Is the lane-rental portion of a bowling alley's private 'bowling party' package subject to sales tax, and does bundling it with taxable food and beverage charges change the answer?

Plain-English summary

An accounting firm asked the Department about the sales tax treatment of "bowling parties" at its client's 42-lane bowling alley — a package that includes lane rental for up to seven bowlers for three hours, plus optional food and beverage service brought to the lanes. The package's three components (lane rental, food, and drinks) are separately priced and separately stated on the customer's contract.

The Department split the answer along exactly those lines. Bowling lane rental is not taxable, because New York's sales tax on admission charges to a "place of amusement" specifically excludes charges for the use of facilities for a participant sporting activity — and the regulations name bowling alleys as a textbook example. That exclusion doesn't disappear just because the lane rental is sold together with other things in one party package.

Food and beverages are taxable, exactly as they would be at any restaurant or bar, because they're just an extension of the bowling alley's ordinary snack bar and lounge business — nothing about serving that food at the lanes during a party changes its nature. Because the lane-rental charge is reasonable and is kept as its own separately stated line item from the food and drink charges (rather than folded into one bundled price), the Department treated the bowling and the food/drink as two distinct sales rather than treating the whole taxable food charge as contaminating the exempt lane rental (or vice versa). Gratuities that are separately stated and paid over in full to the servers and bartenders also stay untaxed.

What this means for you

Bowling alleys and other participant-sports venues

If you sell package deals that bundle exempt participant-sports admission (lane time, court time, greens fees, etc.) with taxable food, drink, or equipment rental, keep those charges reasonable and separately stated on the invoice or contract. Doing so lets each component keep its own tax treatment. If you instead charge one lump sum for the whole package, the Department could tax the entire amount as a single bundled sale.

Restaurants, bars, and caterers operating inside amusement venues

The food and beverage side of this ruling is unremarkable — it's taxed the same as any other restaurant sale under Tax Law § 1105(d). The interesting part is entirely about keeping it billed separately from the exempt admission charge next door.

Accountants and tax professionals

The key doctrinal move is treating "reasonable and separately stated" lane rental as sufficiently distinguishable from the taxable food/drink sale to allow split tax treatment, per the Department's own earlier Carucci opinion (TSB-A-90(54)S). Watch for the same separately-stated requirement anywhere a taxable and a nontaxable component are sold together — see 20 NYCRR § 527.1(b)'s default rule that a single bundled price for taxable and exempt items together is fully taxable.

Common questions

Q: Is a bowling alley's lane rental charge taxable in New York?
A: No. Charges to a patron for the use of bowling lanes are specifically excluded from sales tax as a charge for a participant sporting activity, under Tax Law § 1105(f)(1) and 20 NYCRR § 527.10.

Q: If food and drinks are included in a bowling party package, does that make the whole package taxable?
A: Not automatically. Here, because the lane rental was a reasonable amount and was separately stated from the food and beverage charges, the lane rental stayed exempt while only the food and drinks were taxed.

Q: Are gratuities on the food and drink charges taxable?
A: No, as long as the gratuity is separately stated and turned over in full to the servers and bartenders providing the service.

Q: Does this ruling apply to any bowling alley or amusement venue selling similar packages?
A: No. This advisory opinion binds the Department only as to the petitioner's client and the facts described. Other venues should confirm their own billing structure meets the same separately-stated requirement.

Citations and references

Statutes and regulations:

• Tax Law § 1101(d)(2) (definition of "admission charge")
• Tax Law § 1101(d)(10) (definition of "place of amusement")
• Tax Law § 1105(d)(i) (tax on food and drink sold by restaurants, taverns, and caterers)
• Tax Law § 1105(f)(1) (tax on admission charges; participant-sports exclusion)
• 20 NYCRR § 527.1(b) (taxable and exempt items sold as a single unit)
• 20 NYCRR § 527.8(l) (gratuities)
• 20 NYCRR § 527.10 (admission charges; participant-sports exclusion, naming bowling alleys)

