Was a driving-range charge taxable rent merely because it was based on the number of golf balls used?

Plain-English summary

San Jose Auditing asked about a driving range charging customers according to golf balls used. Tax Counsel concluded that ball-count pricing did not turn the facility-use charge into taxable ball rent. The range consumed the balls, so retailers' sales of balls to it were taxable.

The memorandum separately discussed young people it called ball hawks who collected and sold or returned balls. Counsel expected most sales to be isolated enough for occasional-sale treatment, while acknowledging that some could operate frequently/profitably. A person definitely in that business should hold a seller's permit, although counsel saw little practical gain in targeted permit enforcement.

Counsel also reasoned that many recoverers merely returned the range owner's lost balls for a recovery fee. The Board had treated people collecting old soft-drink bottles and returning them to bottlers similarly, not as taxable sellers. No date, identifier or copy for that administrative precedent is supplied.

The source gives no underlying request, contracts, ownership/pricing records, seller-frequency evidence or outcome and cites no legal authority. The live annotation publishes only the first sentence's no-rental conclusion.

Common questions

Did charging by the ball make each ball a rental?

No. The source treated the payment as a charge for using the driving range.

Who was the consumer of the range balls?

The driving range, with tax applying to retail sales of balls to it.

Did the memorandum exempt every recurring recovered-ball seller?

No. It said someone definitely engaged in that business should hold a permit, while discussing isolated recovery activity differently.

Were all recovered-ball transfers treated as sales?

No. Counsel thought many were returns of the owner's lost merchandise for a recovery fee.

What authority supported the bottle analogy?

The memorandum cites only an unidentified prior Board administrative practice; it supplies no ruling, date, facts or copy.

Did the source establish the actual sellers' frequency?

No. Its discussion uses assumptions such as Undoubtedly, in most cases, some and if any appeared definitely rather than transaction records.

Citations and references

• November 19, 1965 San Jose Auditing memorandum — described but absent
• Unidentified Board treatment of soft-drink bottle recoverers — mentioned without date, identifier, facts or copy
• November 29, 1965 Tax Counsel EHS memorandum — no statute, regulation, case or identified ruling cited
• Pricing/ownership, retailer, recovery/seller-frequency, permit and outcome records — absent
• Official Annotation 330.2160 — facility-charge result without the memorandum's other branches/limits

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.2160
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/330-2160.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

San Jose - Auditing (SE:EL)

From:

Tax Counsel (EHS)

330.2160

Date:

November 29, 1965

Subject:

We have considered the problem presented by your memo of November 19 and have reached the conclusion that the charge for the use of the driving range is not a rental to which tax applies even though the charge is based upon the number of balls used. The range is the consumer of the balls and tax applies to the sale of the balls by retailers. Undoubtedly, it would be a practical impossibility to require the boys that you call "ball hawks" to take out a permit and pay tax. The chances are in most cases we would assume these sales would be isolated enough to regard as occasional, even though some boys may find it profitable to carryon the business of rounding up and selling balls with some degree of frequency. If any appeared definitely to be in such a business, they should, of course, hold permits. However, it would not appear that there is much to be gained by making any particular effort to "permitize" these boys. Probably, in many cases, they are merely returning balls to the owner and what they receive is something in the nature of a fee for recovering lost merchandise. We have had this problem up in connection with persons who gather up old soft drink bottles and return them to the bottling companies for a fee. We have never regarded this as representing taxable sales; rather, we have considered it to be the return of merchandise to its owner.

EHS:fb [lb]