Does the operator of a coin-operated game room with no admission fee and no other sales need a NY sales tax Certificate of Authority?

Plain-English summary

The Petitioner runs a small game room with four coin-operated machines -- a pinball machine, a jukebox, and two billiard tables. He charges no admission and sells no food, drink, other property, or services. The only money the business takes in comes from the coin-operated machines. He asked whether he needs a Certificate of Authority.

The Office of Counsel concluded he does not:

• A Certificate of Authority is only for those who must collect tax. Every "person required to collect" sales tax must register (section 1134; Reg. 533.1). Those persons are vendors of property or services, recipients of amusement charges, and hotel operators (section 1131(1)).
• Coin-operated amusement receipts aren't taxable. Receipts from coin-operated amusement devices provided for patrons' enjoyment are not subject to sales tax (Hospital Tel. Sys.; Bathrick Enterprises). The pinball machine, jukebox, and billiard tables all qualify.
• No admission charge = no amusement charge. Because the operator charges nothing to enter, he is not a "recipient of amusement charges" (section 1101(d)).
• No other sales. Selling no food, drink, property, or services, he is not a vendor. So he is not a person required to collect tax and need not register.

What this means for you

Coin-operated amusement businesses

If your only receipts come from coin-operated amusement devices (arcade games, pinball, jukeboxes, coin-op pool tables), you charge no admission, and you sell nothing else, you generally are not a sales-tax vendor and don't need a Certificate of Authority -- those device receipts aren't taxable.

One taxable activity changes everything

The result flips the moment you add a taxable activity -- charging admission, or selling food, drinks, merchandise, or taxable services. Then you become a person required to collect tax and must register.

Register before you make a taxable sale

A Certificate of Authority must be in hand before you make taxable sales; if you start selling snacks or charging a door fee, get one first.

Common questions

Q: Are arcade / pinball / jukebox receipts subject to NY sales tax?
A: No -- receipts from coin-operated amusement devices provided for patrons' enjoyment aren't taxable.

Q: Do I need a Certificate of Authority for a coin-op-only game room?
A: Not if you charge no admission and sell nothing else -- you aren't a person required to collect tax.

Q: What would make me need one?
A: Charging admission, or selling food, drinks, merchandise, or taxable services -- any taxable activity makes you a vendor who must register.

Citations and references

• Tax Law section 1134 (certificate of authority; persons required to register)
• Tax Law section 1131(1) (persons required to collect tax)
• Tax Law section 1101(d) (amusement charge; admission charge definitions)
• 20 NYCRR section 533.1 (certificate of authority)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2014.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a14_32s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-14(32)S
Sales Tax
August 26, 2014

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S140314A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
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Redaction.
Petitioner asks whether a certificate of authority is required to run his coin-operated game
room. We conclude that Petitioner is not required to obtain a certificate of authority in order to
run his business.
Facts
Petitioner operates a small game room, consisting of a pinball machine, jukebox and two
billiard tables, all of which are coin-operated. Petitioner does not charge a fee to enter the
establishment, nor does Petitioner sell any food, drink or other tangible personal property or
services. The only form of payment Petitioner’s business receives from its customers is from the
use of the four coin-operated machines.
Analysis
Whether or not Petitioner’s business must obtain a certificate of authority depends on
whether the business is a "person required to collect sales tax."
Every person required to collect tax imposed by Article 28 of the Tax Law or pursuant to
the authority of Article 29 of the Tax Law is required to obtain a certificate of authority. See Tax
Law § 1134(a) and Sales Tax Regulation § 533.1(a). A certificate of authority empowers the
registrant to collect the applicable sales and use taxes. Tax Law § 1134(a)(2).
Tax Law § 1131(1) provides that “every vendor of tangible personal property or services;
every recipient of amusement charges; and every operator of a hotel” are persons required to
collect tax imposed by Tax Law Article 28. A “recipient” of amusement charges is defined as
“any person who collects or receives, or is under a duty to collect an amusement charge.” The
term “amusement charge” is defined as “[a]ny admission charge, dues or charge of roof garden,
caberet or other similar place.” An admission charge is defined as “the amount paid for
admission, including any service charge, and any charge for entertainment or amusement or for
the use of facilities therefor.” Tax Law § 1101(d)(2), (3), and (11).

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TSB-A-14(32)S
Sales Tax
August 26, 2014

Receipts from the operation of coin-operated amusement devices, including coinoperated gaming devices that are provided for the enjoyment of patrons, are not subject to sales
tax. See Matter of Hospital Tel. Sys. Inc. v. New York State Tax Comm’n., 44 AD 2d 271 (3d
Dep’t 1974); Bathrick Enterprises, Inc. v. Murphy, 27 AD 2d 215 (3d Dep’t 1967). The pinball
machine, jukebox and two billiard tables in Petitioner’s game room qualify as coin-operated
amusement devices; therefore, the receipts from the operation of these devices are not subject to
sales tax. Furthermore, because Petitioner does not charge admission to enter his game room, he
is not a recipient of amusement charges. Because Petitioner’s establishment does not sell any
other property or services, he is not a “person required to collect tax” and is not required to
obtain a certificate of authority in order to run his business.

DATED: August 26, 2014

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy 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. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.