Prior rulings referenced:

• Paul J. Carucci, Adv Op Comm T&F, Oct. 24, 1990, TSB-A-90(54)S (separately stated non-taxable and taxable charges get separate treatment)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2000.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a00_44s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-00(44)S
Sales Tax
October 18, 2000

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S000414A

On April 14, 2000, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Marcum & Kliegman, LLP, 130 Crossways Park Drive, Woodbury, NY 11797.
The issue raised by Petitioner, Marcum & Kliegman, is whether receipts from its client’s
sales of “bowling parties” that include both the cost of the bowling lane rentals and the cost of food
and/or beverages are subject to sales and compensating use taxes.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner’s client operates a 42-lane bowling alley and derives its revenues from bowling
and several bowling related activities as described below.
Petitioner’s client receives approximately 30% of its revenue from what is called “open
bowling.” Open bowling is available anytime the bowling alley is open; patrons may walk in and
pay for each game of bowling. The charge for one ten-frame game of bowling is based upon the time
of the day and the day of the week. For example, a game of bowling is more expensive on Friday
night than it is on Tuesday afternoon. The average charge for one ten-frame game of bowling is
approximately $6.45. An additional equal charge is incurred for additional games bowled.
Petitioner’s client receives approximately 4% of its revenue from “shoe rental.” This is a
charge to rent a pair of bowling shoes during open bowling. Petitioner’s client charges $3.00 for
shoe rental, regardless of the time, day or number of games bowled.
As is common with most bowling alleys, Petitioner’s client’s bowling alley has a bar and a
snack bar on the premises. The bar is somewhat larger than the typical bowling alley bar and the
snack bar serves somewhat fancier food than the typical bowling alley snack bar. The bar and the
snack bar do not have a separately enclosed eating and drinking area. The bar and the snack bar do
have a glass partition separating them from the bowling lanes. In addition, there are tables and
counter space for patrons to sit at while they eat or drink. There is no access to the bar or the snack
bar except through the bowling alley. The bar serves both alcoholic and non-alcoholic beverages.
The snack bar serves food normally expected to be found at a bowling alley such as hamburgers, hot
dogs, and pizza, as well as “higher-end” food such as pasta, hot appetizers and sandwiches.
Petitioner’s client does not serve “sit down” meals, as restaurants do.
Any time the bowling alley is open to the public, all patrons have complete access to the bar
and snack bar to order something to eat or drink. All food and beverage items have a per item

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charge. For example, a hamburger or sandwich may cost $6.00, french fries $3.00, a soda $2.50 or
a beer $5.00 (prices are approximates). Bar receipts from open bowl patrons account for 18% of
revenues. Snack bar receipts from open bowl patrons account for 4% of revenues. All gratuities
received in connection with the sale of food and beverages are turned over to the food servers and
bartenders. The bar and snack bar are closed when the bowling alley is closed.
Petitioner’s client receives approximately 5% of its revenue from other miscellaneous sources
such as vending machine sales and sales of clothing (bowling shirts, etc.), bowling equipment,
trophies and other items.
Petitioner’s client receives approximately 1% of its revenue from “childrens’ parties.” A
child’s party includes pizza, soda, ice cream cake, two games of bowling and shoe rental for a per
child charge. This charge is approximately $28.
The remaining 38% of Petitioner’s client’s revenue is from “bowling parties.” It is the sales
tax implications on these charges that are at issue in this Advisory Opinion. Revenues from bowling
parties come from three sources. These three components are separately stated in the contract for
a bowling party, a sample of which was submitted with this Petition.
The first component of a bowling party is the lane rental. The lane rental charge varies from
$125 to $190 per lane and entitles the bowling party customer to use of the lane for three hours by
a maximum of seven bowlers. Petitioner’s client requires that a bowling party customer rent at least
one lane per seven bowlers. There is no limit to the number of games that can be bowled in the
three-hour period.
In addition to the lane rental, the bowling party customer has the option to order food for the
party guests. The purchase of food is not required as a condition of the lane rental. The bowling
party customer chooses from the various food choices on the menu and Petitioner’s client charges
the per item charge multiplied by the number of persons in the party. For example, a bowling party
customer could choose to have chicken fingers and fried shrimp appetizers available for its guests.
If chicken fingers are $5.00 a serving and fried shrimp is $7.00 a serving, the bowling party customer
would be charged $12.00 per person for food. This charge is in addition to (and separately stated
from) the lane rental charge.
During the party, chaffing dishes are set up behind the lanes where the party guests are
bowling so that they can eat at their leisure. Normally, bowling parties are not segregated from the
rest of the bowling alley, nor is there a separate section of the bowling alley for bowling parties.
Also, in addition to the lane rental, the bowling party customer has the option of ordering
beverages for the party guests. The ordering of food without beverages or ordering of beverages

