If my business charges one price for admission plus food and drinks (like a birthday party package), does Illinois sales tax apply to the whole charge or just the food?

Plain-English summary

The Illinois Department of Revenue answered a question from a business (think bowling alley, roller skating rink, or laser tag venue) about how to charge sales tax on "birthday party packages" that bundle general admission to the attraction with food (a slice of pizza) and a soft drink.

The Department's answer turns entirely on how the charge is billed, not on which item is the "true object" of the sale:

• If you charge one single, undivided price for the admission, food, and soft drinks together, the entire charge is subject to Retailers' Occupation Tax (Illinois's sales tax).
• If the food and soft drinks are separately stated from the admission charge, then tax applies only to the food and drink portion — the admission charge itself is not taxed.

The letter explicitly declined to resolve the taxpayer's specific packages, stating that the Department "cannot determine the taxability of your birthday party packages without examining the invoices." It also did not adopt the taxpayer's proposed "true object" test (i.e., that the attraction, being the majority of the cost, should control taxability); instead it applied the bundling/separate-statement rule from 86 Ill. Adm. Code 130.2145(c)(2)(B).

Because this is a General Information Letter (GIL), it is not a statement of Department policy and is not binding — it simply points the taxpayer to the applicable regulation.

What this means for you

Bowling alleys, roller/skating rinks, laser tag, and similar attraction operators

If you sell food (pizza, snacks) or soft drinks, you're selling tangible personal property and must collect Retailers' Occupation Tax (and any applicable local taxes) on those sales regardless of the day or time sold. The key planning point for bundled offerings like birthday party packages is invoicing: a single lump-sum price for admission plus food and drink makes the whole package taxable, while itemizing (stating admission separately from food/drink) limits the tax to just the food and drink line.

Businesses selling "package deals" or time-limited specials

The same rule applies to specials that bundle a block of time (e.g., a 2- or 3-hour admission window) with a slice of pizza and a drink for one set price. The letter does not carve out an exception for time-based specials — the single-charge-versus-separately-stated-charge distinction is what controls, not whether the offer is called a "special" versus a "package."

Accountants and tax professionals advising these businesses

Point clients to 86 Ill. Adm. Code 130.2145(c)(2)(B) for the bundling rule. Note that the Department expressly rejected doing a fact-specific "true object" analysis in this letter and instead applied the bright-line separate-statement test. Also note the Department said it could not rule on the taxpayer's actual packages without seeing the invoices — so this GIL states the general rule but does not confirm how any particular pricing structure should be taxed.

Businesses considering whether to request a binding ruling

Because a GIL is not binding on the Department, a business that wants certainty about a specific package's tax treatment would need to request a Private Letter Ruling (PLR) under 2 Ill. Adm. Code 1200.110, providing the actual invoices/pricing structure, since a PLR is binding as to the requesting taxpayer to the extent the facts are complete and correct.

Common questions

Q: We sell a birthday party package for one flat price that includes admission, a slice of pizza, and a soft drink. Is the whole price taxable?
A: Under this letter, yes — when a single charge is made for the admission, food, and soft drinks together, the entire charge is subject to Retailers' Occupation Tax.

Q: What if we itemize the receipt so admission and food/drinks are billed separately?
A: Then tax applies only to the food and soft drink portion; the separately stated admission charge is not taxed. See 86 Ill. Adm. Code 130.2145(c)(2)(B).

Q: Does it matter that the attraction (bowling, laser tag, etc.) is the "true object" and the majority of the cost, with food being incidental?
A: The letter does not adopt that argument. The taxpayer raised a "true object" theory, but the Department's response focuses only on whether the charge is bundled into one price or separately stated — not on which component is the primary reason customers buy the package.

Q: Does this letter tell us exactly how our specific packages should be taxed?
A: No. The Department stated it "cannot determine the taxability of your birthday party packages without examining the invoices." This GIL gives the general rule, not a ruling on the taxpayer's specific facts.

Q: Is this letter binding on the Department?
A: No. It is a General Information Letter (GIL), which directs the taxpayer to relevant regulations but is not a statement of Department policy and is not binding. A taxpayer wanting a binding answer would need to request a Private Letter Ruling (PLR).

