Are Your Virtual Event Revenues Subject to Taxation?

Author: Danica Tormohlen       

events tax

Attorney Paula Goedert will break down the current IRS regulation UBIT and how it applies to forced virtualization of exhibits during an Oct. 27 PCMA webinar.

How will U.S. tax rules impact virtual exhibit and sponsorships? The short answer: It’s unclear given the 16-year-old IRS guidance that suggests that income received from virtual-only trade shows may be taxable. What is clear: It’s an issue nonprofit show organizers will need to address if their association’s digital events generate revenue from virtual exhibits — and potentially sponsorships — without an in-person event.

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Paula Goedert

As COVID-19 has forced many groups to transform their in-person events to digital platforms in 2020 and even early 2021, associations that want to lessen their exposure to unrelated business income tax (UBIT) need to plan with care when moving events to a completely virtual format. Attorneys who specialize in working with nonprofits offer differing opinions on whether this income will be considered as taxable, given the current environment and technology innovations since 2004.

“A case could be made for the safe harbor of virtual booth revenue if the virtual trade show is held in conjunction with virtual member or committee meetings, education, and networking — not as stand-alone trade show,” said Jim Anderson, an attorney with Howe Anderson & Smit who has worked with a number of association clients over 30-plus years.

How might your virtual event be impacted? Attorney Paula Goedert will break down the current IRS regulation UBIT and how it applies to forced virtualization of exhibits — and explore whether sponsorship rules offer a path forward to tax-exempt revenue during a complimentary PCMA webinar from 1-2 p.m. CT on Oct. 27.

Learn more and register for the UBIT: How US Tax Rules Impact Virtual Exhibits and Sponsorships webinar here. And look for PCMA Convene to publish a white paper on this timely topic in the coming weeks.

Danica Tormohlen was editor at large at Trade Show Executive magazine and is the former editor in chief of EXPO Magazine, and is based in the Kansas City, Missouri metro area.