a) and (b) do not apply, the sale is sourced to the location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller's business when use of this address does not constitute bad faith.
When (a), (b), and (c) do not apply, the sale is sourced to the location indicated by an address for the purchaser obtained during the consummation of the sale, including the address of a purchaser's payment instrument, if no other address is available, when use of this address does not constitute bad faith.
(e) When (a), (b), (c), or (d) do not apply, the sale is sourced to the location from which the service is provided.
Where is the place of receipt for Ticket Service Charges?
The location of where a retail service is sourced determines if the state retail sales tax is due and which local jurisdiction can impose its local sales and use tax. In the case of Ticket Service Charges, the Department is aware that sellers have generally been sourcing the sale of these services for retail sales tax purposes using one of the following approaches:
Event location: The service charge is sourced to the location of the sporting event. Under this approach, it is presumed that the fee, along with the ticket, allows the purchaser (or its donee) access to the event and thus the service is first used by the purchaser when the ticket is used to gain admittance to the sporting event. This approach treats the service charge as an access fee and follows the sourcing rule set out in RCW 82.32.730(1)(a) (i.e., the seller’s business location, if the seller’s business location is the event location) or (1)(b) (i.e., event location if the seller’s location is not the event location).
Purchaser location: The service charge is sourced to the location where the purchaser takes receipt of the ticket. Under this approach, it is presumed that the fee is for the privilege of buying the ticket in a convenient manner and is unrelated to admittance to the sporting event. This approach treats the service charge as a convenience fee that is first used by the customer when the ticket is purchased. If the customer purchases and receives the ticket at the seller’s place of business, then the service charge is sourced to the seller’s place of business. RCW 82.32.730(1)(a). If the ticket is purchased through the internet or at a location other than at the seller’s place of business, the sale is sourced to the customer’s address available from the business records of the seller maintained in the ordinary course of the seller’s business or an address obtained during the consummation of sale. RCW 82.32.730(1)(c) and (d).
The Department recognizes that sellers are currently sourcing the retail sales tax applied to Ticket Service Charges using the approaches described above. Because there is currently no consensus as to the proper method of sourcing these services, the Department will continue to accept the use of either of the approaches above as long as the seller applies the selected approach consistently to their sales. Retail sales tax collected under either of the approaches above is considered properly collected and is not subject to refund. Further, we anticipate holding stakeholder meetings in the future to discuss the administrative and interpretive issues involved with sourcing sales of Ticket Service Charges. At the end of this process, the Department anticipates providing final guidance on how to source sales from Ticket Service Charges, which will apply prospectively.
The Department will continue to review this issue for purposes of developing final guidance. This interim statement will remain in effect until the Department issues its final guidance or cancels the interim statement.
If you are interested in attending the stakeholder meeting you may sign up for the DOR Excise Tax Rule Actions The Department will send a notification announcing the meeting date, time, and location.
If you have questions about this guidance, please contact the Department at 360-705-6705.