Citations and references

• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax imposed on retail sales of tangible personal property)
• 86 Ill. Adm. Code 150.101 (Use Tax on tangible personal property purchased at retail)
• 86 Ill. Adm. Code 130.2145(c)(2)(B) (taxability of bundled admission and food/drink charges)
• 2 Ill. Adm. Code 1200.110 (procedures for requesting a Private Letter Ruling)
• 2 Ill. Adm. Code 1200.120 (General Information Letters are not binding Department policy)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2017.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2017/st-17-0032-gil.pdf

Original ruling text

ST 17-0032-GIL 10/02/2017

GROSS RECEIPTS

When a single charge is made for the admission to an attraction, food and soft drinks, the
entire charge is subject to Retailers’ Occupation Tax. In contrast, if the food and soft drinks
are separately stated from the admission to an attraction (e.g., bowling, roller skating, laser
tag), tax applies only to the food and soft drinks. See 86 Ill. Adm. Code 130.2145(c)(2)(B).
(This is a GIL.)

October 2, 2017

Dear Xxxxx:
This letter is in response to your letter dated July 20, 2017, in which you requested information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
I recently sent a series of questions to your department to verify the proper way to
impose sales tax for a BUSINESS in regards to Birthday Party Packages and other
Specials that include an attraction, food (slice of pizza) and a soft drink.
Could you kindly read the email chain provided and offer advice?
The basic question is as a BUSINESS (whether it is bowling, roller skating, laser tag,
etc.), how is sales tax imposed for Birthday Party Packages where the package includes
general admission for the attraction, food, (such as pizza) and soft drinks and a
reserved table?
And is there any difference if a special is offered at a particular time and day where
there is a set price for 2 or 3 hours and it includes a slice of pizza and a soft drink?
I believe the only circumstance where the entire gross receipt would be taxed is if the
true object was the food. In the case of a Birthday Party Package the attraction
(bowling, roller skating, etc.) would be the main object correct? It is the majority of the
cost of the package, and it is essence of what the establishment is in business for.
Therefore sales tax would be imposed only on the food and drink, correct?

ST 17-0032-GIL
Page 2

In the case of a 3-hour special where it includes general admission for the attraction
(laser tag or roller skating, etc.) and a slice of pizza and drink, again, the true object
would be the general admission and not the food, correct. Therefore sales tax would be
imposed only on the food and drink, correct?
Is there a way to calculate when the food is the true object vs. the attraction? Because
there is a reserved table for the birthday party does that change anything? Is it looked
at as a room rental because there is a reserved table even though the customer is
coming for the attraction and the majority of the cost is for the actual attraction and not
the reserved table?
DEPARTMENT’S RESPONSE:
The Retailers' Occupation Tax Act imposes a tax upon persons engaged in this State in the
business of selling tangible personal property at retail to purchasers for use or consumption. See 86
Ill. Adm. Code 130.101. Use Tax is imposed on the privilege of using, in this State, any kind of
tangible personal property that is purchased anywhere at retail from a retailer. See 86 Ill. Adm. Code
150.101. These taxes comprise what is commonly known as “sales tax” in Illinois.
Food and Soft Drinks
If you are engaged in the sale of food (such as pizza) and soft drinks, you are engaged in the
sale of tangible personal property (regardless of the time and day sold) and must collect Retailers’
Occupation Tax and any applicable local taxes on such sales.
Parties
Based on the descriptions in your letter, it appears that you offer birthday party packages that
include admission to an attraction (e.g., bowling, roller skating, laser tag), a slice of pizza and a soft
drink. When a single charge is made for the admission to an attraction, food and soft drinks, the
entire charge is subject to Retailers’ Occupation Tax. In contrast, if the food and soft drinks are
separately stated from the admission to an attraction (e.g., bowling, roller skating, laser tag), tax
applies only to the food and soft drinks. See 86 Ill. Adm. Code 130.2145(c)(2)(B). We cannot
determine the taxability of your birthday party packages without examining the invoices.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel

DMB:bkl