United States

Ohio: Baseball Team Strikes Out Before Board of Tax Appeals

Jun 05, 2017
From KPMG TaxWatch

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The Ohio Board of Tax Appeals recently struck down an argument that certain promotional items purchased by a professional baseball team were resold to patrons. The baseball team, the Cincinnati Reds, purchased items, such as bobbleheads, player cards, and other team-themed gear that were given to patrons for free on certain game days. It was undisputed that the purpose for offering the items was to increase ticket sales and overall interest in certain games.  On audit, the baseball team was assessed use tax on the cost of the items. The team protested, arguing that it “resold” the promotional items to attendees along with the purchase of an admission ticket. In support of this position, the team stated that it factored the cost of the items into the ticket prices, which are determined prior to the start of the season as part of the team’s budgeting processes.

The Board did not find the taxpayer’s argument to be a home run and declined to dismiss the assessment. In the Board’s view, the promotional items were simply not resold along with the cost of a ticket. The Board noted that the ticket price for each particular seat was the same throughout an entire season, regardless of whether a promotional item was offered at the game. Moreover, there was no guarantee that a patron would receive a promotional item, as there were limited quantities that were distributed as long as supplies lasted. Finally, the team’s advertising indicated that patrons were not being charged a separate amount for the item but that they were “free” or a “giveaway.” Therefore, the Board upheld a use tax assessment on the promotional items. It remains to be seen whether the Reds will appeal or try for another shot at-bat. For more information on Cincinnati Reds, LLC v. Testa, please contact Dave Perry at 513-763-2402.


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.