How is a charter fishing/hunting 'package deal' taxed — item by item — and what happens if the whole trip is billed as one flat fee?

Plain-English summary

Outdoor Pursuits, Inc. planned to arrange charter fishing and hunting "package deals" in the Lake Ontario region. A package could combine hotel accommodations, vehicle rentals, vehicle fuel, box lunches, beverages, a chartered boat and captain, preparation of the fish caught, shipping coolers, meals, gratuities, and fishing licenses — Outdoor Pursuits would pay the providers and charge participants a single amount including a profit element. It asked how the package is taxed.

The Department held that taxability turns on how the bill is prepared — item by item if itemized, all-taxable if a single flat fee.

If the bill itemizes the charges (each carrying its proportionate profit):

• Taxable: hotel accommodations (Tax Law 1105(e)); vehicle rental, vehicle fuel, shipping coolers (1105(a)); box lunches, meals, beverages (1105(d)); preparation of the fish caught (1105(c)(2)).
• The charter boat depends on control. If the customer has the right to direct when and where the boat goes, the charge is a taxable rental (1105(a)). But if the owner merely allows the customer aboard to fish at a time and place the owner selects, the charge is an admission — and because it's admission to a facility for a sporting activity in which the customer participates, it is exempt (1105(f)(1)).
• Gratuities follow their associated charge — taxable if that charge is taxable, exempt if it's exempt. But a gratuity is not taxable when it is (1) separately stated on the invoice, (2) specifically designated as a gratuity, and (3) paid over in full to employees (20 NYCRR 527.8(l)).
• The fishing license is not taxable.

If the bill does not separate the taxable and non-taxable charges, the entire flat fee is taxable (20 NYCRR 527.1(b); La Cascade, Inc. v. State Tax Commission, 91 AD2d 784).

Either way, when the customer is given any sales slip or invoice, the tax must be separately stated, charged, and shown on the first such document.

What this means for you

Bundling is a tax decision, not just a billing style. If you sell a mixed package and quote a single undifferentiated price, New York taxes the whole amount — even the pieces that would be exempt on their own (like the fishing license or a participatory boat admission).

Itemize to preserve the exemptions. Break out each component and each is taxed under its own rule. That's how the license stays untaxed and how a participatory-fishing admission can qualify as exempt.

Watch the charter boat's structure. Whether the boat charge is a taxable rental or an exempt admission depends on who controls where and when the boat goes. Customer-directed = taxable rental; owner-directed with the customer simply fishing = exempt participatory admission.

Handle gratuities precisely. A gratuity escapes tax only if it's separately stated, labeled a gratuity, and paid entirely to employees. Otherwise it's taxed like the charge it accompanies.

Common questions

Q: I sell an all-in outdoor package for one price. Is it all taxable?
A: If you don't separately state the taxable and non-taxable parts, yes — the whole flat fee is taxable. Itemizing lets each component be taxed under its own rule.

Q: Is the charter boat charge taxable?
A: It depends on control. If the customer can direct where and when the boat goes, it's a taxable rental. If the owner controls that and the customer just comes aboard to fish, it's an exempt admission to a participatory sporting facility.

Q: Are the fishing licenses and gratuities taxed?
A: Fishing licenses are not taxable. Gratuities are taxed like the charge they relate to — unless they're separately stated, designated as a gratuity, and paid in full to employees, in which case they're not taxable.

Citations and references

Tax Law:

• 1105(a) — retail sales of tangible personal property (vehicle rental and fuel, shipping coolers; a customer-directed charter boat rental)
• 1105(c)(2) — producing/processing service (preparation of the fish caught)
• 1105(d) — food and drink (box lunches, meals, beverages)
• 1105(e) — hotel occupancy
• 1105(f)(1) — admission to a facility for a participatory sporting activity is exempt

Regulations (20 NYCRR):

• 527.1(b) — a single unit of taxable and exempt items is taxed on the total unless the parts are separately stated
• 527.8(l) — gratuities are not taxable when separately stated, designated as a gratuity, and paid over in full to employees

Case cited:

• La Cascade, Inc. v. State Tax Commission, 91 AD2d 784 — an undifferentiated flat fee is taxable in full

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1985.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a85_33s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-85(33)S
Sales Tax
August 21, 1985

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S841026B

On October 26, 1984 a Petition for Advisory Opinion was received from Outdoor Pursuits,
Inc., P.O. Box 248, East Syracuse, New York 13057.
The issue raised is the extent to which the products and services provided by Petitioner are
subject to New York State and local sales tax.
Petitioner will be entering into the business of arranging charter fishing and hunting trips to
the Lake Ontario region of New York State. These will be "package deals" that can be tailored to
the wishes of the participants. Participants may select the length of time of the trip and include a
variety of options such as: hotel accommodations; vehicle rentals; vehicle fuel; box lunches;
beverages; chartered boat and captain; preparation of fish caught; shipping coolers; meals; gratuities
and fishing licenses.
Petitioner states that it will pay all charges to the providers of the various products and
services and Petitioner will collect a flat amount from the participants which will include an element
of profit.
The taxability of the items sold by Petitioner will be affected by the way in which the
customer's bill is prepared.
I
If a bill itemizing the various charges is rendered to the customer, the sales tax status of the
items will be as listed below. It is assumed that each item includes a proportionate amount of the
element of profit.
The following charges to the customer are subject to State and applicable local sales tax:
Hotel accommodations. Tax Law 1105(e)
Vehicle rental; vehicle fuel, shipping cooler. Tax Law 1105(a).
Box lunch; meals, beverages. Tax Law 1105(d).
Preparation of fish caught. Tax Law 1105(c)(2).
The rental of the charter boat, where the customer has the right to direct when and where the
boat is to go, is subject to tax. Tax Law 1105(a). However, if the owner of the boat merely allows
the customer on board to fish at a place and time selected by the owner, the charge is an admission
charge. In this case, since the charge is for admission to a facility for a sporting activity in which the
customer is a participant, the admission charge is exempt from tax. Tax Law 1105(f)(1).
RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-85(33)S
Sales Tax
August 21, 1985

Gratuities are includable as part of the receipt and are subject to or exempt from tax to the
same extent that the associative charge is subject to or exempt from tax. However, gratuities are not
subject to tax when such gratuities are: separately stated on the invoice given to the customer;
specifically designated as a gratuity and; paid over in total to employees. 20 NYCRR 527.8(1).
The charge for the fishing license is not subject to tax.
II
If the bill rendered to the customer makes no separate statement of the otherwise non-taxable
and taxable charges, the total flat fee charge is subject to tax. 20 NYCRR 527.1(b); La Cascade, Inc.
v State Tax Commission, 91 AD 2d 784.
Whether Petitioner itemizes the individual taxable and non-taxable items on its billing or
merely charges a flat fee, the Tax Law requires that "[i]f the customer is given any sales slip, invoice,
receipt or other statement or memorandum of the price. . . the tax shall be stated, charged and shown
separately on the first of such documents given to him."

DATED: July 30, 1985

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth herein.