Computing Admissions and Amusement Taxes

The admissions and amusement tax is imposed by county and municipal governments at varying rates up to 10 percent of gross receipts from taxable activities. If the gross receipts from the activity is also subject to the sales and use tax, the admissions and amusement tax is limited to 5 percent. Effective June 1, 2009, electronic bingo and electronic tip jars are subject to a state admissions and amusement tax of 30 percent, which is imposed on the net proceeds.

Unlike the sales and use tax, which is imposed on the person making the purchase, the admissions and amusement tax is imposed on the person or business receiving the taxable receipts. For this reason, you are not required to impose a separate charge on the consumer for this tax as you would to collect the sales tax.

Admissions and amusement taxes which may be due for both the state of Maryland and a county or municipality for these specific activities must be noted on separate lines on the admissions and amusement tax return and may not be combined. The tax owed the state is the same whether calculated on a separately stated or tax-included basis.

Tax rates

Often, different rates apply to different activities. Check our rate chart to determine the tax for your planned activity. You can also request a rate chart by calling the Taxpayer Service Section at 410-767-1300 in the Baltimore area, or 1-800-492-1751 from elsewhere in Maryland. Once you file an initial return, we will pre-print the correct rates for previously reported activities on subsequent returns.

Exemption certificates

Also unlike the sales and use tax, exemption certificates are not valid for the admissions and amusement tax. Since the tax is imposed on the host of the activity rather than on the consumer, the exemption does not apply.

Deductions

Generally, deductions for prizes, cost of goods sold and other expenses are not permitted since the admissions and amusement tax is a gross receipts tax and not an income tax permitting the deduction of expenses. The only exception is in Anne Arundel County (outside of any municipality) where the cost of prizes in bingo games may be deducted before computing the tax.

Exempt activities

If all of the proceeds from an activity are donated to a charity, the gross receipts are exempt from the admissions and amusement tax. Also, the gross receipts from sales of tickets to political fund-raisers are not subject to tax.

Free admissions

An additional tax is imposed on reduced charge or free admissions in most, but not all subdivisions. If your jurisdiction imposes this tax, it is equal to:

• 5 cents for each ticket if the regular price is less than 50 cents,
• 10 cents for each ticket if the regular price is less than $1.00, and
• 15 cents for each ticket if the regular price is $1.00 or more.

The tax on reduced charge or free admissions is payable in full even if the actual amount of taxes payable would exceed 10 percent of gross receipts.

Computing the Tax on a Tax-included Basis

To compute the admissions and amusement tax using receipts that already include the tax, follow this four-step process: Step 1 - Convert the tax rate to a decimal and add 1. Step 2 - Divide the total receipts by the number obtained above to find taxable gross receipts. Step 3 - Multiply the above answer by the tax rate to find the tax. Step 4 - Report the total mount of taxable gross receipts and the total amount of tax separately.

If a business in Baltimore County, where the rate is 10 percent, has receipts from tax-included admissions totaling $9,900 for the reporting period, the tax is computed as follows:

Step 1 - Convert the tax rate to a decimal and add 1: .10 + 1 = 1.10 Step 2 - Divide the total receipts by the number obtained in Step 1 to find taxable gross receipts: $9,900 ÷ 1.10 = $9,000 Step 3 - Multiply the answer to Step 2 by the tax rate to find the tax: $9,000 x 10% = $900 Step 4 - Report taxable gross receipts of $9,000 and tax of $900.