Are tickets to a dinner-theater performance taxable as cabaret charges, or exempt because the food was merely incidental to the show?

Plain-English summary

Tamara NY, NY Limited Partnership staged the immersive live play "Tamara" at the New York Armory on Park Avenue. The show was unusual: the ticket was a "passport" booklet, and audience members were treated as participants who, following the script, were served food when the actors sat down to dinner. The meal was a "sumptuous banquet buffet" from Le Cirque, designed by Chef Daniel Boulud, with champagne, French wines, roast leg of lamb, curried chicken, pasta primavera, and creme brulee.

The partnership argued the tickets were not taxable because the food was merely incidental to the performance. The Department held the tickets ARE taxable.

• § 1105(f)(3) taxes the charges of a "roof garden, cabaret or other similar place."
• § 1101(d)(12) says that phrase covers any place furnishing a public performance for profit, but not a place offering merely live dramatic or musical performances where the serving of food is merely incidental.
• The test (from federal cabaret-tax cases) is whether the refreshments are a significant attraction in their own right. In Ross v. Hayes, beer, soda, chips, pretzels and peanuts were "merely incidental" to the dancing. By contrast, in Dance Town, U.S.A., the bar was itself a magnet that kept customers on the premises, so it wasn't incidental (see also Stevens v. United States).
• Here, the Le Cirque banquet was a genuine draw for its own sake — far more than the chips and pretzels of Ross. So the food was not merely incidental, the venue fell within the cabaret definition, and the tickets were subject to sales and use tax under §§ 1105(f)(3) and 1101(d)(12).

What this means for you

Dinner theater can trigger the cabaret tax on the whole ticket

New York's cabaret tax reaches the full charge at a place that pairs a public performance with food and drink — unless the food is genuinely incidental. When the meal is a marquee attraction (a celebrity-chef banquet, an elaborate menu promoted in the marketing), the entire admission can become taxable, not just a food component.

"Merely incidental" turns on whether the food is a draw

The line is qualitative. Snacks that simply keep patrons comfortable (the Ross chips and pretzels) stay incidental; a bar or a gourmet meal that is itself a reason people come and stay (the Dance Town bar, the Le Cirque buffet) is not. How you market and design the food matters as much as how you serve it.

Promotional materials can be used against you

The Department leaned on the venue's own announcement touting the "sumptuous banquet buffet" and the passport-ticket menu. Marketing that sells the dining experience as a highlight is evidence the food is a significant attraction.

Common questions

Q: Weren't these theater tickets, which are normally exempt?
A: A pure live dramatic performance is outside the cabaret tax, but § 1101(d)(12) pulls in a performance venue that also serves food unless that food is merely incidental. Here the elaborate meal made the tickets taxable.

Q: What makes food "merely incidental"?
A: Food that offers little attraction of its own — the chips, pretzels and soda in Ross v. Hayes. Food that is a significant draw in its own right, like the Le Cirque banquet here, is not incidental.

Q: What was actually taxed?
A: The charges (tickets) for the "Tamara" performances, under §§ 1105(f)(3) and 1101(d)(12).

Citations and references

Statutes and cases:

• Tax Law § 1105(f)(3) — tax on charges of a roof garden, cabaret or other similar place
• Tax Law § 1101(d)(12) (as amended by Ch. 609, L. 1986) — definition excluding places where food is merely incidental to a live dramatic/musical performance
• Stevens v. United States, 302 F.2d 158; Ross v. Hayes, 337 F.2d 690; Dance Town, U.S.A., Inc. v. United States

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_25s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (25)S
Sales Tax
March 7, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S901101A

