California Sales Tax on Auction Items and Special Event Tickets
Advancement Services TrainingAugust 6, 2014
Overview of Training
CA Sales tax:California Board of Equalization Publication 18Current CA sales taxAuctions itemsSpecial Event TicketsForms required to book proceeds from auctions and ticket sales in AWARequirement of Insurance for special events
Why this training?To prepare for any events that coincide withGraduation.To be prepare for planned events for Colleges andDepartments.Example: Personalized medicine, Anniversary commemoration, Taste of the Bay and Florence Hale Stephenson brunch.The importance of obtaining insurance to protect the University from any liable during anevent.
California Sales Tax
Publication 18 from the California Board of Equalization states:In general, the amount you receive in exchange for merchandise is taxable.This is true whether a person pays you by cash or another method, or offers you something in barter or trade.In general, the taxable amount is the price you set and receive for the item.However, in case of auctions and silent auctions, the full amount you receive is taxable, regardless of the item’s value.
California Sales Tax
Examples:You sell books after your church services for a price of $10 each, plus tax. You will owe tax based on the $10 price ($10 x tax rate = tax amount due).A member of your church comes by your table and gives you $50. She takes one $10 book and tells you to keep the entire $50. You will owe tax only on the $10 price of the book. The other $40 is a nontaxable donation and you do not owe sales tax on it.You sell a copy of the same book in a silent auction for $50. You will owe tax on the entire amount.
California Sales Tax
Sales tax generally applies regardless of whether the items you sell or purchase are new, used, donated or homemade.Sales tax is required to be added to the final auction bid price paid and it is suggested that signage, or an indication, discloses that sales tax will be added.Currentsales taxrate is 8.75% (e.g. $100 bid would pay $108.75).
ActivitiesThat Do NotRequire Sales Tax
Sales of tickets for concerts, movies, plays, shows and similar events when food and meals are not included in the ticket prices.Sales of tickets for raffles when prizes are not guaranteed to every ticket purchased.The sale of travel, home rentals, guide services, tutoring and other things of value that are not physical products.Sales of gift cards, gift certificates and coupon books.Sales of advertising that does not involve exchanges of merchandise or goods.
The following documentation should be provided to the Office of University Development for processing and acknowledgement purposes:GIK Acceptance formDonor Intent formAuction Sales Form
Fair Market Value
A fair market value of each auction item has to be publicly disclosed to all attending or bidding.If the winning bid is more than the fair market value , the winner may claim a deduction (and SF State may count as a gift) for any amount paid in excess of the fair market value.
Sales Tax onSpecial Event Tickets
If you charge a single payment for a fundraising event involving taxable sales, the entire ticket charge will be taxable unless you do both of the following:List the taxable charges separately on the event ticketsKeep separate records of taxable and nontaxable charges
Example: you hold a fundraising dinner where the $75 ticket price includes dinner and drinks (which are taxable and entertainment (which is not taxable).If your tickets list only one price, that full amount is taxable.However, if the tickets state “Ticket price includes $35 for dinner and drinks” and your event income records reflect this break-down, tax would apply only to the $35 charge for dinner and drinks.
If your organization contracts with a vendor to serve the meals at your event, you are not responsible for paying tax on your ticket sales.Instead, the business that serves the meals must report the sale of the meals and pay the tax due, based on the amount they charge you.If your organization serves the meals at your event, you are liable for the tax.Thisis true whether the meals are furnished by members of your organization, purchased or donated to you.Taxis due based on the ticket price for the meal.
If your tickets do not mention refreshments and you serve only an insignificant amount of food or drink at your event, your ticket sales are not taxable.
A College/Department that conducts a fundraising event should determine the cost of food and beverages and notify the Office of University Development with the amount as well as the account the ticket proceeds should be deposited to.The cost of the meal will be deposited asFundraising Revenue.Any amount that exceeds the cost of the meal will be deposited as aDonation.
The number of seats provided as part of a sponsorship also needs to be provided to our department in order to properly split the payment between Fundraising Revenue and Donation.
Ticket Payment Online Page
A College/Department that hosts a fundraising event should contact Ken Maeshiro, Alumni Programs Assistant, to set up a special ticket payment page so invitees/attendees can make their payments for the event online.Ken can be contacted by email [email protected] by phone at 415-405-2964.
Special Event Insurance
A College/Department should acquire Special Event Insurance from The University Corporation, SF State (U Corp) to ensure appropriate coverage is in place, risk is mitigated and all parties (including but not limited to SF State, the U Corp, attendees, etc.) are covered accordingly.For questions regarding Special Event Insurance, please contact Antony Victoria [email protected] 415-338-2238.
For questions regarding this training, please contact IrinaKrasnitskaya, Gift Records Coordinator, [email protected]/or Laura Lopez, Sr. Gift Processor,[email protected] 415-405-3967.