Was a restaurant tabletop device used mainly for ordering and paying a coin-operated amusement device or redemption machine?

Plain-English summary

A casual-dining restaurant company installed tabletop mobile point-of-sale devices. Guests could use them to order food, add items, pay, complete satisfaction surveys, and optionally access games or premium content. The company asked whether the devices were taxable coin-operated amusement devices and whether the answer applied to local taxes.

IDOR declined to issue a PLR but supplied a nonbinding GIL. It said a taxable amusement device had to be coin-operated, played primarily for amusement or entertainment rather than to buy a particular commodity or service, and return no money or property. A redemption machine had to meet a separate game, skill, and prize definition.

Based on IDOR's understanding, the restaurant device was not subject to the state device tax. Its primary use was purchasing food and services such as ordering and payment, not amusement, and it did not appear to be a redemption machine.

IDOR expressly did not answer the local question. Municipalities and counties could impose their own taxes or license fees, and the Department did not administer those local charges.

What this means for you

The device's predominant purpose mattered more than the mere availability of optional games. This GIL addressed the described restaurant device only and did not resolve any municipal or county charge.

Common questions

Did optional games make the device an amusement device? Not on the facts IDOR described, because ordering and payment were its primary uses.

Did IDOR rule on local amusement-device taxes? No.

Citations and references

• 35 ILCS 510/1 and 510/7.
• 86 Ill. Adm. Code 460.101 and 460.105.
• 720 ILCS 5/28-2(a)(4).
• 65 ILCS 5/11-55-1.
• 55 ILCS 5/5-1076.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2016.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2016/st-16-0001-gil.pdf

Original ruling text

ST 16-0001-GIL 01/04/2016 C.O.A.D
A coin-operated amusement device includes any "...device operated or operable
by insertion of coins, tokens, chips or similar objects...which returns to the player
thereof no money or property or right to receive money or property..." 35 ILCS
510/1. (This is a GIL).

January 4, 2016

Dear Mr. Xxxxx,
This letter is in response to your letter dated October 5, 2015, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings
(“PLRs”) are issued by the Department in response to specific taxpayer inquiries
concerning the application of a tax statute or rule to a particular fact situation. A PLR is
binding on the Department, but only as to the taxpayer who is the subject of the request
for ruling and only to the extent the facts recited in the PLR are correct and complete.
Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General
Information Letter (“GIL”) is to direct taxpayers to Department regulations or other sources
of information regarding the topic about which they have inquired. A GIL is not a
statement of Department policy and is not binding on the Department. See 2 Ill. Adm.
Code 1200.120. You may access our website at www.tax.illinois.gov to review
regulations, letter rulings and other types of information relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
“Pursuant to Ill. Adm. Code §1200.110, COMPANY (“COMPANY”)
submits the following request for Private Letter Ruling on behalf of client
(“Company”) whose use of a mobile point of sale device (described below)
within its restaurants in Illinois.
STATEMENT OF FACTS
The Company is one of the largest full service casual dining
companies with restaurant locations in most states including Illinois. The
Company initiated a pilot program incorporating the use of a mobile point of
sale device (herein “Mobile Point of Sale Device” or “Device”) at its
restaurant locations that will accommodate tabletop menu, ordering and
payment in some of its Illinois locations. The Mobile Point of Sales Device
is an Android tablet with a touch screen interface that will be placed at each
table that provides pictures/detailed descriptions of the menu items and

