Request By:
Mr. Frank Sgroi, Chairman
Kentucky Athletic Commission
Kentucky Towers, Suite 306
430 W. Walnut Street
Louisville, Kentucky 40202
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: George Geoghegan, III, Assistant Deputy Attorney General
This letter is in response to your request on the interpretation of KRS 229.031 as it relates to "Gross Receipts" . KRS 229.031(1) states in pertinent part:
"Every person conducting a professional boxing or wrestling match or exhibition . . . shall within twenty-four (24) hours after the termination of every match or exhibition, furnish to the commission a written report, . . . showing the number of tickets sold for the match or exhibition, the amount of the gross receipts from such sale and such other matters as the commission prescribes. He shall also, within the same period, pay to the commission a tax of five percent (5%) of the gross receipts from the sale of all tickets to the match or exhibition. "
You have stated that a promoter of a wrestling match paid the 5% tax on the "adjusted gross receipts". That is a bond fee that was included in the price of admission and was deducted from the gross receipts and the 5% tax was paid on the receipts after such deduction.
KRS 229.031(3) states:
"All taxes required to be paid by this section shall be computed on the gross receipts without any deduction whatsoever for commissions, brokerage, distribution fees, advertising or other expenses, charges or recoupments in respect thereto, exclusive of any federal excise taxes."
The language of this section suggests that the legislature intended only federal excise taxes to be deducted in determining "gross receipts" .
In Taylor v. Rosenthal, Ky., 213 S.W.2d 435 (1948), the court had to determine the meaning of "gross receipts" in the context of a contract between a landlord and a tenant of a movie house. The court stated, "when a tax is levied on 'gross receipts' it applies to every penny a person, firm or corporation takes in regardless of the source from which it comes." Id at 437. This all-encompassing definition was reaffirmed by the court in Luckett v. Texas Eastern Transmission Corp., Ky., 336 S.W.2d 567 (1960), where the court had to determine the exact nature of "gross receipts" as used in a taxing statute. In relying on the Taylor, supra, notion of gross receipts as the whole, entire or total receipts, the court said:
"We assume that the General Assembly, when formulating the statute, used the words, gross receipts, according to the generally accepted definition." Luckett at 569.
Based on the language of KRS 229.031 and the above-mentioned decision of the Kentucky courts, it is our opinion that "gross receipts" includes everything that a promoter takes in and no deduction should be made for a bond fee that was included in the price of admission.
Since your letter states that the promoter has already paid the 5% tax on the "adjusted gross" it is our suggestion that you contact the promoter and request that the 5% tax be paid on the "gross receipts" . If payment is not forthcoming, legal recourse can be undertaken.