SALES TAX SLICE: MEMORIAL DAY WEEKEND: REMEMBERING SACRIFICES AND PONDERING TAX QUESTIONS

 

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Memorial Day, initially called “Decoration Day,” is almost here with what has become a tradition of barbecues, concerts, and three day weekends for many workers. Additionally, many people mark the holiday by laying wreaths or flags on the graves of veterans. So, are these commemorative items, memorial concerts, and barbecue offerings taxable? Countless people (or maybe just tax attorneys like me) will be wondering.

Some organizations, like the Boy Scouts or the military, observe Memorial Day by placing flags at the graves of veterans. However, in some states, like Texas, sales of flags of any kind are subject to sales and use tax. Luckily for them, other states, such as Pennsylvania and New York, exempt the sale of United States flags from sales and use tax. New York goes a step further and exempts the New York state flag along with military service flags, prisoner of war flags and blue star banners. California even has an exemption for flag lapel pins when sold by a nonprofit veterans’ organization. California also has an exemption for “buddy poppies” or similar, symbolic, temporary lapel pins sold by the Veterans of Foreign Wars when the pins memorialize U.S. military veterans killed in foreign wars.

As concerts are often held on Memorial Day weekend, the question arises as to whether admission to such events is taxable. In Alabama, unless a concert is conducted by the state or any instrumentality thereof, admission will be taxable. In Texas, as long as a concert is held by a tax exempt organization, admission to that concert is also tax exempt. Meanwhile, Illinois doesn’t impose tax on admission charges to concerts at all, as places of public entertainment are considered to be providing a nontaxable service.

What about barbecues? Will your grilling fare be subject to sales tax? Most states, like Maine and Arkansas, tax grocery items at a reduced rate or exempt it from sales and use taxes altogether. But, if you’re buying your ribs pre-cooked, the exemption may be lost as many states tax prepared foods. If you’re serving cold beer at your cook-out, be prepared to pay tax on it, as various states, like Arizona and Florida, do not consider alcoholic beverages to be food for human consumption and tax it accordingly.

Whatever the tax implications for flags, flag pins, concerts and barbecues, let’s be grateful that the day off from work on Monday isn’t taxable. Luckily, good weather (if we have any) isn’t taxable either.

Continue the discussion on LinkedIn: Should the sale of flags be subject to state sales and use taxes?

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By Emilie Burnette