allows customers to place drink, appetizer, and entrée orders, and pay their
check by credit card, debit card or gift card on the Device. Alternatively, it
can be paid through their server/wait staff if preferred.
The Mobile Point of Sale Device also allows restaurants the option
to enhance the customer experience by allowing access to premium content
located on the Device. This content could include news, sports, access to
social media, selecting songs to be played on the restaurant’s playlist as
well as access to interactive games. The Company will charge separate
fees for access to games on the Device, access to current news and social
media, and for song selections. The games application software resides
within each Device. During the pilot phase, the Company intends to charge
only for the game fees, and the use of the Device to access news content
will be free.1 The premium content fee will be included as a line item on the
customer’s food and beverage bill. The vendor (“Vendor”) of the Mobile
Point of Sale Device has indicated to the Company that at the average
restaurant over XX% of the restaurant customers use the Device for
ordering and/or payment at the end of the meal, while only XX-XX% of the
customers access any premium content located on the Device.
The owner of the Devices charges the Company a monthly service
fee for the use of the Devices. Per the agreement between the Vendor and
the Company, the Company will be responsible for collection/remittance of
any applicable state or local taxes imposed on the transactions.
Additionally, the Vendor may also charge monthly commissions to the
Company as a percentage of the game fee and song fee income. The
Company will be required to pay to the Vendor a portion (or potentially all)
of the revenue generated by these premium content fees.
In a possible alternative scenario, the Vendor will not charge the
Company a monthly service fee for use of the devises, but will instead
receive from the Company all of the premium content fees up to a maximum
amount, at which time the fees in excess of such amount will be shared with
the Company.
The Mobile Point of Sale Device was developed specifically for the
restaurant industry. The primary purpose of the Device is to facilitate (1)
order placement, (2) order add-ons, (3) checkout/payment, and (4)
customer satisfaction surveys. The benefits of the Device to the restaurant
industry include increased food and beverage sales, a quicker table
turnover, and increased guest loyalty and satisfaction. To achieve these
desired results, the Company will provide one Mobile Point of Sale Device
at each table within each restaurant. The average restaurant will typically

1

This fee structure is intended to be employed solely for the pilot program. Following the conclusion of the
program, the Company may elect to charge a fee for access to any premium content on the Device.

contain XX tables, and on average XX Mobile Point of Sale Devices would
then be used at each establishment.
It is the Company’s intent that access to premium content (including
news, videos, sports, educational items, and interactive games) is ancillary
to the true purpose of the Device as part of the Company’s established point
of sales order and payment system. A picture of the Device and its intended
use (e.g., ordering food through a mobile menu) is included below.
ISSUES
1) Based on the information provided, would the Device be
viewed as a coin-operated amusement device for purposes of
the state tax under 35 ILCS 510/1?
2) Will such determination be applicable at the local level since
the Department of Revenue does not collect tax on a coinoperated amusement device that local jurisdictions may
impose? Since the authority for local jurisdictions to impose
a tax on coin-operated amusement devices is granted in 35
ILCS 510/7 would a determination of what is and what is not
a coin-operated amusement device under 35 ILCS 510/1 also
apply at the local level?
TAXPAYER’S POSITION
Illinois imposes a tax on the privilege of operating amusement
devices that require the insertion of coins, tokens, chips or similar objects.
Such devices include but are not limited to Jukeboxes, pinball machines
and coin-operated video games.2 The Company believes that the Device
should not be viewed as a “coin-operated amusement device.” First, the
Company asserts that the Mobile Point of Sale Device should not be
considered a “coin-operated amusement device” because it is not operated
via a coin or token. Second, the purpose of the Company’s Device is not
that of amusement but the facilitation of ordering food and customer
payment. The Device was specially designed for the restaurant industry
for the purpose of increasing food sales, efficiency, and enhanced customer
satisfaction.
The Vendor’s statistics have shown that XX-XX% of
customers that are seated a tables with Device use it for ordering their
meals, XX% or more use it for payment at the end of the meal, and on
average only XX-XX% of such customers use the Device to purchase of
premium content. Unlike the Mobile Point of Sale Device, a coin-operated
amusement device actually requires payment of some kind in order to be
used for its intended purpose. Restaurant guests that use the Mobile Point
of Sale Device to order food or pay their bill are not required to provide
2

35 ILCS 510/1

payment in order to use the Device. Clearly, the Mobile Point of Sales
Device is not intended to provide “amusement, diversion, or entertainment”
based on the actual and predominant use of the Device. The Mobile Point
of Sale Device is primarily designed and intended to facilitate (1) order
placement, (2) order add-ons, (3) checkout/payment, and (4) customer
satisfaction surveys.
The Company would like confirmation on whether the Device will be
viewed as a coin-operated amusement device under 35ILCS 510/1. The
Company would also like confirmation whether such determination will be
applicable at the local level since the Department of Revenue does not
collect tax on a coin-operated amusement device that local jurisdictions may
impose.
CONCLUSION
Company reviewed Illinois laws, regulations and administrative
decisions but was unable to locate a definitive authority or clear
determination on this matter. Therefore, we request the Commissioner’s
office review the facts presented in our request and provide a ruling
response with regard to the proper taxability of this emerging technology.
If you have any questions, please contact the undersigned at XXXXXX-XXXX.

