Shared real estate commissions

From the 2024 DOR Tax Exemption Study

Det. No.13-0330, 33 WTD 213 (June 30, 2014) 216 agents in incurring the costs, but has primary or secondary liability to pay the provider of the supplies or services. ETA 3145.2009 goes on to provide specific examples illustrating the Department’s [position]. The following example addresses Taxpayer’s situation: Option 1: The Broker and Associate agree that commissions will be split 50/50 for any real estate sold by the Associate. It is also agreed that the Associate will pay the Broker a fixed charge of $500 per month for use of a desk, office space, advertising, and other services furnished by the Broker. The agreement provides for the Broker to deduct the fixed charge from the commission which will be paid to the Associate each month. The Associate made a sale in the current month for which the brokerage office will receive a commission of $1,200. The Associate is entitled to receive $600 as a commission which will be reduced by the $500 fixed fee for “office expenses.” The Broker gives the Associate a check for $100 and retains $1,100. The Broker is taxable on the gross commission of $1,200 and on the $500 fixed fee. The total of $1,700 is taxable under the service B&O tax clas