5 Rules Governing Maryland Admissions & Amusement Taxes
- Sales Tax
- October 22, 2015 | Jaimy Ford
Even fun is taxed in the great U.S. of A., but how that fun is taxed varies from state to state. Keep reading to ensure that you are compliant with the Admissions and Amusement Taxes in the Old Line State.
First, let’s define “amusements.” In the state of Maryland, amusements include concerts, participatory sports or games, spectator sports, movies, events at nightclubs and other venues -- even the bingo game at the local Elks Lodge -- and more. In addition, if you own or operate a theater, hall, park, or other facility that you rent or lease for amusement-type activities, you fall under the scope of amusements. While those activities are generally exempt from sales tax, they are subject to the Admissions and Amusement Tax (A&A Tax).
Special exceptions and rules do apply. To name two, admissions to wrestling and boxing matches are taxable, as are electronic bingo machines. So it is critical that you know the rules -- review this rate chart from the Comptroller of Maryland website.
1. Taxes are imposed by county and municipal governments
Admissions and amusement sales are not subject to the Maryland sales tax if the local jurisdiction has imposed an A&A Tax at the city or county level. However, if the local government doesn’t impose an A&A Tax, admissions and amusements sales in those cities and counties are subject to the Maryland sales tax.
There are no local sales taxes in the state of Maryland; therefore, the A&A Tax is collected by the State Comptroller’s Office.
2. Taxes are based on gross receipts from sales of admissions or amusements
Local jurisdictions can set the admissions and amusement tax rates from 1 up to, but not exceeding, 10 percent of the gross receipts from taxable activities, such as admissions, the use or rental of recreational or sports equipment, and the sale of merchandise, refreshments, or services at a place where entertainment is provided.
However, if a transaction is subject to Maryland sales tax and A&A Tax -- for example, sporting equipment rentals -- the rate of the admissions and amusement tax can’t exceed 5 percent. Because Maryland sales tax is 5 percent, and the tax rate can’t exceed 10 percent, the applicable A&A Tax is 5 percent.
3. Sellers do not have to pass the tax through to customers
Sales taxes are imposed on the consumer, whereas A&A Taxes are imposed on the seller. Therefore, the seller can choose not to collect A&A Taxes from the customer. In addition, sellers do not have to indicate on invoices that an A&A Tax has been collected. While that could mean less paperwork, it means that those businesses are absorbing the cost of the A&A Taxes that they are required to pay to the state, thereby creating an extra expense for their businesses.
Additionally, regardless of how you show the A&A Tax -- either calculated on a separately stated or tax-included basis -- you own the same amount of tax.
4. Reduced charges and free admissions are taxed at a higher rate
An additional A&A Tax is imposed on reduced charges or free admissions in most, but not all, jurisdictions. That additional tax is applicable even if the actual amount of taxes payable would exceed 10 percent of the gross receipts.
5. Admission and amusement taxes are rarely exempt
Because the tax is imposed on the seller or host of the activity, not the consumer, exemptions don’t apply. One exception: If you donate all of the proceeds from a charity event, the gross receipts are exempt from the A&A Tax.
Furthermore, you shouldn’t accept exemption certificates, diplomatic exemption cards, or other evidence of exemption from customers.
That’s the gist of the A&A Tax in the state of Maryland. Just remember one very important rule: Even if you have no taxable receipts, you are required to file an Admissions and Amusement Tax Return and pay your taxes in full to avoid costly penalties and interest.
Featured Image: Brian Ho