Md. Code Regs. 03.06.02.04

Current through Register Vol. 51, No. 22, November 1, 2024

Section 03.06.02.04 - State Authorized Exemptions

A. Charitable, Educational, or Religious Exemptions.

(1) The tax may not be imposed on gross receipts derived from any charge for admission or for merchandise, refreshments, or a service, if the gross receipts are used exclusively for a:

(a) Charitable, educational, or religious purpose;

(b) Volunteer fire company or nonprofit rescue squad; or

(c) Fraternal, service, or veterans organization chartered by a grant of Congress.

(2) In each instance, in determining whether the "exclusively" requirement is met, ordinary and reasonable expenses of operation, including the costs of merchandise or refreshments provided or sold, may be disregarded. The "exclusively" requirement is not met if any:

(a) Promoter, concessionaire operator, professional exhibitor, or entertainer is entitled to share in the gross receipts on any form of a percentage basis, including a minimum fee plus a percentage, whether the additional percentage fee is earned.

(b) Promoter, concessionaire operator, professional exhibitor, or entertainer is to be compensated on any other basis resulting in that individual's receiving substantially all of the gross receipts in excess of bona fide expenses paid to unrelated third parties. If a promoter, concessionaire operator, professional exhibitor, or entertainer is compensated from the gross receipts of an affair, the fact that the amount of money devoted to charitable, educational, or religious purposes is less than the applicable tax shall create a presumption that the "exclusively" requirement has not been met.

(c) Business promoter receives a substantial business benefit from an affair in the form of advertising, good will, or public acceptance.

(3) If not disqualified under §A(2)(a)-(c), above, and in the absence of other evidence to the contrary, the Comptroller shall presume that the gross receipts of any organization possessing an effective determination letter from the Internal Revenue Service as to qualification under the Internal Revenue Code, §§ 501(c)(3), (8), (10), or (19), qualify for exemption.

B. The tax may not be imposed:

(1) On gross receipts derived from any charge for admission or for merchandise, refreshments, or a service, if the gross receipts are used exclusively for the improvement, maintenance, or operation of an agricultural fair, if the net earnings do not inure to the benefit of any stockholder or member of the association conducting the fair.

(2) On gross receipts derived from any charge for admission to a concert or theatrical event presented or offered by a not-for-profit group that is organized and operated:

(a) To present and offer an annual series of scheduled music concerts; or

(b) For a cultural purpose and receives a grant directly or indirectly from the Maryland State Arts Council.

(3) On gross receipts derived from the use of bowling alleys or lanes. The tax, however, may apply to the gross receipts of other activities at bowling alleys, including the gross receipts derived from rental of sports equipment, such as bowling shoes, and from coin-operated amusement devices.

(4) On gross receipts derived from amounts charged for admission to live boxing or wrestling matches. Closed circuit telecasts of live matches taking place within or outside this State are live matches for the purposes of this exemption.

(5) On gross receipts derived from amounts charged for admissions to, or use of, a charter fishing boat. In order for this exemption to apply, the fishing vessel shall have been hired by and for one specific person or group of people. The charges for admission to or for the use of a vessel which is not the subject of a charter, such as a head boat, do not qualify for the exemption.

(6) On gross receipts derived from any charge for admission to or use of a facility or equipment in connection with a bingo game that is operated in accordance with Criminal Law Article, §13-507, Annotated Code of Maryland.

(7) By Baltimore County on gross receipts of a not-for-profit community association that is organized and operated to promote the general welfare of the community that the association serves and the net earnings of which do not inure to the benefit of any stockholder or member of the association.

(8) By Calvert County, including Chesapeake Beach and North Beach, on gross receipts that are subject to the sales and use tax.

(9) By Washington County on gross receipts from an amusement device that is subject to the license and permit requirements of Article 24, §11-202, Annotated Code of Maryland.

Md. Code Regs. 03.06.02.04