Georgia Sales Tax Cover Admission Charges

By January 18, 2019 January 24th, 2019 Georgia Sales Tax

Georgia Sales Tax Cover Admission Charges

One might be thinking that a cover charge, door-fee, entrance-fee, are not the sale of a tangible product so that there is no sales and use tax implication. However, there are some exemptions to services (non-tangibles) which call for taxation.

Amusement activities recapture otherwise non-taxable service transactions into sales tax transactions.  All of the cover charges that have been collected, fall under the purview of amusement activities. Although there is no definitive activity, such as jet skiing or wall climbing, the mere fact that money was taken as a prerequisite to engaging in an activity, which in this case could be as simple as socializing, will implicate the activity as amusement requiring sales tax to be paid.

Most notably, hookah lounges on busy nights, clubs, bars, and restaurants, will have to collect and remit sales tax. Remember, a sales tax audit will not start by an auditor asking you for proof of sales tax being paid on cover charges. The sales tax audit will start with the collection of books and records. When they can see that there is an amount of gross income that has been excluded from sales tax, they will look to see all of the activities that are being carried out. If cover charges are among those activities, you can rest assure that they are looking for sales tax.

The audit factor will likely be overstated. The cover charges are usually deminimus compared to the true line of sales and business.

Georgia Sales Tax Cover Admission Charges

Ansari Law Firm

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