How is an amusement park taxed on its ride-lease payments, its Pay-One-Price admissions, and its various concession arrangements?

Plain-English summary

Darien Lake Fun Country, Inc., an amusement-park operator, asked five questions about how it and its concessionaires are taxed. (This is a companion to TSB-A-82(46)S, issued to the same park.)

The Department's conclusions:

• (1) Ride-lease payments are taxable. The park leases rides from Huss Trading on a turn-key basis, paying rent equal to a percentage of Pay-One-Price gross receipts. Because a customer's ride charge is an admission charge under § 1105(f)(1) — not a retail sale of tangible personal property — the park does not "resell" the rides, so its lease payments are taxable under § 1105(a). This is true whether the rent is a percentage or a fixed amount.
• (2) Pay-One-Price admissions are taxable. A single fee covering general admission plus unlimited rides is a taxable admission charge under § 1105(f)(1).
• (3) Separate admission and ride tickets are taxable. If the park instead charges separately for admission and for rides, both are still admission charges taxed under § 1105(f)(1).
• (4) No allocation to participating sports. The park cannot carve out the part of an admission attributable to non-taxable participating sports (e.g., Treasure Island Golf). The whole amount must be paid to gain entry to the place of amusement, so it is taxable in its entirety — even if some visitors, once inside, choose activities a separate charge for which wouldn't be taxable. (TSB-M-79(1)S and WEBR v. State Tax Commission, cited by the park, don't compel a different result.)
• (5) Concession receipts must be allocated. For each concession contract the park allocates its receipts:
  • Taxable: amounts for renting/licensing tangible personal property and for equipment-maintenance service (e.g., payments to Omnivision for the rental of films and a lens).
  • Not taxable: amounts for the license to use real property or the exclusive right to operate a business on the premises; payments to Show Biz to produce theatrical performances; and, on a purchase of buildings/stands, only the portion representing tangible personal property (not real property) is taxable.
  • No tax is due on admissions to theatrical performances, coin-operated amusement devices, carnival-type games of skill, or parking.
  • Concessionaires making taxable sales must register as vendors and collect tax; but where a concession must account for and pay over its receipts to the park, the park reports and remits the tax and both are jointly responsible (20 NYCRR 526.10(g)(3)).

What this means for you

A bundled admission is taxed as a whole. If a single price is required to get in, the entire charge is a taxable admission — you can't split off the value of activities inside that might not be separately taxable. Turnstile-count allocation doesn't apply to one indivisible admission charge.

"Reselling" rides doesn't make ride equipment tax-free. Because ride receipts are admissions, not sales of goods, the equipment you lease or buy to run them is taxed to you. Percentage-of-receipts rent is still taxable rent.

Concession deals need a line-by-line allocation. One concession agreement can bundle a real-property license (not taxable), a TPP rental (taxable), equipment maintenance (taxable), and the right to operate a business (not taxable). Break the contract down and tax only the taxable elements — and note the special carve-outs for theatrical admissions, coin-op devices, games of skill, and parking.

Know who remits when a concession pays over receipts. If a concession hands its receipts to you under the contract, you report and remit the tax on those sales, but both of you are jointly responsible under the leased-department rule.

Common questions

Q: Is our Pay-One-Price ticket fully taxable even though guests can play non-taxable participating sports inside?
A: Yes. It's a single admission charge to a place of amusement, taxable in its entirety; there's no basis to allocate part of it to activities inside (§ 1105(f)(1)).

Q: We lease our rides for a percentage of receipts. Is that rent taxable?
A: Yes. Ride receipts are admissions, not sales of goods, so the rides aren't bought for resale — your lease payments are taxable whether the rent is a percentage or fixed.

Q: How are concession payments taxed?
A: Allocate them. Renting tangible personal property and equipment-maintenance service are taxable; a real-property license or the exclusive right to operate a business is not. No tax on theatrical admissions, coin-op devices, games of skill, or parking. Where a concession pays over its receipts to you, you remit the tax and both are jointly responsible (§ 526.10(g)(3)).

