For a railroad's charter excursions, is the transportation taxable, who pays tax on bundled event tickets, and what local rate applies to souvenirs and food sold on a moving train?

Plain-English summary

The New York Susquehanna and Western Railway Corporation planned to run passenger charter excursions on its rail lines through several New York localities. Some excursions would bundle rail transportation with admission to an event (a sporting event, musical performance, etc.), with the transportation and event charges separately stated on the ticket. The railroad would also sell souvenirs from a fixed gift shop (in Oneida County) and on the train, and food on the train. It asked three questions.

Issue 1 — Excursion tickets bundling transportation and event admission.

• Providing passenger transportation by railroad is not a service enumerated under § 1105(c), so the sale of tickets to transport passengers on the charter excursions is not subject to sales tax.
• For the event admission, under § 1105(f)(1) the railroad must pay sales tax when it purchases the taxable event tickets, because there is no provision in the Tax Law allowing admission charges to be purchased for resale without paying tax. The railroad is not required to collect sales tax when it resells those tickets to its passengers.

Issue 2 — Local rate on souvenirs. Sales tax is a destination tax (§ 525.2(a)(3)): it applies at the point of delivery / where possession is transferred. Souvenirs sold from the fixed location are taxed at that locality's rate; souvenirs sold on the moving train are taxed at the rate of the locality where possession is transferred to the purchaser as the train travels through New York.

Issue 3 — Local rate on food sold on the train. Under §§ 525.2(a)(3) and 527.8, food and drink (and alcoholic beverages) sold on the moving train are taxable at the rate of the locality where possession is transferred, which is treated as the train's location at the time the check for the food or drink is presented to the purchaser.

What this means for you

Passenger transportation is not a taxable service — but bundled admissions are handled at purchase

Selling a ride is not taxable in New York; hauling passengers by rail isn't on the § 1105(c) list of taxable services. When you bundle a ride with admission to a taxable event, though, you don't collect tax from the passenger on the admission — instead you pay the tax when you buy the event tickets, because admissions can't be bought for resale tax-free. Build that cost into your pricing.

On a moving vehicle, the local rate follows where the customer takes possession

New York's destination rule means the applicable local rate is set by where the buyer receives the goods — not where your business is headquartered. For a train crossing county lines, that rate can change as you move, and for food and drink the opinion pins the moment (and place) of the sale to where the train is when the check is presented. Point-of-sale systems on mobile operations need to capture location to charge the right local rate.

Separately stating the transportation doesn't tax it — it stays nontaxable

Because transportation is simply not an enumerated service, separating it out on the ticket keeps it nontaxable; the analysis focuses instead on the admission and the tangible goods.

Common questions

Q: Do we charge sales tax on the rail-fare portion of an excursion ticket?
A: No. Railroad passenger transportation is not an enumerated service under § 1105(c), so the fare is not taxable.

Q: How is the event-admission portion taxed?
A: You pay sales tax when you buy the event tickets (§ 1105(f)(1)); you do not collect tax again when you resell them to passengers.

Q: What local rate applies to souvenirs and food sold on the moving train?
A: The rate of the locality where possession is transferred to the buyer (§ 525.2(a)(3)); for food and drink, that is the train's location when the check is presented (§ 527.8).

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) — tax on retail sales of tangible personal property (souvenirs)
• Tax Law § 1105(c) — enumerated taxable services; railroad passenger transportation is not among them
• Tax Law § 1105(f)(1) — tax on admission charges to a place of amusement; no resale purchase for admissions
• 20 NYCRR § 525.2(a)(3) — sales tax is a destination tax keyed to point of delivery/transfer of possession
• 20 NYCRR § 527.8 — tax on food and drink sold by restaurants, taverns, other establishments, and caterers

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_52s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (52)S
Sales Tax
July 26, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910502A

On May 2, 1991, a Petition for Advisory Opinion was received from The New York
Susquehanna and Western Railway Corporation, 1 Railroad Avenue, Cooperstown, New York
13326.
The issues raised by Petitioner, The New York Susquehanna and Western Railway
Corporation, are:
1.

Whether receipts from the sale of tickets for passenger charter excursions which
include the cost of rail transportation and the cost of entry to events, (e.g. sporting
events, musical performances, etc.) are subject to sales tax.

2.

What is the appropriate local sales tax rate for souvenirs sold from a fixed location
and from a moving train.

3.

What is the appropriate local sales tax rate for the sale of food sold on a moving train.

