Is a charge to drive a go-kart on a track taxable, and are packaged ice cream bars sold there taxable?

Plain-English summary

Little Ozzie's Inc. operates a go-kart raceway — a circular track with no admission charge, only a charge to use a go-kart — and sells packaged ice cream bars on the premises. It asked whether the go-kart charge and the ice cream sales are subject to sales tax.

The Department gave a two-part answer.

• The go-kart charge is exempt. The raceway is a "place of amusement" under 20 NYCRR § 527.10(b)(3), but Tax Law § 1105(f)(1) exempts charges to a patron for the use of facilities for a sporting activity in which the patron is a participant — the examples given are bowling alleys and swimming pools. Because Little Ozzie's single charge is for using a go-kart (including the track), it is an exempt participatory-sport facility charge.
• But its own equipment purchases are taxable. The opinion notes no exemption covers Little Ozzie's purchases of go-karts, equipment, supplies, or parts.
• The ice cream bars are taxable. Sales of food and drink for consumption on the premises are taxed under § 1105(d)(i). "Premises" means the total space and facilities where the vendor does business, so packaged ice cream bars sold at the raceway for on-premises consumption are subject to tax.

What this means for you

A charge to participate in a sport isn't an amusement admission

Even at a "place of amusement," a charge that lets the customer actively participate in a sporting activity — driving the go-kart, bowling, swimming — falls under the § 1105(f)(1) participant exception and isn't taxed as an admission. The distinction is participation versus merely watching (contrast a spectator admission, which is taxable — see TSB-A-90(18)S on dog-show admissions).

You still pay tax on the equipment you buy to run the activity

The customer's participatory charge being exempt doesn't exempt your side. Go-karts, parts, supplies, and related equipment you purchase to operate the raceway are taxable to you — there's no production or resale exemption for them.

Concession food eaten on-site is taxable

Snacks and drinks sold for consumption on your premises are taxable, even packaged items like ice cream bars, because "premises" covers your whole space. (This ruling is the one the Department later cited in TSB-A-90(18)S when taxing a dog club's on-site baked-goods sales.) Off-premises sales of the same items in food-store form can be different — but on-site consumption is taxed.

Common questions

Q: Do we charge tax on the fee to drive a go-kart?
A: No. A charge to use facilities for a sporting activity the customer participates in is exempt under § 1105(f)(1), like bowling or swimming.

Q: Do we owe tax on the go-karts and parts we buy?
A: Yes. There's no exemption for your purchases of go-karts, equipment, supplies, or parts.

Q: Are the ice cream bars we sell at the track taxable?
A: Yes, when sold for consumption on the premises they're taxable food and drink under § 1105(d)(i).

Citations and references

Statutes and regulations:

• Tax Law § 1105(f)(1) — tax on admission charges to a place of amusement; exception for charges to participate in a sporting activity (bowling alleys, swimming pools)
• Tax Law § 1105(d)(i) — tax on the sale of food and drink for consumption on the premises
• 20 NYCRR § 527.10(b)(3) — definition of "place of amusement"
• 20 NYCRR § 527.8 — definitions of "premises" and "consumption on premises"

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1990.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a90_6s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-90 (6) S
Sales Tax
February 8, 1990

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S891003A

On October 3, 1989 a Petition for Advisory Opinion was received from Little Ozzie's Inc.
7581 Gifford Road, Rome, New York 13440.
The issues raised by Petitioner, Little Ozzie's Inc., are whether the charges for the use of GoKarts for racing on a circular track on the premises are subject to sales tax and whether the charges
for packaged ice cream bars sold on the premises are subject to sales tax.
Petitioner's raceway consists of Go-Kart racing on a circular track. There is no admission
charge; only a charge to use the Go-Kart. Packaged ice cream bars are the only items that are sold
on the premises.
Section 1105(f) of the Tax Law imposes taxes on: "(1) Any admission charge where such
admission charge is in excess of ten cents to or for the use of any place of amusement in the state .
. . except charges to a patron for admission to, or use of, facilities for sporting activities in which
such patron is to be a participant, such as bowling alleys and swimming pools."
Section 527.10(b)(3) of the Sales Tax Regulations defines "place of amusement", as "Any
place where any facilities for entertainment, amusement or sports are provided." Petitioner's business
operation meets the definition.
Since Petitioner's only charge is for the use of a Go-Kart which includes the use of the track,
his single charge is considered to be an exempt charge for its use of facilities for sporting activities.
It is noted that no exemption is provided for Petitioner's purchases of Go-Karts or any related
equipment, supplies or parts.
Section 1105(d)(i) of the Tax Law imposes a sales tax on the receipts from the sale of ". . .
every sale of food and drink of any nature or of food alone. . .."
Section 1105(d)(i)(1) imposes the tax "in all instances where the sale is for consumption on
the premises where sold."
Section 527.8 of the Sales Tax Regulations define the terms "premises" and "consumption
on premises" as follows:
(c) Premises. The term premises shall mean the total space and facilities in or on which the
vendor conducts his business, including but not limited to parking areas for the convenience of in-car
consumption, counter space, indoor or outdoor tables, chairs, benches and similar conveniences.

-2­
TSB-A-90 (6) S
Sales Tax
February 8, 1990

(d) Consumption on premises. The phrase for consumption on the premises shall mean that
the food or drink sold may be consumed on the premises where the vendor conducts his business.
Accordingly, the sale by Petitioner of packaged ice cream bars for on premises consumption,
at its Go-Kart facility is subject to sales tax.

DATED: February 8, 1990

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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