Casinos, Sales Tax, and The Entertainment Industry

Sales tax can be complicated for any industry, but the entertainment industry has had some especially interesting cases. Recently one Nevada court ruled in favor, at least partially, of Harrah’s when it came to  sales tax for planes they bought in 2006 to transport high rollers to their casinos to gamble. The court ultimately ruled that two of the four planes purchased were involved in interstate commerce and weren’t subject to Nevada’s tax. Harrah’s still came out on top, saving $3.7 million instead of having to pay sales tax on the entire amount of their transactions. Entertainment is subject to sales tax in most cases, but many states, including New York, make exceptions for “artistic performance.”

Determining whether your entertainment business is subject to sales tax can be tricky when it involves determining whether you’re offering art or just fun. While a game of mini-golf might be subject to sales tax, a mini-golf game as part of an artistic performance in an uptown gallery might not. For one interesting example concerning “artistic performance,” New York’s highest court ruled in a case about a strip club that it owed back taxes for years of non-compliance because the entertainment offered didn’t count as art. As states jockey for sales tax revenue to make up for other diminishing revenue sources, laws concerning the entertainment industry might change.

The law that helped Harrah’s avoid sales tax on their planes stipulates that if the “first use” of goods falls under interstate commerce, they’re not subject to sales tax. But after missing out on $3.7 million in revenue, Nevada could change that law to target tax shielding practices that involve flying planes between two cities outside of Nevada to prevent sales tax liabilities. If your business is in the entertainment industry, we can help you stay on top of your sales tax filing with our software that ensures your information is correct. Don’t gamble with your sales tax—know you’re doing it right every time.

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