Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
515.0000 SERVICE ENTERPRISES GENERALLY—Regulation 1501
(a) IN GENERAL—SERVICE DISTINGUISHED FROM SALE
515.0011.260 Focus Group Activities. A taxpayer organizes focus group sessions for sponsors. The participants of the focus group contract with the sponsor. Participants are served food and beverages during the session and receive a videotape of the session to take home. The sponsor of the focus group provides significant educational services including classroom instruction. Participants are charged a lump-sum price. Under these conditions, tax does not apply to the sponsor's charge to participants. The videotape, food, and beverages are regarded as incidental to the educational services. In addition to organizing the focus group sessions, the taxpayer contracts with the sponsor for (1) solicitation of participants for the sponsor and (2) providing the facility, food and beverages, and the videotapes to the sponsor.
The charges to the sponsor for the food, beverages, and videotape are subject to tax. The sponsor is engaged in creating a focus group and it is not reselling the food, beverages, and videotapes, but rather performing a service. The retail sale is by the taxpayer to the sponsor. However, based on the assumptions that the taxpayer is not responsible for service of the food (i.e., someone else is hired to do so) and there are significant educational services, the charge for the facilities is not subject to tax. Also, charges for solicitation of participants are not subject to tax if the solicitation is optional with the sponsor. 11/7/94.