Boo! Should You Charge Tax on Tickets to Your Haunted House?
- Sales Tax
- October 26, 2015 | Jaimy Ford
Halloween is just around the corner, and that means many business-savvy folks are capitalizing on people’s need to be scared out of their wits.
All through the month of October, these spooktacular events bring in hordes of zombies customers, and the profits can be outstanding. But of course if you are hoping to make some big bucks off of a haunted event, you can expect to hand over a cut to the government.
Should you be collecting tax from your soon-to-be-terrified customers? In most cases, yes.
Amusement, Admissions, Entertainment
Haunted house tickets tend to fall under each state’s amusement, admissions or entertainment tax, and in the majority of states, admissions are taxable. If you don’t collect the tax from your customers, you are still on the hook to pay it. So you should be adjusting your ticket prices to account for the admissions tax if you want to avoid a fright from penalties and interest.
As with many sales tax rules, there are exceptions. For example, according to TTR, in California, Virginia, Massachusetts, and Rhode Island (among others), admissions for amusements are tax-exempt.
What's an Amusement?
However, to make life difficult, each state has its own guidelines for what constitutes “amusements” and other tricky rules. In New York, for example, admission charges for a musical or dramatic performance are not taxable. However, haunted houses are—even if music and acting is involved—because haunted houses are categorized as amusements. And while admissions in Maryland are typically tax-exempt, if you were to host a haunted boxing match, for example, you’d be liable for paying an Admissions and Amusement Tax, because boxing and wrestling matches are one exception to the rule.
To further complicate matters, the admission tax is sometimes imposed by the local jurisdiction, as is the case in Maryland, which sets the rate within certain parameters. So if you were to host two haunted attractions in different towns, you may need to charge two different admission tax rates. If you are hosting the event for charity, a whole new set of rules apply, and they vary from state to state.
You must do your research and know how to stay compliant in your state and town, so check with your state’s Department of Revenue.
No doubt all the rules take the fun out of your big event, so rather than agonizing over all the details, turn to Avalara Trustfile to take the pain out of filing and paying your sales tax.