Petitioner will operate a passenger charter excursion business on its rail lines which pass
through various localities in New York State. Certain excursions will include charges for
transportation to an event and the event itself. Petitioner will secure tickets to events, such as
sporting events and musical performances. Charges for the transportation and the events will be
separately stated on the tickets. In addition Petitioner will sell souvenirs from a gift shop located in
Oneida County, as well as on the train to and from the events. Petitioner will also sell food on the
train to and from the events.
Section 1105(a) of the Tax Law imposes sales tax upon the receipts from every retail sale of
tangible personal property.
Section 1105(c) of the Tax Law imposes sales tax upon the receipts from every sale, except
for resale, of certain enumerated services. The providing of transportation by a railroad for its
passengers is not a service enumerated under Section 1105(c) of the Tax Law.
Section 1105(f)(l) of the Tax Law imposes sales tax upon:
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 for admission
to race tracks, boxing, sparring or wrestling matches or exhibitions which charges are
taxed under any other law of this state, or dramatic or musical arts performances, or
motion picture theaters, and 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

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TSB-A-91 (52)S
Sales Tax
July 26, 1991
bowling alleys and swimming pools. For any person having the permanent use of
possession of a box or seat or a lease or a license, other than a season ticket, for the
use of a box or seat at a place of amusement, the tax shall be upon the amount for
which a similar box or seat is sold for each performance or exhibition at which the
box or seat is used or reserved by the holder, licensee or lessee, and shall be paid by
the holder, licensee or lessee.
Section 527.8 of the Sales and Use Tax Regulations provides, in part, as follows:
(a) Imposition. Sales tax if imposed on the receipts, including any cover,
minimum, entertainment or other charge, from every sale of beer, wine or other
alcoholic beverages and food or drink of any nature sold in or by restaurants, taverns
or other establishments in this State or by caterers:
(1) in all instances where the sale is for consumption on the premises
where sold;
(2) in those instances where the sale is for consumption off the
premises and the vendor (or someone acting on behalf of the vendor)
after delivery either serves or assists in serving, cooks, heats or
provides services with respect to the food or drink; and
(3) in those instances where the sale is for consumption off the
premises of the vendor all sandwiches and other food or drink unless
the food or drink is sold in:
(i) an unheated state; and
(ii) the same form and condition, quantities and
packaging commonly used by food stores not
principally engaged in selling foods prepared and
ready to be eaten.
Section 525.2(a)(3) of the Sales and Use Tax Regulations provides as follows:
The sales tax is a "destination tax," that is, the point of delivery or point at
which possession is transferred by the vendor to the purchaser or designee controls
both the tax incident and the tax rate.
Accordingly in issue "1", pursuant to Section 1105(c) of the Tax Law the providing of
transportation by railroad for Petitioner's passengers is not an enumerated service which is subject
to sales tax. Therefore, the sale of tickets by Petitioner to transport passengers on the charter
excursions will not be subject to sales tax. Furthermore pursuant to Section 1105(f)(l) of the Tax
Law and Section 527.10 of the Sales and Use Tax Regulations, Petitioner must pay the sales tax due,

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Sales Tax
July 26, 1991
if any, upon its purchase of taxable event tickets since there is no provision in the Tax Law allowing
admission charges to be purchased for resale without the payment of sales tax. Petitioner will not be
required to collect sales tax on its resales of said tickets to its passengers.
Concerning issue "2", pursuant to Section 1105(a) of the Tax Law and Section 525.2(a)(3)
of the Sales and Use Tax Regulations sales tax is imposed upon the receipts from every retail sale
of tangible personal property at the point of delivery or point at which possession is transferred by
the vendor to the purchaser. Therefore, receipts from souvenirs sold by Petitioner through a fixed
location will be subject to sales tax at the applicable rate for the locality in which the souvenirs are
delivered or possession is transferred. Petitioner must collect sales tax on sales made on the moving
train while traveling through New York State at the rate imposed by the locality where possession
is transferred to the purchaser.
Regarding issue "3", pursuant to Sections 525.2(a)(3) and 527.8 of the Sales and Use Tax
Regulations sales tax is imposed on the receipts from every sale of beer, wine, or other alcoholic
beverage and food and drink of any nature sold at the point in which possession of the alcoholic
beverage, food and drink is transferred to the purchaser. Therefore, Petitioner must collect sales tax
on sales of alcoholic beverages, food and drinks made on the moving train while in New York State
at the rate imposed by the locality where possession is transferred to the purchaser. Possession will
be considered to be transferred to the purchaser at the train's location at the time the check for the
food or drink is presented to the purchaser.

DATED: July 26, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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