Does an indoor golf-simulator business have to charge Utah sales tax on time or per-round charges to use the machines?

Plain-English summary

A new business with four indoor golf simulators (a computer plus a big-screen projector, letting customers "play" a round of golf indoors) asked whether it had to charge sales tax on time-based or per-round charges to use the machines — hoping the answer might be no, since golfers aren't used to tax on a round of golf and video-arcade players aren't used to tax on tokens.

The Commission's answer was straightforward: admission and user fees charged for any amusement, entertainment, recreation, exhibition, cultural, or athletic activity are subject to Utah sales tax, and it doesn't matter which of the taxpayer's own analogies you use — traditional golf and video-arcade-style charges are both taxable activities in Utah. (The Commission noted coin-operated video machines are taxed a bit differently — off total proceeds rather than per individual transaction — but that mechanical difference doesn't change that the activity itself is taxable.) Charges to use the golf simulation equipment are taxable, whether billed by the quarter-hour or by the round.

On the side question about snacks and drinks, the Commission flagged that some food sales carry Utah's additional 1% restaurant tax on top of regular sales tax, but said the taxpayer's letter didn't give enough detail to determine whether that applied to this business — it sent along the statute, rule, and a tax bulletin excerpt rather than making a definitive call on that point.

What this means for you

Recreation, amusement, and entertainment businesses

If you charge admission or a usage fee for any recreational, amusement, entertainment, exhibition, cultural, or athletic activity in Utah — indoor golf, mini-golf, batting cages, escape rooms, arcade-style attractions, and similar — expect that charge to be taxable sales tax base, regardless of whether you bill by time, by round/session, or by admission. Restructuring the billing method (time vs. per-round) doesn't get you out of the tax.

Businesses also selling food or drinks on-site

Don't assume ordinary sales tax is the only tax that applies to your snack bar — Utah layers an additional 1% restaurant tax on some food sales. Whether it applies to your specific setup depends on facts (seating, service style, etc.) this ruling didn't have enough detail to resolve; check the restaurant-tax statute and rule directly or ask the Commission for your own facts.

Common questions

Q: Are indoor golf simulators taxed differently from real golf?
A: No — the Commission treated both as taxable recreational/amusement activities regardless of the taxpayer's argument that simulators are more like an arcade.

Q: Does billing per round instead of per time slot avoid the tax?
A: No. Both billing structures are taxable; the method of charging doesn't change the underlying taxability of the recreational-use fee.

Q: Do I automatically owe the extra restaurant tax on my snack sales?
A: Not automatically — it depends on facts about how the food is sold and served that this ruling didn't have enough information to evaluate. Check the restaurant-tax statute, rule, and bulletin, or ask the Commission about your specific setup.

Q: Can I rely on this 1995 ruling today?
A: Not directly — it binds the Commission only for the taxpayer and facts it addressed, and Utah's statutes and rules have been renumbered and amended repeatedly since. Verify current law before relying on it.

Citations and references

No specific Utah Code sections, rules, or bulletins are cited by number in the available response text; the Commission referenced (but did not number) a restaurant-tax statute, administrative rule, and tax bulletin it enclosed separately.

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/95-085.htm

Original ruling text

95-085

Response
December 5, 1995

Request

Dear
XXXXX:

I
recently spoke with someone at your office, and they told me I should write to
you with a question about sales tax at our new business.

The
business is called XXXXX. We have four
golf simulators and charge money for people to play on the machines. A person can pay by the quarter-hour, or by
the round. We also have snacks and
drinks for sale, and know of course that we are to collect sales tax on those
items. The question is, should we
collect sales tax on the use of the simulators? And, is there a difference between charging by the round of golf,
or renting time on one? In one sense,
it is like playing at a golf course, in that typically the player will come to
us and pay about $$$$$ to play a round of 9 holes. However, in another sense it is like a video game center, in that
we are indoors, not on public land like a golf course, and the simulators are
made up of a computer and a big screen TV projector.

We
certainly would like not to have to collect sales tax. Golfers are used to paying a �round� number
for a round of golf, and likewise, people that play arcade games are not used
to paying tax on the tokens they buy.
It would help our new business survive if the overall cost is simpler,
and of course less.

If
you have any further questions about our business, please call me at
XXXXX. You could also call XXXXX in
Salt Lake City at XXXXX (XXXXX) with any questions about the machines
themselves. That is the company that
makes the simulators.

Thank
you,

XXXXX

XXXXX

RE:
Advisory Opinion - Application of sales tax to charges for use of golf
simulation machines.

Dear
XXXXX

We
have received your request for an advisory opinion regarding your obligation to
collect sales tax on charges for use of your golf simulation equipment. We find as follows:

Admission
and user fees charged for any amusement, entertainment, recreation, exhibition,
cultural or athletic activity are subject to Utah sales tax. You have likened the simulator activities to
both golf and video game machines. The
charges in both of these cases are taxable (although in the case of
coin-operated video machines, the tax is collected from the total proceeds
rather than individual transactions).
Charges to your customers to use the golf simulation equipment are
subject to sales tax.

With
regard to your food sales, some food sales are subject to a 1% restaurant tax
in addition to sales tax. Your letter
does not provide sufficient information to allow us to evaluate your liability
in that regard, so I am enclosing for your information a copy of the statute,
administrative rule and a portion of a tax bulletin which describes application
of the restaurant tax. If we can answer
any questions about this tax, please let us know.

For
the Commission,

Alice
Shearer

Commissioner