Washington D.C.: Sales Tax Due on Admissions to Public Events on Boats
- Apr 22, 2014 | Gail Cole
Sales of admissions to public events occurring on boats are subject to Washington D.C. sales tax, effective April 18, 2014. Certain sales of food, drinks, and beverages on boats are also subject to sales tax, as are certain rentals of boats.
It’s not a boat rental if it comes with a captain
Bear in mind that if the services of a captain or operator come with the rental of a boat, the District of Columbia Office of Tax and Revenue considers that “no rental of the boat has occurred” and charges for the boat and captain are exempt from sales tax. If the services of the captain or operator are furnished separately, then a boat rental has occurred and the charges for the boat rental are subject to sales tax. Boats are taxable when rented without a captain or operator.
When charges for events, food and drink are included in ticket price
If the ticket price of a boat tour or cruise includes charges for admissions to a public event, the entire ticket price is subject to sales tax. If the admissions to the event are separately stated, tax applies only to the event, not the event and the cruise. The same is true for charges for food and drink. When those charges are included in the ticket price of the tour or cruise, the cost of the ticket is taxable. When both admissions to a public event and food/ drink charges are included in the cost of the ticket, the ticket is subject to sales tax. “However, this rule does not apply where the value of the food and drink or alcoholic beverage included in the ticket price is de minimus.”
If charges for food and drink are not included in the price of the ticket, taxability hinges on …
Where were you when that drink was poured?
Sales of food and drink, including alcoholic beverages, are exempt from sales tax when the boat on which they’re consumed is “operating with the District in the course of commerce between the District and a state….” If by any means “any or all of the boat’s passengers or crew disembark the boat … and go ashore outside of the District,” then sales of food and drink are not subject to D.C. sales tax. The onus to prove that the boat operated “in the course of commerce between the District and a state” falls on the taxpayer. Taxpayers are advised to keep detailed and accurate records.
If the boat enters another jurisdiction’s waters but does not allow passengers or crew to disembark on another state’s shores, then the taxpayer “shall substantiate in his or her books and records the allocation of sales of food and drink or alcoholic beverages between the District and non-District waters.” Taxpayer records on this matter must be reasonable. If they are considered unreasonable, “the Deputy Chief Financial Officer shall allocate the sales to the District.”
Sales of food and drink are subject to sales tax when the boat does not leave District waters.
The change in taxability of admissions to boat tours and boat cruises is posted in the D.C. Register. View the text to read the fine print, including how “boat” is defined.
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