Wisconsin Court Upholds Sales Tax on StubHub Ticket Sales

On January 13, the Wisconsin Court of Appeals, District I, issued its decision in the case between StubHub, an online marketplace operator that facilitates sales of tickets for sporting events, concerts, theatre, and other live entertainment, and the Wisconsin Department of Revenue (DOR). The main issue was whether StubHub was subject to Wisconsin sales tax on the sale of admissions to Wisconsin events sold through its online platform from 2008 to 2013.

The Case Background and Court's Decision

To buy and sell tickets, both sellers and buyers must create an account to use the marketplace and accept StubHub’s User Agreement. The User Agreement sets out the terms and conditions governing users' access to and use of StubHub’s website and services.

Ticketholders used an online marketplace to list tickets for sale by selecting an event from StubHub’s existing catalog or requesting that a new event be created, entering detailed information about the ticket, and setting their own sale price. Once listed, tickets remained available on the website unless the seller withdrew the listing or the ticket was purchased. 

The company permitted sellers to remove listings, adjust prices, or sell tickets through other channels, except when a seller selected the Instant Download option, which required an exclusive listing on StubHub. In cases where the ticket was not sold, ownership remained with the ticket holder. While most of the sellers were individuals, some businesses also engaged in ticket resale, and StubHub itself never purchased tickets or held inventory for resale. 

Once the ticket was sold, the buyer paid the price set by the ticketholder, along with additional fees calculated as a percentage of the ticket price and a logistics fee, which varied by transaction, charged by StubHub. The company collected the full payment from the buyer, deducted its fees, and remitted the remaining amount to the ticketholder.

Between 2008 and 2013, nearly USD 154 million in event tickets was sold in Wisconsin through the online marketplace, and no evidence was provided that ticketholders or buyers paid sales or use taxes on any purchases, nor that the company remitted any tax on those transactions. Following the tax audit conducted in 2014, the DOR issued two notices assessing USD 8.5 million in back taxes, plus USD 8.5 million in interest, penalties, and fees. The Tax Appeals Commission confirmed this, prompting an appeal to the Court of Appeals. 

The Court agreed with the Commission that, although the company was based outside the state, its role in facilitating ticket sales for Wisconsin events provided a sufficient basis to impose the state's sales tax on the full purchase price of tickets during the statedperiod.

Conclusion

Ultimately, the ruling confirmed that an out-of-state marketplace facilitator, such as StubHub, may be required to collect and remit Wisconsin sales tax when it plays a central role in selling admissions to in-state events. The ticket broker should consult the Wisconsin DOR's published guidance to avoid similar issues.

Source: Wisconsin Court of Appeals District I - Case 2024AP455