NY TSB-A-15(39)S Sales Tax 2015-11-13

Is a charge to bring a mobile video-gaming theater (a game-equipped trailer) to a customer's event taxable in New York?

Short answer: Yes, when the trailer is delivered to a New York location. The business brings a 32-foot trailer with five widescreen TVs and consoles (Wii, Xbox, PlayStation) to events like children's birthday parties for a fixed fee, and provides a 'coach' who oversees the equipment. The trailer and its contents are tangible personal property, and the fixed fee for bringing it to the customer's location for a set time is a rental charge -- so it is subject to sales tax under Tax Law section 1105(a) when the trailer is delivered in New York. The presence of a coach does not change the result, because the coach only instructs on the equipment's use and protects it from damage; the coach does not operate the equipment to entertain the guests. So the charge is a taxable rental of tangible personal property, not a nontaxable service.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A business brings a 32-foot "mobile video-gaming theater" trailer -- five widescreen TVs, climate control, on-board generator, and consoles (Wii, Xbox, PlayStation) -- to a customer's location (mostly children's birthday parties) for a fixed fee and a set time. A "coach" is always present to oversee the equipment. No products are sold. It asked whether the charge is taxable.

The Office of Counsel concluded the charge is a taxable rental of tangible personal property (Tax Law section 1105(a)) when the trailer is delivered to a New York location:

The trailer and its contents (TVs, consoles, game software) are tangible personal property.
The fixed fee to bring the trailer to the customer's location for a set period is a rental charge -- taxable under section 1105(a).
The coach's presence doesn't change the result: the coach instructs on use and protects the equipment from damage; the coach does not operate the equipment to entertain the guests. So this is a rental of property, not a nontaxable service (TSB-A-07(2)S).

What this means for you

Mobile entertainment / equipment-party businesses

If you drop off equipment for guests to use themselves for a fee, that's a taxable rental of tangible personal property -- bounce houses, game trailers, AV gear, party equipment. Delivery to a New York location makes it New York-taxable.

A "supervisor" doesn't make it a service

Having staff on site to set up, instruct, or protect the gear doesn't convert a rental into a service. The line is whether your staff operates the equipment to provide the experience, versus the customer's guests using it themselves.

Where it's delivered controls

The charge is taxable based on delivery in New York -- the trailer coming to the customer's New York event.

Common questions

Q: We provide a coach the whole time -- isn't that a service?
A: No. The coach instructs and protects the equipment but doesn't operate it to entertain. The customer's guests use the equipment, so it's a taxable rental.

Q: We don't sell anything -- just the experience. Still taxable?
A: Yes. The fixed fee is for renting the trailer and its equipment, which is taxable tangible personal property.

Q: What if we set it up outside New York?
A: This opinion taxes the charge when the trailer is delivered to a location within New York State.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

Tax Law section 1105(a) (sales tax on the sale or rental of tangible personal property)
Tax Law section 1101(b)(5) (definition of tangible personal property)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_39s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(39)S
Sales Tax
November 13, 2015

Office of Counsel

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE

ADVISORY OPINION

PETITION NO. S130723B

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTED. Petitioner asks whether its charges for providing a mobile video gaming theater to
its customers are subject to New York State and local sales taxes. We conclude that these
charges are subject to State and local sales tax if the mobile video gaming theater is delivered to
a location within New York State.
Facts
Petitioner charges its customer for the use of a 32 foot trailer (mobile video gaming
theater), which it delivers to its customer’s location. The trailer has five widescreen televisions
and a climate-controlled interior. The trailer is self-powered by an on-board generator. Twenty
people can simultaneously play video games on equipment such as Wii, Xbox or PlayStation 3.
The equipment uses video games designed for those platforms. Petitioner states that its business
mainly provides a form of entertainment to children at birthday parties and similar events.
Petitioner’s customer pays a fixed fee for the mobile trailer to come to its location for a
specified time period. Petitioner may also charge for additional time or delivery of the trailer to
a location that is not in its immediate service area. There are no products sold to the customer.
Petitioner requires all individuals in or around the gaming trailer and equipment to be with one of
its “coaches,” who oversees all the activity and operation of the equipment.
Analysis
Section 1105(a) of the Tax Law imposes sales tax on the receipts from the sale or rental
of tangible personal property. Tangible personal property is defined as “corporeal personal
property of any nature . . . .” Petitioner’s mobile video gaming theater and its contents, including
televisions, gaming equipment and video game software, are all tangible personal property. The
fixed fee charged by Petitioner for the mobile guided theater to come to the customer’s location
for a fixed period of time is a rental charge and rental of the mobile video gaming theater is,
therefore, subject to sales tax under Tax Law §1105(a).

Petitioner indicates that a “coach” is present at all times and oversees all activity and
operation of equipment within the mobile video gaming theater. However, this does not change
the conclusion that Petitioner is renting tangible personal property. Petitioner’s “coach” is not
using the equipment to entertain the customer and his or her guests. Rather, the coach is present
to give instructions on the use of the equipment and to ensure it is not damaged. Accordingly, the

-2-

TSB-A-15(39)S
Sales Tax
November 13, 2015

charge for providing the equipment for the customer’s event is a charge for the rental of tangible
personal property, which is subject to sales tax under Tax Law § 1105(a). See TSB-A-07(2)S.

DATED: November 13, 2015
/S/
DEBORAH R. LIEBMAN
Deputy Counsel

NOTE:

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.