A new ruling from the Internal Revenue Service could affect tax-exempt insurance groups that sponsor Web-based trade shows and seminars.[@@]

The federal government cannot tax revenue from trade shows held by tax-exempt groups in hotels or convention halls, but it can tax similar events that take place entirely on the Web, according to Charles Barrett, an IRS tax-exempt entities specialist.

Internal Revenue Code Section 513(d)(1) lets tax-exempt trade groups treat conventions, annual meetings and trade shows as tax-exempt activities. Events that take place in a single geographic location qualify for the exemption if they promote an industry’s products or provide educational activities for industry participants, Barrett writes.

Some people may be starting to think of Web-based events as “real” events, but a Web site that carries product directories and similar information is not a tax-exempt event “is not a specific event at which [a group's] members, suppliers and potential customers gather in person at one physical location during a certain period of time and interact face-to-face,” Charles Barrett, an IRS tax-exempt entities specialist, writes in IRS Revenue Ruling 2004-112.

But revenue from the same Web site would be tax-exempt if the Web site appeared as a supplement to an event sponsored by a tax-exempt trade group that took place in the real world, Barrett writes.

The IRS has posted a copy of Barrett’s ruling at http://www.irs.gov/pub/irs-drop/rr-04-112.pdf