Is admission to a children's indoor play center exempt from sales tax as a participant sporting activity?

Plain-English summary

Playspace 92nd Street West operates an indoor play center for children ages one to six, charging an admission fee per child (parents enter free) that lets the child spend one to three hours playing with games, toys, computers, a sandbox, swings, and other amusement devices, plus structured activities like arts and crafts, sing-alongs, and story times. Playspace argued its admission fee should be exempt from sales tax under the specific carve-out for charges to participate in "sporting activities," similar to bowling alleys and swimming pools.

New York taxes admission charges to any "place of amusement" -- broadly defined as anywhere facilities for entertainment, amusement, or sports are provided -- but excludes charges for admission to facilities for sporting activities in which the customer is a participant, like bowling or swimming. The Department found Playspace's single admission fee, covering unlimited access to its games, toys, and playground equipment for a set period, squarely fits the general "admission charge" definition. But its attractions -- non-ride amusement devices and structured entertainment activities -- are more comparable to the kinds of attractions found at an amusement park (which are themselves taxable) than to genuine sporting activities like bowling or swimming. Because Playspace's play center doesn't offer a sporting activity within the statute's meaning, the specific admissions-tax exclusion doesn't apply, and its admission charges are fully taxable.

What this means for you

Children's play centers, indoor playgrounds, and similar amusement venues

An admission fee covering unlimited access to games, toys, and play equipment is a taxable "amusement" admission charge, not an exempt "participant sports" charge, even if some activities (like playground equipment) resemble outdoor recreational play -- the sporting-activity exclusion is narrowly read to cover activities genuinely comparable to bowling or swimming.

Amusement and entertainment venue operators generally

Structured entertainment programming (sing-alongs, story times, arts and crafts) bundled into a general admission fee reinforces (rather than undermines) the "amusement" characterization -- it doesn't help an argument that the venue is really offering sports participation.

Accountants and tax professionals

This ruling applies the well-established amusement-park admissions line of cases (Darien Lake, Fairland Amusements, Outdoor Amusement Business Association) to a newer children's-play-center business model -- useful precedent for any venue combining play equipment with programmed activities under one admission fee.

Common questions

Q: Is admission to any children's play or activity center exempt from sales tax?
A: No -- only charges for genuine participant sporting activities (like bowling or swimming) are excluded from the admissions tax; a general play center with games, toys, and programmed entertainment is taxable like an amusement park.

Q: Does having playground equipment similar to an outdoor playground change the tax treatment?
A: No -- the Department found the overall mix of amusement devices and structured entertainment activities comparable to amusement-park attractions, not participant sports, regardless of some equipment resembling an outdoor playground.

Q: What kinds of activities does the "participant sports" exclusion actually cover?
A: The statute specifically names bowling alleys and swimming pools as examples -- activities genuinely comparable to organized sports participation, not general play or amusement activities.

Q: Does this ruling apply to my play center or children's activity business?
A: Not automatically. An Advisory Opinion binds the Department only for the taxpayer and facts it was issued to, and it can't be relied on by anyone else. Your own activities and admission structure would need their own analysis.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1997.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a97_61s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(61)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S970708A

On July 8, 1997, the Department of Taxation and Finance received a Petition
for Advisory Opinion from Playspace 92nd Street West, Inc., 2473 Broadway, New
York, NY 10025.
The issue raised by Petitioner, Playspace 92nd Street West, Inc., is
whether the amusements it provides qualify as sporting activities in which its
customers participate, thus excluding the admission charge for such activities
from sales tax under section 1105(f)(1) of the Tax Law.
Petitioner submitted the following facts as the basis for this Advisory
Opinion.
Petitioner owns and operates a play center and indoor playground for
children ages one to six years old. An admission fee is charged for each child
who enters. Parents are admitted free of charge. A single fee is paid upon
entry, and the child may spend from one to three hours at the center.
The child can play with games, toys, computers and other amusement devices.
Alternatively, the child can play in a sand box, on swings, etc., similar to an
outdoor playground.
The child participates in whatever activity he or she
chooses, which can include free play or structured activities such as arts and
crafts, sing alongs, story times, circles games, etc.
Applicable Law and Regulations
Section 1105(f)of the Tax Law imposes tax 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 1101(d)(10) of the Tax Law defines place of amusement as “[a]ny
place where any facilities for entertainment, amusement, or sports are provided.”
Section 1101(d)(2) of the Tax Law defines admission charge as “[t]he amount
paid for admission, including any service charge and any charge for entertainment
or amusement or for the use of facilities therefor.”
Technical Services Bureau Memorandum, TSB-M-87(15)S, dated November 13,
1987, entitled Taxable Status of Amusement Rides and Admission Charges provides,
in part:

-2­
TSB-A-97(61)S
Sales Tax

. . . While sales tax is not applicable to charges for the use of
amusement rides, charges for admission to an amusement park or
similar site where such rides are located remain subject to tax.
(Emphasis added)
Opinion
A place of amusement may be interpreted as meaning the physical space
within which the amusement is provided. The definition of a place of amusement
contained in Tax Law Section 1101(d)(10) is descriptive of Petitioner’s play
center, i.e., a site where facilities for amusement or entertainment are provided
(cf. Fairland Amusements v. State Tax Commn., 110 AD2d 952, 954 (Mikoll, J.,
dissenting), revd 66 NY2d 932.)
Petitioner charges one fee for general admission to its place of amusement,
which entitles the customer to enter the center and enjoy unlimited use of
various amusement devices and attractions for a specified period of time. This
fee can be characterized as a charge for the use of the facilities, i.e., the
momentary use of the amusement devices and playground equipment, and for entrance
to a place where entertainment, i.e., sing alongs, circles games, and story
times, is to be conducted. Accordingly, the fee Petitioner charges its customers
is an admission charge as defined in section 1101(d)(2) of the Tax Law (cf.
Outdoor Amusement Business Assn. v. State Tax Commn., 84 AD2d 950, revd on
dissenting mem below 57 NY2d 790; Fairland Amusements, Inc., supra).
Petitioner contends that such an admission charge should not be taxable
under Section 1105(f)(1)of the Tax Law because of that provision’s exclusion of
charges for participant sports activities. The attractions, however, are more
in the nature of non-ride attractions which are comparable to those found in an
amusement park than sporting activities contemplated by the statute. Admission
charges to amusement parks are taxable under Section 1105(f)(1) of the Tax Law
(see Darien Lake Fun Country v. State Tax Commn., 118 AD2d 945, affd 68 NY2d 630;
TSB-M-87(15)S, supra). Accordingly, the exclusion from sales tax on admissions
as provided for in Section 1105(f)(1) is not applicable to Petitioner’s business
operation. Such admission charges are thus subject to tax.

DATED: September 29, 1997

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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