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without food is allowed. Again, ordering beverages is not a requirement of the lane rental. The
bowling party customer has two choices when ordering beverages for its guests.
The bowling party customer may purchase “open bar” privileges for its guests. In this
situation, the bowling party customer is charged a certain fee (approximately $35 per person) which
entitles the guests to unlimited drinks for the three hours Petitioner’s client has reserved the lane for
the party. The actual fee charged depends on whether the bowling party customer is purchasing
unlimited alcoholic beverages, nonalcoholic beverages, beer or wine.
The other beverage option a bowling party customer has is to purchase a certain number of
drink tickets. These tickets are exchanged by the guests for drinks (one ticket equals one drink). The
bowling party customer may purchase as many or as few tickets as it chooses. The cost of the ticket
is dependent upon whether it can be exchanged for an alcoholic or nonalcoholic drink. These drink
tickets usually cost approximately $5.00.
As shown in the sample contract provided, all charges for the lane rental, food, beverages,
gratuity and sales tax are separately stated. Charges for the lane rental, food and beverages contain
a similar profit margin. Petitioner’s client charges and remits sales tax on all charges for food and
beverages purchased during parties. The customers are required to pay an 18% gratuity on all food
and drink charges. All gratuities received in connection with the sale of food and beverages are
turned over to the food servers and bartenders. Accordingly, sales tax is not charged on gratuities.
Guests attending the bowling parties have the option of purchasing additional food or drinks
on their own simply by walking over to the bar or snack bar and ordering the food or beverage and
paying for it. Petitioner’s client remains open for “open bowling” during a bowling party. There
may be several parties going on at the same time and there is no requirement to start any of these
parties at a certain time, although the party must end by the time the bowling alley closes. In rare
cases, very large parties reserve all 42 lanes. In those cases, the bowling alley is not available for
open bowling because there are no lanes available. However, it is also possible that there would be
no lanes available because open bowlers occupy all the lanes.
Of the 38% of the bowling alley’s receipts that are attributable to bowling parties, 4% of the
revenue is from food, 8% is from beverages and the remaining 26% is from the lane rental charge.
Applicable Law and Regulations
Section 1101(d)(2) of the Tax Law defines admission charge as “[t]he amount paid for
admission, including any service charge and any charge for entertainment or amusement or for the
use of facilities therefor.”

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Section 1101(d)(10) of the Tax Law defines place of amusement as “[a]ny place where any
facilities for entertainment, amusement, or sports are provided.”
Section 1105(d)(i) of the Tax Law imposes sales tax on:
The receipts from every sale of beer, wine or other alcoholic beverages or any
other drink of any nature, or from every sale of food and drink of any nature or of
food alone, when sold in or by restaurants, taverns or other establishments in this
state, or by caterers, including in the amount of such receipts any cover, minimum,
entertainment or other charge made to patrons or customers (except those receipts
taxed pursuant to subdivision (f) of this section). . . .
Section 1105(f)(1) of the Tax Law imposes sales tax on:
Any admission charge where such admission charge is in excess of ten cents
to or for the use of any place of amusement in the state . . . except charges to a patron
for admission to, or use of, facilities for sporting activities in which such patron is to
be a participant, such as bowling alleys and swimming pools.
Section 527.1(b) of the Sales and Use Tax Regulations provides:
Taxable and exempt items sold as a single unit. When tangible personal
property, composed of taxable and exempt items is sold as a single unit, the tax
shall be collected on the total price.
Example:

A vendor sells a package containing assorted cheeses, a
cheese board and a knife for $15. He is required to collect tax
on $15.

