Is a charge for the use of a transportable miniature golf course taxable as an amusement service, or as a rental of equipment?

Subject

Transportable Miniature Golf Course Rental Is Taxable As A Lease Of Tangible Personal Property

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9308L1249G06

Plain-English Summary

A taxpayer asked the Comptroller whether a charge for the use of a transportable miniature golf course is subject to sales tax as an amusement service.

The Comptroller's response draws a line between an amusement service and a rental of equipment. The total charge for the transportable miniature golf course is subject to sales tax under Rule 3.294(b), as the lease or rental of tangible personal property. The letter explains that the charge would not be considered an amusement service, because the taxpayer did not charge admission. In other words, tax still applies — just under the rental provision rather than the amusement-services provision.

The letter notes that a copy of Rule 3.294 and a packet of information on Texas sales tax were enclosed for the taxpayer's reference, and closes with the standard caveat that the opinion is based on the facts presented, and that additional or different facts could change the result.

What This Means For You

Taxable either way — the classification just changes which rule applies. Whether you set up a portable amusement item (like a transportable miniature golf course) as an "amusement service" or as equipment you lease/rent to a customer, this letter shows the Comptroller may still tax the charge — here, as a rental of tangible personal property under Rule 3.294(b), not as an amusement service.

Admission charges are the dividing line noted in this letter. The letter specifically ties the "not an amusement service" conclusion to the fact that the taxpayer did not charge admission. Businesses that provide portable recreational equipment (for birthday parties, events, etc.) without charging a separate admission fee should be aware that the charge may instead be classified — and taxed — as equipment rental.

Event and party rental businesses should check how they're structuring charges. If you rent out portable game or recreation equipment for parties or events, this letter is a reminder that the "no tax because it's an amusement" argument does not automatically apply just because the equipment happens to be recreational — the Comptroller may still find the transaction taxable under the rental-of-tangible-personal-property rule.

This letter is fact-specific. As with all STAR letters, the Comptroller states the opinion is based on the facts presented, and that additional or different facts may lead to a different result.

Q&A

Q: Is a charge for using a transportable miniature golf course subject to Texas sales tax?
A: Yes. The letter states the total charge is subject to sales tax under Rule 3.294(b), as the lease or rental of tangible personal property.

Q: Is the charge taxed as an amusement service?
A: No. The letter states the charge would not be considered an amusement service since the taxpayer did not charge admission.

Q: What rule does the Comptroller cite for taxing the charge?
A: Rule 3.294(b), which the letter describes as covering the lease or rental of tangible personal property. A copy of Rule 3.294 was enclosed with the original letter.

Q: Does not charging admission make the transaction tax-exempt?
A: No. Not charging admission is why the letter concludes the charge is not an amusement service — but the letter still finds the charge taxable, as a rental of tangible personal property.

Q: Does this letter apply to any similar business situation?
A: Not automatically. The letter states the opinion is based upon the facts presented, and that the opinion may change if there are additional or different facts.

Original ruling text

August 3, 1993

Dear ****:

In your letter, you asked if a charge for use of a transportable
miniature golf course is subject to sales tax as an amusement service.

The total charge for the transportable miniature golf course is subject
to sales tax per Rule 3.294 (b) as the lease or rental of tangible personal
property. The charge would not be considered an amusement service since you did
not charge admission.

I have enclosed a copy of Rule 3.294 and a packet of information on Texas
sales tax for your information.

The opinion is based upon the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions, please call 1-800-252-5555 toll free or our
direct number is 512/463-4600. My direct number is 512/475-0892. You may write
me at Comptroller of Public Accounts, Tax Administration Division, Austin TX
78774-0100.

Sincerely,

John J. Fitzgibbons
Tax Administration Division

NOTE: Previous Accession Number 9308047L.2 and/or 9308047L