On November 1, 1990, a Petition for Advisory Opinion was received from Tamara NY, NY
Limited Partnership, c/o Maple Interactive Entertainment, 151 John Street, Suite 501, Toronto,
Ontario M5V 2T2.
The issue raised by Petitioner, Tamara NY, NY Limited Partnership, is whether tickets sold
for the presentation of a live-dramatic performance of "Tamara" were not subject to the sales and use
tax imposed on a roof garden, cabaret or other similar places Section 1105(f)(3) of the Tax Law,
because the service of food and drink was merely incidental to the performance in accordance with
Section 1101(d)(12) of the Tax Law.
Petitioner presented a live-stage dramatic performance of "Tamara" at the New York Armory
on Park Avenue in New York City. The presentation was unique in nature as reflected by the
"passport" type booklet utilized as the entrance ticket. The audience members were treated as
participants in the dramatic performance and, as such, pursuant to the script received food when the
actors in the performance would sit down for dinner in the context of the performance. No food or
drinks were served other than at times as provided by the script. The meal consisted of a sumptuous
banquet buffet presented by Le Cirque Restaurant, designed by Chef Daniel Boulud and Dounia
Rathbone and catered by Remember Basil.
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. . ."
Pursuant to Section 1101(d)(12) of the Tax Law as amended by Chapter 609 of the Laws of
1986, the phrase "roof garden, cabaret or other similar place" means:
. . .Any roof garden, cabaret or other similar place which furnishes a public
performance for profit, but not including a place where merely live dramatic or
musical arts performances are offered in conjunction with the serving or selling of
food, refreshment or merchandise, so long as such serving or selling of food,
refreshment or merchandise is merely incidental to such performances.
Thus, an establishment which provides public performances, musical entertainment or
dancing and, additionally, sells or serves food, refreshment or merchandise falls within the definition
of roof garden, cabaret or other similar place unless the serving or selling of food, refreshments or
merchandise is merely incidental to the performances, entertainment or dancing.
Inasmuch as Petitioner provided public performances for profit in conjunction with the
serving and selling of food and refreshments, Petitioner's establishment falls within the definition

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TSB-A-91 (25)S
Sales Tax
March 7, 1991
of "roof garden, cabaret or other similar place" unless it is demonstrated that its sale of food and
refreshments was merely incidental to such performances.
Where the sale of refreshments assumes importance as a significant attraction for its own
sake, it is not merely incidental. Stevens v. United States, 302 F.2d at 163. Thus, the selection of
food and refreshments, the dining atmosphere created and extent of service available would all tend
to indicate the extent to which such food and refreshments serve as an attraction in their own right.
For example, in Ross v. Hayes, 337 F.2d 690, the court concluded that the beer, Coca-Cola, SevenUp, ice, potato chips, pretzels, crackers, peanuts and chewing gum in question offered little or no
attraction to the patrons of the establishment and, therefore, were merely incidental to the real
attraction which was the dancing provided.
By way of contrast, the court noted in Dance Town, U.S.A., Inc. v. United States, supra. at
p. 636, that
Without food and drink, plaintiff's customers, exhausted by their terpsichorean
activities, may well not have lingered long upon the premises before seeking
elsewhere an oasis at which to refresh and refuel. Dancetown's bar was thus not only
an ample source of revenue in its own right, but a magnet that guaranteed the
presence throughout the evening of many of plaintiff's customers and, we might add,
kept them coming back.
In contrast to the Ross case, an announcement prepared by Petitioner for the performance
stated that a "sumptuous banquet buffet" presented by Le Cirque, designed by Chef Daniel Boulud
and Dounia Rathbone and catered by Remember Basil would be served. The "passport ticket" set
forth the menu which included such items as champagne, french wines, primi piatti, roast leg of
lamb, curried breast of chicken "Le Cirque", pasta primavera "Le Cirque" and creme brulee "Le
Cirque". Such items certainly were more likely to attract patrons for their own sake due to the
uniqueness of their preparation than would the potato chips and pretzels of the Ross case.
Accordingly, the "sumptuous banquet buffet" presented by Le Cirque was a significant
attraction for its own sake, and was not merely incidental to the performance. Therefore, the tickets
sold by Petitioner for the performances of "Tamara" were subject to sales and use tax pursuant to
Sections 1105(f)(3) and 1101(d)(12) of the Tax Law.

DATED: March 7, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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