Must a public golf course charge sales tax on golf carts that golfers use at no extra charge?

Plain-English summary

A public "daily-fee" golf course lets golfers use its golf carts during a round at no separate charge, the fee to play is the same whether or not a cart is used. It asked whether it must collect sales tax on the carts.

The Office of Counsel concluded the cart use is not taxable. A taxable sale or rental of tangible personal property requires consideration for the transfer of possession. Because the course charges nothing extra for the cart and the green fee is identical with or without one, there is no consideration for the cart, so its use is neither a sale nor a rental. The flip side: since the course is not selling or renting the carts to customers, it can't buy them for resale, so it must pay sales tax when it purchases the golf carts itself.

What this means for you

Golf courses and recreation operators

If you genuinely provide equipment at no separate charge (same price with or without it), you don't owe sales tax on the customer's use of it, but you are the end user and must pay sales tax when you buy that equipment.

Operators who do charge for carts/equipment

If you charge separately for cart use, that is a taxable rental, and you could then buy the carts for resale. The treatment hinges on whether there's a separate charge/consideration.

Accountants and tax professionals

No consideration, no sale or rental (§ 1101(b)(6); 20 NYCRR 526.7). The resale exclusion is unavailable when the property isn't resold/rented, so input tax is due on the purchase.

Common questions

Q: Why isn't free cart use a taxable rental?
A: There's no separate charge, so no consideration is paid for the cart; without consideration there's no taxable sale or rental.

Q: Does the course owe any tax?
A: Yes, on its own purchase of the carts, because it's the end user, not a reseller.

Q: What if the course charged a separate cart fee?
A: That would be a taxable rental, and the course could then buy the carts for resale.

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

Statutes and guidance:
- Tax Law § 1105(a); § 1101(b)(6)
- 20 NYCRR 526.7; 526.8(a)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-32s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(32)S
Sales Tax
July 14, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ] (Petitioner).
Petitioner asks whether or not sales tax should be charged on golf cart usage. We conclude
that use of the golf carts by Petitioner’s customers is not subject to sales tax.
Facts
Petitioner operates a golf course that is open to the public. On its website, it describes
itself as a “daily fee golf course.” Golfers pay a fee per person to play 18 or 9 holes of golf.
Petitioner owns golf carts that are available for all golfers to use during a round of golf. The fee
for playing golf with the use of a golf cart is the same as the fee for playing golf without using
the cart. Petitioner sates that no separate fee is charged for use of the golf carts.
carts.

Petitioner asks whether it must collect sales tax from its customers for the use of golf

Analysis
Tax Law § 1105(a) imposes a sales tax on the sale of tangible personal property, except as
otherwise provided. Tangible personal property means property with a material existence and
perceptibility to the human senses. See Tax Law § 1101(b)(6); 20 NYCRR 526.8(a).
A “sale” is any transaction in which there is a transfer of title or possession or both of
tangible personal property for consideration. See 20 NYCRR 526.7(a)(1). The terms sale,
selling and purchase include rentals or leases of tangible personal property. See 20 NYCRR
526.7 (a)(b).
Petitioner does not separately charge customers for the use of golf carts, and the price for a
round of golf is the same with or without a golf cart. Consequently, we conclude that the use of
the golf carts by patrons does not constitute a sale or a rental of tangible personal property,
because there is no consideration paid to the Petitioner in exchange for the temporary transfer of
possession of tangible personal property. Therefore, the use of the golf carts by customers is not
subject to sales tax. However, because we conclude that the golf carts are not sold or rented by

-2-

TSB-A-20(32)S
Sales Tax
July 14, 2020

Petitioner to its customers, it cannot purchase the golf carts exempt from sales tax as purchases
for resale. Accordingly, Petitioner must pay sales tax when it purchases the golf carts.
DATED: July 14, 2020

/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.