Section 527.10 of the Sales and Use Tax Regulations provides, in part:
(a) Imposition. (1) A tax is imposed upon any admission charge, in excess
of 10 cents, to or for the use of any place of amusement in this State.
*

*

*

(b) Definitions. (1) Admission charge.
(i) The amount paid for admissions . . . to any place of amusement, including
any service charge and any charge for entertainment or amusement or for the use of
facilities therefor.

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*

*

*

(3) Place of amusement. Any place where facilities for entertainment,
amusement, or sports are provided. Such places include without limitation . . .
bowling alley. . . .
(d) Admissions excluded from tax. . . .
*

*

*

(4) Charges to a patron to or for the use of sporting facilities or activities in
which the patron is to be a participant are excluded from tax.
Example 6:

Admission charges for the use of bowling lanes . . . are not
subject to tax. However, any charge for the use of tangible
personal property in conjunction with the sporting activity is
taxable. . . .

Opinion
Petitioner’s client operates a 42-lane bowling alley and derives its revenues from bowling
and several bowling related activities. At issue in this Advisory Opinion is the application of the
Sales and Use Tax Law to a single aspect of Petitioner’s client’s business known as “bowling
parties.” A bowling party consists of the use of bowling lanes by a maximum of seven bowlers per
lane for a 3-hour period, during which time an unlimited number of games can be bowled. For
additional optional charges, bowling party customers may purchase food and/or beverages (alcoholic
and non-alcoholic) for their party guests to eat and drink while bowling. These additional charges
are separately stated in the sample contract provided as part of this Petition.
Petitioner’s client’s bowling alley is a “place of amusement” and its charge for the use of a
bowling lane is an “admission charge” within the contemplation of Section 1105(f)(1) of the Tax
Law. Under Section 1105(f)(1), charges for admission to a participatory sporting activity are
specifically excluded from the imposition of sales tax. The exclusion from tax explicitly refers to
bowling as the kind of activity intended to be excluded under the statute. Therefore, the charges for
bowling lane rental are not subject to sales tax. However, when sold in conjunction with the sale of
taxable food and drink, the issue arises whether the non-taxable nature of the bowling charges is
affected by the other taxable components of the sale.
In addition to the lane rental charge, a bowling party customer has the option of ordering food
and/or beverages for its guests. Such sales of food and drink fall within the purview of Section
1105(d) of the Tax Law and are subject to the imposition of sales tax. The food and drink supplied

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at bowling parties is an extension of Petitioner’s client’s normal restaurant and bar business located
at the bowling facility. The purchase of such food and drink by a bowling party customer is separate
from the bowling the same way it is anytime that any bowling customer purchases food or drink from
the snack bar or bar. As described above, the purchase of food or drink is not required as a condition
of the lane rental.
Accordingly, the bowling component of Petitioner’s client’s bowling parties is a distinct,
discrete activity separate from the sales of food and drink. The two transactions are sufficiently
distinguishable to allow differential tax treatment. Therefore, provided the lane rental charges are
reasonable and separately stated from the charges for food and drink and any other taxable charges,
only the charges for food and drink and any other taxable charges are subject to sales tax (see Paul
J. Carucci, Adv Op Comm T&F, October 24, 1990, TSB-A-90(54)S). Likewise, charges specifically
designated as gratuities that are separately stated from the charges for food and drink and are paid
over in total to the workers providing the food and drink service are not subject to tax. See Section
527.8(l) of the Sales and Use Tax Regulations.

DATED: October 18, 2000

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist III
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.