Current through Register Vol. 24-06, March 15, 2024
(1) When a trade show, convention or
educational seminar is sponsored and held by a nonprofit trade or nonprofit
professional organization for a group other than the general public, the
sponsoring organization may deduct from its business and occupation tax measure
all "attendance" or "space" charges it collects for such an event, per
RCW
82.04.4282. Nonqualifying organizations, and
qualifying organizations sponsoring nonqualifying events, must include
"attendance" and "space" charges in their tax measure for purposes of computing
service and other activity business and occupation tax thereon.
(2) Nonprofit organizations are taxed in the
same fashion as profit-making individuals or groups, with but few tax
exemptions. This section implements one of those exemptions. See also WAC
458-20-114 and
458-20-169.
(3) For purposes of this section, the
following definitions shall apply:
(a) The
term "nonprofit" means exempt from tax under Section 501 of the Internal
Revenue Code. The tax exempt status must be in effect when the trade show,
convention, or seminar is conducted.
(b) A "trade organization" is an entity whose
members are engaged "in trade", i.e., in one or more lawful commercial trades,
businesses, crafts, industries, or distinct productive enterprises.
(c) A "professional organization" is an
entity whose members are engaged in a particular lawful vocation, occupation or
field of activity of a specialized nature.
(d) A "trade show" is a gathering of persons
in trade for the purpose of exhibiting, demonstrating, and explaining services,
products and/or equipment.
(e) A
"convention" is a gathering of persons in trade or a profession for the
purposes of providing, publishing and exchanging information, ideas and
attitudes and conducting the business of the organization.
(f) A "seminar" is a gathering of persons in
trade or a profession for the purpose of research, study, and/or exchange of
specialized information, ideas and attitudes in regard to that trade or
profession.
(g) "Not open to the
general public" means that attendance is limited to members of the sponsoring
organization and to specific invited guests of the sponsoring
organization.
(4) As of
July 23, 1989, for purposes of computing taxable receipts subject to business
and occupation tax, a qualifying "nonprofit" organization may deduct all
amounts the organization collects as charges for
(a) Admissions, and
(b) Licenses to occupy space in order to
display exhibits, equipment and/or goods, at an organization-sponsored trade
show, convention or seminar not open to the general public.
(5) No statutory deduction is
available for the following:
(a) Outright
sales of tangible personal property or services for which a specific charge
separate from the charge for attending or occupying space is made. It is only
those charges which are paid for the express privilege of attending or
exhibiting at such an event which are deductible; and
(b) Admission or space charges for purely
social, recreational, entertainment or other nontrade or nonprofessional
gatherings regardless of the nonprofit tax status of the sponsoring
organization.
(6)
Examples:
(a) The local building trade council
(council) organizes and sponsors a trade show held for specialty and general
housing contractors. Council has on file a letter of tax exemption under
Section 501 of the Internal Revenue Code. Council collects $100.00, prepaid,
from each exhibitor for licenses to display and exhibit construction equipment,
tools and related wares at preassigned booths, and $5.00, paid at the door,
from each contractor who attends the event. Because the sponsoring organization
qualifies as a nonprofit trade organization, the event qualifies as a trade
show sponsored by the organization, and it is not open to the general public,
all of the amounts collected constitute deductible receipts of admission and/or
space charges.
(b) The metropolitan
business group (metro), a recognized tax-exempt organization under IRC Section
501, organizes and sponsors a convention for all of its businesses members.
Following completion of regular metro business matters (election of officers,
etc.), there are speeches by accountants, attorneys, bankers, financial
consultants, city planners, and other persons able to give legal and business
advice and information to those attending. Metro charges a $25.00 per person
entry fee. Included with the program is a hosted luncheon at which the mayor
gives an explanation of local governmental regulations. The entry charges are
fully deductible by Metro from its business and occupation tax measure. The
sponsoring organization is "nonprofit" and a "trade organization" because its
members are generically "in trade" even though not all are members of just one
trade. The event constitutes a convention for persons "in trade" (generic, not
specific) and the event is not open to the public. Finally, the moneys
collected all constitute admission charges, no special charge for the meal
having been made.
(c) The eastside
whiffle ball association (association), a corporation recognized in writing to
be tax exempt under Section 501 of the Internal Revenue Code, holds a "skills"
clinic for all interested persons. The association charges $3.00 to all
attending, which is just sufficient to cover the cost of materials and the use
of a facility. Following the event, a special barbecue is held for $4.00 extra
per participant. Souvenirs imprinted with the association name are also
available for extra charge. The $3.00 admission charges, the $4.00 dinner
charges, and the souvenir charges must all be included in the association's
B&O tax measure for the following reasons, each one of which disallows the
deduction:
(i) The association is not a trade
or professional organization,
(ii)
The event is not a trade show, convention or seminar, and
(iii) The event is open to the public.
Separate dinner and souvenir charges are nondeductible in any event because
they constitute itemized charges for goods and services.
(d) A local concerned citizen group (group),
which has never applied for federal tax exempt status, organizes and sponsors a
health care seminar held in the local school auditorium for district health
care professionals, nurses, sport trainers, parents, and concerned students. To
cover the cost of hiring competent medical experts to speak at the seminar, the
group charges $5.00 per person. The event is sponsored by the group for a
worthwhile public purpose and the entry fees are in fact admission charges. For
the following reasons, each one of which disallows the deduction, the group
will have to include all door charges in its tax measure: (i) The sponsoring
organization is not properly recognized to be nonprofit (no federal tax
recognition) or to be a trade or professional organization, and (ii) the event
is open to the public at large.
Statutory Authority:
RCW
82.32.300. 90-04-058, § 458-20-256,
filed 2/2/90, effective 3/5/90.