October 7, 1999 | Read Time: 1 minute
The Commonwealth Court of Pennsylvania says two organizations that sponsored professional golf tournaments do not qualify as charities under state law and must pay a local “amusement tax” of $83,200 on revenues generated at events held in 1996 and 1997.
A lower court had ruled that the two groups — Betsy King LPGA Classic and Betsy King Classic Charities — did not owe the 10-per-cent tax on admissions to the sporting events. The lower court, the Court of Common Pleas of Berks County, said that the organizations qualified as charities and were exempt from state taxes in part because they met a requirement under a previous Pennsylvania Supreme Court ruling that they “advance a charitable purpose.” The court’s analysis: The organizations qualified because they helped funnel money from tournament revenue and sponsors to hospitals and other groups that are classified as charities under federal law.
But the Commonwealth Court said that the golf organizations did not meet the state-law standards for charities. One reason: While the revenue generated by the two golf tournaments amounted to $1.8-million, the two organizations made only $340 in “direct charitable contributions,” the court said. “The record establishes that the overwhelming majority of revenue generated, after operating expenses, went to fund the purse for the participants of the golf tournament,” the court concluded (Betsy King LPGA Classic et al v. Township of Richmond et al, Nos. 2567- 68, C.D. 1998).