DEPARTMENT’S RESPONSE:
The Department’s regulation “Public Information, Rulemaking and Organization”
provides that “[w]hether to issue a private letter ruling in response to a letter ruling request
is within the discretion of the Department. The Department will respond to all requests
for private letter rulings either by issuance of a ruling or by a letter explaining that the
request for ruling will not be honored.” 2 Ill. Adm. Code 1200.110(a)(4). The Department
declines to issue a Private Letter Ruling in response to your request.
The Coin-Operated Amusement Device and Redemption Machine Tax Act
imposes an annual privilege tax on the privilege of operating, in this State: 1) every coinin-the-slot-operated amusement device that returns to the player no money or property or
right to receive money or property; and 2) every redemption machine, as defined in 86 Ill.
Adm. Code 460.105. 86 Ill. Adm. Code 460.101.
For an amusement device to be taxable, it must be coin-operated, and it must be
an amusement device. The device cannot return money or property or the right to receive
money or property to the player. An amusement device is a device which is played
primarily for amusement or entertainment rather than for the purchase of some specific

commodity or service. Every kind of coin-operated amusement device, which does not
return money or property or the right to receive money or property to the player, is subject
to the tax. 86 Ill. Adm. Code 460.105(a).
A "redemption machine" is a single-player or multi-player amusement device
involving a game, the object of which is throwing, rolling, bowling, shooting, placing, or
propelling a ball or other object that is either physical or computer generated on a display
or with lights into, upon, or against a hole or other target that is either physical or computer
generated on a display or with lights, or stopping, by physical, mechanical, or electronic
means, a moving object that is either physical or computer generated on a display or with
lights into, upon, or against a hole or other target that is either physical or computer
generated on a display or with lights, provided that all of the following conditions are met:
A)

The outcome of the game is predominantly determined by the skill of the
player;

B)

The award of the prize is based solely upon the player's achieving the object
of the game or otherwise upon the player's score;

C)

Only merchandise prizes are awarded;

D)

The wholesale value of prizes awarded in lieu of tickets or tokens for single
play of the device does not exceed $25, and

E)

The redemption value of tickets, tokens, and other representations of value,
which may be accumulated by players to redeem prizes of greater value,
for a single play of the device does not exceed $25. 720 ILCS 5/28-2(a)(4).

Based on our understanding of the Mobile Point of Sale Device described in your
letter, it does not appear to be an amusement device subject to the tax imposed by the
Coin-Operated Amusement Device and Redemption Machine Tax Act because it is not
played primarily for amusement or entertainment; rather, it appears to be primarily used
for the purchase of a specific commodity, such as food, and service, such as order
placement and order payment. The Device also does not appear to meet the definition
of a redemption machine. The Department does express any opinion on any other issues
relating to the devices.
The Department’s authority to regulate and tax coin-operated amusement devices
and redemption machines is non-exclusive. Municipalities have the right to impose taxes
or license fees on these devices and machines and to regulate or control the operation of
them within such municipalities as provided in Section 11-55-1 of the Illinois Municipal
Code (65 ILCS 5/11-55-1), and counties have the right to impose taxes or license fees on
these devices and machines in unincorporated territory and to regulate or control the
operation of them within such territory as provided in Section 5-1076 of the Counties Code
(55 ILCS 5/5-1076). 35 ILCS 510/7. The Department does not administer these local

taxes and cannot provide any guidance on the taxation of these devices and machines at
the local level.
I hope this information is helpful. If you have further questions related to the Illinois
sales tax laws, please visit our website at www.tax.illinois.gov or contact the Department’s
Taxpayer Information Division at (217) 782-3336.

Very truly yours,

Richard S. Wolters
Associate Counsel
RSW:bkl