SALES TAX SLICE: GHOST TOURS RAISE SPIRITS OF TAXING AUTHORITIES

In just about two weeks, children and adults across the country will participate in the national ritual known as Halloween. And, scaring people has become big business: amusement parks, ghost tours, and pop-up haunted houses offer chills and thrills for everyone. If you’re among the many who relish the idea of the having the stuffing scared of out of you, you may take a haunted hayride or ghost walk, or reach out to known and unknown forces of the spirit world through a séance. And, as scary as those things may be, what could be even scarier is finding out that the price you pay for your favorite fright-fest might be subject to sales tax.

The vast majority of states impose a sales tax on amusement admissions (or, if not a sales tax, a special admissions or similar excise tax). A few notable exceptions are California, Colorado and Maine. Two of the top 13 “bone-chilling haunted tours” in the country, according to USCityTraveler.com, are located in San Francisco and San Diego, CA, so you can get a glimpse into the macabre, free of state sales tax. Colorado is home to the Stanley Hotel, the infamous hotel on which Stephen King’s book, and the movie, “The Shining” were based. The Stanley Hotel offers paranormal investigations, ghost hunting tours and a staged séance, all apparently for a tax-free admissions price.

In contrast, the Tennessee Department of Revenue recently announced that ghost tours (along with other amusement tours like celebrity bus tours, cave tours and sightseeing tours) come with a sales tax price to add to the chilling experience. Whether you dare to brave a walking ghost tour or choose a “relaxing” hearse tour (check out Nashville), you’ll pay Tennessee tax on the cost of the creepy outing, unless it’s conducted by a nonprofit, a government agency or a historic property preservation entity. In that case, the spooky event would be tax free.

One can also take a hearse ghost tour in Savannah, the price of which would be taxable, since Georgia’s state and local sales tax applies to most amusement admissions charges -- although it’s debatable just how much amusement there is in a tour conducted by hearse.

Massachusetts does not impose a sales tax on admission charges, so if you’re bold enough to take an eerie walk with witches in Salem, you likely won’t pay sales tax. However, if you take a ghost cruise in Boston, the price will come with a Convention Center Financing surcharge that is collected by the state as though it were a tax.

Determining sales tax on entry fees charged for haunted corn mazes, night hayrides and graveyard tours is a Thriller for the state tax nerd in all of us around Halloween. While most states have made the policy decision that the benefits of taxing these and other amusement charges outweigh any potential burdens the taxes might have on commercial activity, one has to wonder whether they’re looking for an excuse for getting out of visiting haunted houses. It’s just for fun and it’s not real… right? Either way, fear is big business, and it’s taxable, too.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: What might be the tax policy reasons for not imposing sales tax on amusement charges?

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By René Y. Blocker