Earlier this week, the 2018 Winter Olympics in Pyeongchang, South Korea, came to a close, sending hundreds of athletes and thousands of spectators back to their home countries. Many will return with mementos of their experience at the games, and for Americans, this may result in a use tax liability at both the state and local level.
The most valuable items of tangible personal property that winning competitors will bring home are their Olympic medals. Surprisingly, gold medals are 99 percent silver and worth just under $600 based on their precious metal content. For federal purposes, Olympic medals are treated as income based on the value of the metal they contain, although most Olympians have been able to exclude these amounts since 2016. For use tax purposes, very little guidance has been issued on the subject of Olympic medals. To the extent the medals are treated as income on the state level, they are probably not subject to use tax, as precious metals and money are not treated as taxable tangible personal property in many states. California has specifically considered exempting Olympic medals from income tax, likely indicating that such items are not subject to the state’s use tax.
A few states provide sales and use tax exemptions that are more specifically applicable to Olympians. For example, Iowa exempts commemorative medallions made of gold, silver, platinum, palladium, or a combination of these metals, provided the value of the metal depends on its content and not its form. Nebraska provides a similar exemption for commemorative medallions, as do South Dakota and Utah.
In contrast, Idaho specifically imposes sales and use tax on medallions created to commemorate a historic event, unless such medallions are sold through the state treasurer. Illinois only exempts historic medallions if issued by the state government, federal government, or government of a foreign country. In these states, Olympic winners will likely owe use tax on their spoils of victory because Olympic medals are presented by the International Olympic Committee.
Of course, medals are not the only items Americans bring home from the Olympics. From t-shirts to Olympic pins to plush hockey sticks, attendees spent thousands of dollars on Olympic souvenirs in Pyeongchang. For those who intend to bring these mementos into a state imposing a use tax, tax will generally be due. However, some limited exemptions may be available for Olympic spectators. Pennsylvania exempts most clothing and footwear from sales and use tax, meaning that Pennsylvanians who return home with t-shirts featuring Soohorang, the Olympic mascot, will not owe use tax on their purchases. Sporting equipment and apparel are taxable, though, so new curling enthusiasts will need to remit use tax on their purchases of brooms, stones, and curling shoes.
Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Should Olympians be required to pay use tax on their medals?
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