If my laser tag business charges one price for a birthday party package that includes laser tag, pizza, soft drinks, and a party host, do I owe sales tax on the whole thing?

Plain-English summary

A prospective laser tag business owner wrote to the Illinois Department of Revenue asking how to charge sales tax on a mix of offerings: general laser tag sessions, birthday party packages (laser tag plus pizza, soft drinks, a small gift, and a party host), concession items like candy bars and fountain drinks, and combo "specials" pairing laser tag with pizza and unlimited drinks.

The Department responded with a General Information Letter (GIL) rather than a binding Private Letter Ruling, since a GIL simply points taxpayers to the relevant rules rather than resolving specific facts. Two things are clear from the letter:

• Straight food and drink sales are taxable. Selling pizza, candy bars, and soft drinks on their own means you're selling tangible personal property, so you must collect Retailers' Occupation Tax (and any applicable local taxes) on those sales.
• Bundled vs. separately stated charges control the party packages. If a birthday party package is billed as one flat price covering the laser tag time, food, drinks, and the party host, the entire charge is taxable. If instead the invoice separately states the charge for the entertainment (laser tag and party host) from the charge for the food and soft drinks, tax applies only to the food and soft drink portion.

Notably, the Department explicitly declined to tell the business owner which category their birthday packages fall into: "We cannot determine the taxability of your birthday party packages without examining the invoices." The letter also did not directly address the "specials" (laser tag plus a pizza slice and unlimited drinks) beyond the same general bundling principle, and it did not resolve whether the business is a "Public Amusement Place" under 86 Ill. Adm. Code 130.2030 or a "Vendor of Meals" under Section 130.2145 more broadly — the questions the owner specifically raised.

What this means for you

Laser tag, trampoline park, and similar amusement operators

If you sell admission or session time bundled with food, drinks, or add-ons (a party host, a small gift) for one flat price, expect the whole charge to be taxable. To limit tax to just the food and beverage piece, you need to separately state that charge from the entertainment charge on the invoice or receipt — not just internally track the cost breakdown, but state it to the customer.

Party-package and event businesses generally

This GIL's core lesson generalizes beyond laser tag: any business combining a taxable entertainment/service charge with tangible personal property (food, drinks, merchandise) in one package should look at 86 Ill. Adm. Code 130.2145(c)(2)(B) to decide whether itemizing charges on the invoice would reduce the taxable base. The Department's own examples ("laser tag and party host") show it is thinking about amusement-plus-catering hybrids specifically.

Accountants and tax professionals

Because this is a GIL, it is not binding on the Department and was expressly issued because the Department could not fully resolve the taxpayer's specific fact pattern (it said so about the birthday packages). Treat it as directional guidance on the bundling/separately-stated-charge rule, not as clearance for any particular invoice structure. If a client needs certainty for a specific set of packages and invoices, a Private Letter Ruling request under 2 Ill. Adm. Code 1200.110 is the mechanism that would actually bind the Department.

Concession and straight food/drink sellers

No ambiguity here: selling candy bars, pizza, or fountain drinks as standalone items is a normal taxable retail sale of tangible personal property under 86 Ill. Adm. Code 130.101, requiring collection of Retailers' Occupation Tax and any applicable local taxes.

Common questions

Q: If I charge one price for a laser tag birthday party (laser tag + pizza + drinks + host), is the whole thing taxable?
A: Under this letter, yes — a single, undifferentiated charge for entertainment, food, soft drinks, and a party host is subject to Retailers' Occupation Tax in full.

Q: Can I avoid tax on the entertainment portion of a party package?
A: You may be able to limit the tax to just the food and soft drinks if you separately state that charge from the entertainment charge (e.g., a distinct line for "laser tag and party host" versus a distinct line for "food and drinks"), per 86 Ill. Adm. Code 130.2145(c)(2)(B).

Q: Did the Department tell this business exactly how to structure its birthday party invoices?
A: No. The letter states plainly that the Department "cannot determine the taxability of your birthday party packages without examining the invoices." It gave the general rule but did not apply it to the taxpayer's actual packages.

Q: Are candy bars and fountain drinks sold at the counter taxable?
A: Yes. Selling food and soft drinks as standalone items is a sale of tangible personal property, so Retailers' Occupation Tax (plus applicable local taxes) applies.

Q: Is this letter binding on the Illinois Department of Revenue?
A: No. It is a General Information Letter, which by regulation (2 Ill. Adm. Code 1200.120) is not a statement of Department policy and is not binding — it only points the taxpayer to relevant rules. A binding answer would require a Private Letter Ruling under 2 Ill. Adm. Code 1200.110.

Citations and references

• 86 Ill. Adm. Code 130.2145(c)(2)(B) (taxability of bundled vs. separately stated charges for meals/entertainment packages)
• 86 Ill. Adm. Code 130.101 (imposition of Retailers' Occupation Tax on retail sales of tangible personal property)
• 86 Ill. Adm. Code 150.101 (imposition of Use Tax)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedures)
• 2 Ill. Adm. Code 1200.120 (General Information Letter procedures)

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-17-0033-gil.pdf

Original ruling text

ST 17-0033-GIL

10/02/2017

GROSS RECEIPTS

When a single charge is made for the entertainment, food, soft drinks, and a party host, the
entire charge is subject to Retailers’ Occupation Tax. In contrast, if the food and soft drinks
are separately stated from the entertainment (e.g., laser tag and party host), 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:
Can you please offer guidance on the proper tax I should be imposing if I am looking to
open up a Laser Tag business in the state of Illinois?
My business will entail being open to the general public for specific hours 6 days a
week.
We will offer:
• General 30 and 60 minutes laser tag session
• Birthday Parties that will include two 30-minute laser tag sessions, pizza and soft
drinks a small birthday gift and party host.
• Small concession items such as candy bars and fountain drink.
• Specials that may include a 60-minute laser tag session and a slice of pizza and
unlimited drinks.
What items do I need to charge sales tax on to the customer?
When I am searching through section 130 – Retailer’s Occupation Tax on your website
there is such a variety of topics that I do not want to miss anything I believe that we
would fall under 130-2030 Public Amusement Places. Is there any other section that

ST 17-0033-GIL
Page 2
would apply? How would my Birthday party packages impose tax? I would charge tax
for the pizza, soft drinks and small gift.
Would my establishment fall under any provisions in Section 130.2145 Vendor of
Meals?
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 (pizza, candy bars) and soft drinks, you are engaged in
the sale of tangible personal property 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 an attraction (e.g., 30 and 60-minute laser tag sessions), pizza, soft drinks, a small birthday
gift and a party host. When a single charge is made for the entertainment, food, soft drinks, and a
party host, the entire charge is subject to Retailers’ Occupation Tax. In contrast, if the food and soft
drinks are separately stated from the entertainment (laser tag and party host), 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