exempt sales tax

Several new sales tax exemptions are now in effect in Georgia.

For a limited time only, qualifying theaters in Georgia don’t have to pay sales tax on certain items used in renovation or expansion projects.

Qualifying theaters

To qualify, a theater must:

  • Be owned or operated by a nonprofit organization (per Section 501(c)(3) of the Internal Revenue Code)
  • Charge admission
  • Contain an art museum
  • Have a mission to provide arts and education programming for the benefit of the citizens of Georgia

If it seems like this applies to a specific theater, that’s because it does: the Woodruff Arts Center. The exemption provided by House Bill 265 will facilitate the center’s Transformation Campaign, which includes the renovation of the center’s Alliance Theatre and Memorial Arts Building.

Qualifying products

Items eligible for the exemption must be used “for or in the renovation or expansion of qualifying theaters.” This means they must either be incorporated into the retail property of the theater, or remain at the theater after construction has been completed. For example, the exemption would apply to dry wall, insulation, and nails. It would not apply to drop cloths, Goof Off, or painter’s tape.

When does the exemption period start and end?

Only purchases made during the effective period are eligible for the exemption. The effective period for both state sales tax and local sales tax began July 1, 2017. Its end is more complicated.

While the exemption from local sales tax ends at midnight, January 1, 2019, the state sales tax exemption ends the earlier of midnight, January 1, 2019, or “the time at which the aggregate state sales tax refunded … exceeds $750,000.”

Must pay tax at time of purchase

The exemption is administered as a refund, so tax must be paid upon the purchase of qualifying items at the time of sale. Qualifying theaters may then file a claim for a refund of taxes paid with the Georgia Department of Revenue. The state will not refund state sales tax in excess of $750,000. Additional information.

Exempt admissions

HB 265 also provides a temporary state sales tax exemption for sales of tickets, fees, or charges of admissions to “a fine arts performance or exhibition conducted within a facility … owned or operated by an organization which is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, or a museum of cultural significance,” provided the primary mission of the organization or museum is “to advance the arts in this state and to provide arts, educational, and culturally significant programming and exhibits for the benefit and enrichment of the citizens of this state.” Local sales tax still applies to admission charges.

The measure defines “fine arts” as “music performed by a symphony orchestra, poetry, photography, ballet, dance, opera, theater, dramatic arts, painting, sculpture, ceramics, drawing, watercolor, graphics, printmaking, and architecture.” It’s unclear at this time whether the exemption for admissions, fees, and tickets applies to theaters other than the Woodruff Arts Center.

The exemptions are set to be automatically repealed July 1, 2020.

New exemptions like these can complicate sales and use tax compliance for both consumers and retailers. Sales tax software helps simplify it. Learn more.

photo credit: BRITISH COLUMBIA 1971 MUNICIPAL EXEMPT plate via photopin (license)