Is the admission charge at a live-music club that also has a bar and serves food in the same room subject to New York sales tax as a cabaret charge?

Plain-English summary

My Father's Place (Bryan & Rose, Inc.), a Roslyn venue, presented live musical performances on a stage at the rear of the room. A bar at the front stayed open during the shows, and food (including hot dishes) was available before and during intermissions, but patrons were not required to buy food or drink and paid no minimum or cover. Admission was by advertised, varying-price ticket. The venue asked whether its admission charges are subject to sales tax.

The Department held the admission charges are taxable cabaret charges.

• The cabaret tax reaches "charges" of such a place. Section § 1105(f)(3) taxes "the amount paid as charges of a roof garden, cabaret or other similar place," and § 1101(d)(4) defines that to mean any charge for admission, refreshment, service or merchandise at such a place.
• The venue fits the definition. A "roof garden, cabaret or other similar place" is one furnishing a public performance for profit (§ 1101(d)(12)), and the regulation covers places where entertainment is afforded to patrons in connection with serving or selling food, refreshment or merchandise (20 NYCRR 527.12(b)(2)(ii)). Here a bar operated in the same room as the performances and patrons could be served while watching.
• Optional food and "here for the music" don't matter. The definition derives from the former federal cabaret excise (I.R.C. § 4231), under which it made no difference that buying food or drink wasn't required or that patrons came primarily for the entertainment (Avalon Amusement Corp. v. United States, 165 F.2d 653; Geer v. Birmingham, 185 F.2d 82). So the admission charges are taxable under § 1105(f)(3).

What this means for you

Selling entertainment where drinks or food are served can make you a taxable "cabaret." If you present performances for profit and serve refreshment to patrons in the same setting, your admission and other charges can fall under the cabaret tax — even without a cover or minimum.

"No purchase required" is not a defense. The test is whether entertainment is furnished in connection with the serving or selling of food, refreshment or merchandise — not whether each patron actually buys any.

A separate ticket price is still a "charge" of the place. The cabaret tax reaches any charge for admission, refreshment, service or merchandise, so an admission-only ticket is within it.

Common questions

Q: We're really a concert hall; people come for the band, not the bar. Are we still a cabaret?
A: Possibly yes. Under the federal-derived definition, it doesn't matter that patrons come mainly for the entertainment if refreshment is served in connection with it.

Q: We don't require a minimum or cover charge. Does that keep us out of the cabaret tax?
A: No. The absence of a required purchase, minimum or cover doesn't change the result if entertainment is furnished together with food or drink service.

Q: Only the admission ticket is charged separately — is that taxed?
A: Yes. "Charges" of a cabaret include any charge for admission, so the ticket price is taxable under § 1105(f)(3).

Citations and references

Statutes and regulations:

• Tax Law § 1105(f)(3) — tax on charges of a roof garden, cabaret or other similar place
• Tax Law § 1101(d)(4) — "charge" means any charge for admission, refreshment, service or merchandise
• Tax Law § 1101(d)(12) — "roof garden, cabaret or other similar place" furnishing a public performance for profit
• 20 NYCRR 527.12(b)(2)(ii) — entertainment afforded in connection with serving/selling food, refreshment or merchandise

Also cited in the opinion:

• I.R.C. § 4231 (former federal cabaret excise, source of the definition)
• Avalon Amusement Corp. v. United States, 165 F.2d 653
• Geer v. Birmingham, 185 F.2d 82

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1982.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a82_2s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-82(2)S
Sales Tax
February 19, 1982

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810805A

On August 5, 1981 a Petition for Advisory Opinion was received from My Fathers Place Bryan & Rose, Inc., 19 Bryant Avenue, Roslyn, New York 11576.
The issue raised is whether charges for admission made by Petitioner are subject to sales tax.
Petitioner rents premises in which live musical performances are presented. The performing
stage is located at the rear of the building. The audience sits at long tables, on individual chairs. A
bar which is open during the performance is located at the front of the building. Food is available
before the performance and during intermissions. Menus are made available to patrons, and hot
dishes may be purchased. However, patrons are not required to buy food or drink, nor must they pay
a minimum or cover charge.
The premises are open only on those nights when performances are given. All performances,
or acts, are advertised in advance. Petitioner's advertisements may consist solely of a listing of the
performers and their scheduled appearance dates, but may also make reference to the availability of
food. The entertainment furnished by Petitioner consists solely of performances by the advertised
performers. Tickets may be obtained at Petitioner's box office or through Ticketron, and must be
presented at the door to gain admittance. Prices of tickets for different shows vary, depending on the
appearance fee Petitioner must pay the performer.
Section 1105(f)(3) of the Tax Law imposes a sales tax on:
"The amount paid as charges of a roof garden, cabaret or other similar place in the
state."
Pursuant to section 1101(d)(4) of the Tax Law, the phrase "charge of a roof garden, cabaret
or other similar place" means:
"Any charge made for admission, refreshment, service, or merchandise at a roof
garden, cabaret or other similar place."
Section 1101(d)(12) of the Tax Law defines the terms "roof garden, cabaret or other similar
place" to mean:
"Any roof garden, cabaret or other similar place which furnishes a public performance
for profit."

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-82(2)S
Sales Tax
February 19, 1982

Section 527.12(b)(2)(ii) of the Sales and Use Tax Regulations further defines the terms "roof
garden, cabaret or similar place" as follows:
"Any room in a hotel, restaurant, hall or other place where music and dancing
privileges or any entertainment, are afforded the patrons in connection with the serving or
selling of food, refreshment or merchandise." 20 NYCRR 527.12(b)(2)(ii)
The definition of "roof garden, cabaret or other similar place" found in the Sales and Use Tax
Regulations is derived from the definition contained in the former federal excise tax on cabaret
charges. I.R.C., §4231. That definition included establishments where food or drink was served to
patrons while they were being provided with entertainment. It did not matter, for purposes of the
federal definition, that the purchase of food or drink was not required, or that customers were
primarily interested in the entertainment offered, rather than the purchase of food or drink. Avalon
Amusement Corporation v. United States, 165 F2d 653; Geer v. Birmingham, 185 F2d 82. The
definition of "roof garden, cabaret or other similar place" contained in the Sales and Use Tax
Regulations, which is based on the federal definition, applies, therefore, to Petitioner's establishment.
The premises used by Petitioner contains a bar in the same room where the musical performances
are staged. Patrons may be served drinks at tables while watching the performances. Menus
containing a listing of drinks and food items are furnished to patrons. Refreshment is furnished to
patrons in connection with the presentation of entertainment. Petitioner's establishment is, therefore,
a "roof garden, cabaret or other similar place" within the meaning of section 1101(d)(12) of the Tax
Law, and amounts charged for admission are, therefore, "charges of a roof garden, cabaret or other
similar place," within the meaning and intent of section 1105(f)(3) of the Tax Law. The amounts
paid for admission to Petitioner's establishment are accordingly subject to the sales tax imposed
under that provision.

DATED: December 30, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau