Price-based taxes are easy to manipulate. For instance, North Carolina’s new 7.5 percent sales tax on tickets (“admission charges”) is getting eroded by an affiliate of the state, the UNC-Chapel Hill repertory theater.
When you order tickets, the theater separately states a ‘Web Handling Fee” that is not taxed. Here’s what an order looks like:
This show closes July 31, but the order page is here.
Now UNC’s own interpretation of the statute might seem to tax this fee:
“Admission Charge:
“An admission charge includes a charge for a single ticket, a multi-occasion ticket, a seasonal pass, an annual pass; a membership fee that provides for admission; a cover charge; a surcharge; a convenience fee, a processing fee, a facility charge; or any other charges included in gross receipts derived from admission.”
But maybe they have a lawyer saying that a “Web Handling Fee” is not taxed. And they can probably find third party charges in that range that don’t bear tax. But no third party seems involved here.
You might call this reverse bundling. Bundling involves giving away a taxed product with the purchase of tax-free product.
And by the way, 7.5 percent of $60 is $4.50, not $4.52. They must get there by rounding up the $1.125 tax on a single ticket to $1.13 and multiplying by 4.
The Center for New Revenue 