Rev. Rul. 58-574

Advice has been requested as to where the responsibility lies for the collection, return, and remittance of the tax on admissions when a theater is leased to performers under the circumstances described below.

The management of a theater leases the theater to various performers but does not lease the box office of the theater to them. The management has a contract with a company under which the company is granted the exclusive privilege of selling tickets in the theaters's box office as long as it does so in compliance with the terms of the contract. If the lessees of the theater wish to utilize the theater's box office, they must negotiate a separate agreement with the ticket selling company. The lessees are at liberty to arrange the sale of tickets outside the theater through brokers and others and do not necessarily have to avail themselves of the services of the box office. The lessees determine the nature of the attraction to be offered, the content of the program to be presented and the scale of prices to be charged.

Section 4291 of the Internal Revenue Code of 1954 provides that every person receiving any payment of facilities or service on which a tax is imposed upon the payor thereof shall collect the amount of the tax from the person making such payment.

Section 6011(a) of the Code provides that when required by regulations prescribed by the Secretary of the Treasury or his delegate any person made liable for any Federal tax, or for the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary or his delegate. Every person required to make a return or statement shall include therein the information required by such forms or regulations.

Section 101.31(d) of Regulations 43, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, states that in each case there rests on the respective person collecting the tax the corresponding duty of then paying such tax in accordance with the provisions of section 101.33 of the regulations and that the amount of tax collected constitutes a special fund in trust for the United States.

Section 101.36 of the regulations provides that whenever a theater, hall, park, ballroom, or other place is leased for any occasion, there is imposed on the lessee the duty of collecting any taxes due on admissions to such place on that occasion. However, for the convenience of the parties and the safeguarding of the revenue, the lessor will be permitted, if properly registered, to assume responsibility for the collection of the tax in such cases.

The person liable for the collection, return, and remittance of the tax on the amount paid for admission to any place is the person who receives the payments for admission. Such person may delegate to his agents the authority to physically take in the payments but this in no way lessens or affects his liability with respect to the admissions tax under the law. In the instant case, the company operating the box office is merely a conduit for the transmission of the payments made by members of the public at the box office and is not itself receiving such payments within the meaning of the Code. Since the lessees of the theater determine the nature of the program to be offered, the content of the program to be presented and the scale of prices to be charged, they are the persons who receive the payments for admission. There is no agreement between the lessor and any lessee which gives the lessor the authority to collect the admissions tax. The fact that the lessees are willing to utilize the service of the tax office and to be governed by the terms of the contract between the theater management and the company which operates the box office, makes the lessees no less liable for the collection, return and remittance of the tax than if brokers or others with whom the lessor has no contract had sold the tickets. Therefore, it is held that the lessees of the theater, who give performances and control the sales of tickets thereto, are liable for the collection, return and remittance of the tax on admission whether the payments for admission are made to the lessees themselves or to their agents.