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Department of Revenue Targets League and Entry Fees

Posted Friday, June 17, 2011 by Michael A. Larson

alt text Recently, the Washington Department of Revenue issued a proposed Excise Tax Advisory (ETA) 3167.2011 that would make “entry fees” and “league fees” for participation in sports subject to Washington retail sales tax. The ETA indicates that this notice is merely a clarification of existing law. However, it actually appears to be a substantial change in interpretation by the Department of Revenue.

Interestingly, WAC 458-20-183, the regulation discussing taxation of amusement, recreation and physical fitness services, clearly provides that entry fees and league fees are not subject to retail sales tax. In essence, the Department of Revenue’s position is that entry fees and league fees are only exempt if they do not provide the right to participate in the activity itself. As it would seem that entry fees and league fees always provide the participants with the right to participate in the activity, the Department of Revenue’s interpretation does not make much sense.

It should be noted that there are limited exceptions that would continue to exempt certain youth organizations that are engaged in “character building of youth.” Should you be interested in learning more of these developments and how they might affect you or your organization, contact me at (206) 805-1490.

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