Citations and references

Statutes and regulation:

• Tax Law § 1105(f)(1) — tax on admission charges to a place of amusement
• Tax Law § 1105(a) — tax on receipts from retail sales of tangible personal property
• Tax Law § 1101(b)(4)(i) — "retail sale" is a sale other than for resale; § 1101(b)(5) — "sale" includes rental/lease
• Sales and Use Tax Regulations § 527.10(b)(3)(iv) — ride receipts are admission charges
• Sales and Use Tax Regulations § 526.10(g)(3) — leased-department/concession pay-over rule (lessor-vendor remits; joint responsibility)

Authorities addressed:

• Outdoor Amusement Business Association v. State Tax Commission (1982) (adopting the dissent in 84 A.D.2d 952) — ride receipts are admissions
• TSB-M-79(1)S and WEBR v. State Tax Commission, 58 A.D.2d 471 — cited by the park; distinguished and not controlling

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1982.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a82_50s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-82(50)S
Sales Tax
December 30, 1982

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S811006C

On October 6, 1981, a Petition for Advisory Opinion was received from Darien Lake Fun
Country, Inc., 9993 Allegany Road, Corfu, New York.
Petitioner, the operator of an amusement park, raises the following questions:
(1) Is sales tax due on amounts paid by Petitioner under the terms of a concession lease
agreement under which Petitioner leases amusement rides? The amount paid to the lessor by
Petitioner is based on a percentage of "ride revenue."
(2) Is sales tax due on receipts from Pay-One-Price admission tickets?
(3) Would sales tax be due if Petitioner provided for a separate charge and ticket for
admission to the amusement park and a separate charge and ticket for riding on the amusement
rides?
(4) May Petitioner, under either the Pay-One-Price concept or the separate admission ticket
and separate ride ticket concept, allocate receipts between non-taxable participating sports, such as
Treasure Island Golf, and taxable non-participating sports, on the basis of turnstile count?
(5) Are receipts Petitioner receives from concessionaires, and receipts obtained by such
concessionaires from customers, subject to sales tax?
Petitioner owns and operates an amusement park. During 1980, Petitioner entered into an
agreement with Huss Trading Corporation of America, an unrelated company, whereby Huss would
lease to Petitioner various rides on a turn-key basis. Under the terms of the agreement Petitioner is
to pay to Huss, as rent for the rides, a percentage of the gross receipts derived from the Pay-OnePrice admissions, "exclusive of an admission charge and/or sales and admission taxes." If a
designated dollar amount is not paid under this formula by specified dates, Petitioner is required to
pay a specified amount.
(1) Section 1105(a) of the Tax Law imposes the State sales tax on "the receipts from every
retail sale of tangible personal property . . . ." The term "sale" includes a rental or lease. Tax Law,
§1101(b)(5). A retail sale is defined, in relevant part, as one other than for resale. Tax Law,
§1101(b)(4)(i). Petitioner's charge to its customer for riding on an amusement ride is not a retail sale
but, rather, an "admission charge . . . to or for the use of any place of amusement," subject to tax
under section 1105(f)(1) of the Tax Law. 20 NYCRR § 527.10(b)(3)(iv); Outdoor Amusement
Business Association v. State Tax Commission, _ NY 2d _ (1982) (adopting the dissent in

ROBERT W. BOUCHARD, ACTING COMMISSIONER
GABRIEL B. DiCERBO , DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (8/82)

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TSB-A-82(50)S
Sales Tax
December 30, 1982

