Are a drop-off child-care center's receipts subject to sales tax as admission to a place of amusement?

Plain-English summary

The petitioner runs an indoor drop-off care center for children ages two to eight, open seven days a week, where a child may stay up to three hours. The facility has a movie wall, playground equipment, a child-size rock-climbing wall, and a bounce castle, plus books, crafts, and supervised group activities. Parents must provide contact information; anyone other than the drop-off person must show photo ID and (if not pre-authorized in writing) a family code word; and the center has a written discipline and behavior policy. It bills by the minute (with a late fee). It asked whether its receipts are subject to sales tax.

The Office of Counsel concluded the receipts are not taxable.

• It's child care, not amusement. The center takes custody of and responsibility for the children, charging for a service similar to daycare. That isn't a taxable admission charge to a place of amusement under Tax Law 1105(f)(1), despite the play equipment.
• Distinguished from places of amusement. The opinion contrasts Playspace 92nd Street West (TSB-A-97(61)S) and NYT-G-06(1)S, which involved facilities where children were not dropped off into the operator's custody.

What this means for you

Drop-off child-care and daycare operators

Taking custody and responsibility for children -- sign-in/out controls, authorized-pickup procedures, supervision, a behavior policy -- makes your charges nontaxable child care, even if your space looks like a play center. Per-minute or hourly billing for that care isn't a taxable admission.

Play centers and party venues

The line is custody. If kids stay with a parent and you're charging for access to play equipment, you may be a taxable place of amusement (like Playspace). Drop-off care, where you assume responsibility for the child, is different.

Common questions

Q: We have a bounce castle and climbing wall -- aren't we a place of amusement?
A: Not if you take custody of and responsibility for the children as a drop-off care service. The equipment doesn't convert child care into a taxable admission.

Q: What distinguishes us from a taxable play center?
A: Whether children are dropped off into your custody. Where parents stay and you charge for access to amusements, it can be taxable; drop-off care is not.

Citations and references

• Tax Law section 1105(f)(1) (admission charges to places of amusement)
• TSB-A-97(61)S (Playspace 92nd Street West; place of amusement)
• NYT-G-06(1)S (charges for use of an educational and recreational center)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2009.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a09_53s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-09(53)S
Sales Tax
December 3, 2009

Office of Counsel
Advisory Opinion Unit

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S090916A

On September 16, 2009, the Department of Taxation and Finance received a Petition for
Advisory Opinion from name and address redacted. Petitioner asks whether its receipts for providing
child care at an indoor facility are subject to sales tax. Petitioner’s receipts are not subject to sales
tax.
Facts
Petitioner operates a drop-off care center for children ages two to eight, which is open seven
days a week. Children dropped off may spend at maximum three hours at the center during a day. The
facility contains a screening wall (8’ X 10’) that plays children movies non-stop. The facility also
contains playground equipment, a child size rock climbing wall, and large jumping ball castle.
Children have access to books, crafts, toys, and puzzles. Staff supervise group activities such as face
painting and art projects.
All persons dropping off children at Petitioner’s facility must provide contact information
including a phone number. If the person dropping off the child does not have a phone, he or she will
be given a cell phone by Petitioner. If someone other than the drop off person picks up the child, that
person must present photo identification at the time of pick up. If the pick-up person has not been
designated in writing as authorized to pick up the child, the person must also provide at the time of
pick up the family code word.
Petitioner has a written discipline and behavior management policy as to the children in its
care, which is available for review by its customers.
Petitioner charges based on the minutes it cares for a child. It also imposes a late fee if a child
stays past closing time.
Analysis
Petitioner’s receipts are not subject to sales tax. Petitioner has custody over and responsibility
for the care of the children. It charges for providing a child care service similar to daycare
and is not charging admission fees to a place of amusement. Compare Playspace 92nd Street West,
Inc., Adv Op Comm T&F, September 29, 1997, TSB-A-97(61)S; and Taxability of Charges for Use of

-2-

TSB-A-09(53)S
Sales Tax
December 3, 2009

an Educational and Recreational Center, November 17, 2006, NYT-G-06(1)S, which did not involve
child care facilities where children were dropped off.

DATED: December 3, 2009

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited
to the facts set forth therein and is binding on the Department only with
respect to the person or entity to whom it is issued and only if the person or
entity fully and accurately describes all relevant facts. An Advisory Opinion
is based on the law, regulations, and Department policies in effect as of the
date the Opinion is issued or for the specific time period at issue in the
Opinion.