84 AD 2d 952). Accordingly, Petitioner's payments under its lease do not constitute receipts from
a purchase for resale. Such payments, therefore, constitute receipts subject to tax under section
1105(a) of the Tax Law. The foregoing applies irrespective of whether the receipts represent a
percentage of Petitioner's receipts or a fixed amount.
(2) Under Petitioner's Pay-One-Price arrangement a customer pays a single fee covering both
general admission and unlimited use of specified rides and attractions. These receipts are subject to
the tax on admission charges imposed under section 1105(f)(1) of the Tax Law.
(3) It follows from the foregoing that the tax imposed under section 1105(f)(1) of the Tax
Law would be due on receipts from the sale of separate admission and ride tickets.
(4) Petitioner's admission charges, whether under the separate admission or Pay-One-Price
arrangement, are clearly admission charges of the type sought to be taxed. They are charges for
admission to a place of amusement, and the entire amount is required to be paid in order to gain
entry. Therefore, they are , in their entirety, taxable admission charges, irrespective of the fact that
some customers, once inside, may choose to participate in activities a separate charge for which
would not be taxable. Accordingly, there is no basis for such allocation as is suggested by Petitioner.
Technical Services Bureau Memorandum, TSB-M-79(1)S, cited by Petitioner, dealt not with an
allocation of a single receipt but with a determination as to the presumptive nature of various
receipts. WEBR v. State Tax Commission, 58 AD 2d 471, also cited by Petitioner, dealt with a
situation wholly unlike the one presented here. WEBR involved the sale of a radio station business,
including both real and personal property, and the issue raised was the appropriate method of
determining the portion of the unallocated purchase price which was attributable to the purchase of
the personal property. A careful review of both TSB-M-79(1)S and WEBR compels no conclusion
contrary to that expressed herein.
(5) The concessionaires in question are, in return for payments equal to specified percentages
of gross receipts, granted by Petitioner, in various combinations, the exclusive right to operate
certain businesses on the premises, the use of real property, the use of tangible personal property, and
the service of equipment maintenance. Petitioner should in the case of each contract allocate the
portion of its receipts to each of the elements described above. The receipts reasonably attributable
to the rental of or license to use tangible personal property and the service of equipment maintenance
would be subject to sales tax. The receipts reasonably attributable to the rental of or license to use
real property, or attributable to the license exclusively to operate a business on Petitioner's premises,
would not be subject to sales tax. In addition to these general rules, the following also apply.
Petitioner's payments to Show Biz for the production of theatrical performances would not be subject
to tax. Receipts from Petitioner's purchase of buildings and stands from Corfu Amusements at the
end of the applicable lease would be subject to tax only insofar as they represented receipts from the
sale of tangible personal property, as opposed to real property. Petitioner's payments to Omnivision
would be subject to tax as receipts arising from a retail sale (rental) of the films and lens. Such

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TSB-A-82(50)S
Sales Tax
December 30, 1982

purchases would not be for resale, pursuant to the reasoning set forth in (1), above. As to the
concessionaires' responsibilities, insofar as they make sales subject to tax they would be required to
register as vendors, and to collect and remit tax (except as described below). It is to be noted, in this
regard, that no tax is due on admission charges to theatrical performances, for the use of coin
operated amusement devices, for carnival-type games of skill, or for the provision of parking. Where
a concessionaire makes taxable sales, and pursuant to the contract with Petitioner is required to
account for and pay over its receipts to Petitioner, the following applies:
"If a leased department or concession must account for and pay over its receipts to the lessor­
vendor, the lessor-vendor must report and remit the tax thereon to the bureau with its return. The
leased department or concession must also file a return reporting only its sales and have attached
thereto a statement to the effect that (i) it is a leased department or concession; (ii) the lessor-vendor
is responsible for reporting sales and remitting tax due; and (iii) identifying the lessor-vendor by
name, address and vendor identification number. Both the leased department or concession and the
lessor-vendor shall be jointly responsible for the collection and remitting of the taxes on the sales
made by the leased department or concession." 20 NYCRR 526.10(g)(3)

DATED: December 14, 1982

s/FRANK J. PUCCIA
Director
Technical Services Bureau