How could an amusement park handle tax-included discounts, locker rentals, and shared coin-machine revenue?

Plain-English summary

An amusement park could advertise both regular and discounted admission prices as tax-included amounts. Stating on the coupons that the discount came from the full tax-included admission price was acceptable.

Standalone lockers used to store guests' clothing were not taxable because they were not part of the amusement service and did not confer a special privilege or status. A locker included in a taxable club-membership amusement service would instead be taxable as part of that service.

The park kept half of the revenue from coin-operated amusement machines and remitted the other half to the machine owner. The letter said that shared revenue was not a lease payment and was not subject to sales tax.

Common questions

Could a discounted admission price include tax? Yes, if the signs and coupons made that treatment clear.

Were ordinary guest locker rentals taxable? No.

Was the park's share of coin-machine revenue taxable as rent? No.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8905L0940D11

Original ruling text

May 11, 1989

Dear **:

I appreciate the opportunity to help you find a simple, acceptable way to
collect tax when you sell discounted tickets.

I understand you now post a sign which states the admission price includes tax.
And, you do not post a separate price for admission and tax. For example, the
regular price of admission is $**, tax included.

Your discount coupons will now state that tax is included in the discounted
price. In other words, if the discounted admission is $**, tax is
included in that amount. This method is acceptable.

You also asked about tax on locker rentals. I understand the lockers are used
at both parks. For example, at AMUSEMENT PARK B the lockers are used to store
dry clothing. The guests enjoy the park and return to retrieve their
belongings. The rental of the locker is not part of the amusement service, and
it does not convey a special privilege or status. In this situation, locker
rentals are not taxable.

If the locker were rented as a part of a club membership which was an amusement
service, then the rental would be taxable as a part of the price of the
amusement.

You also asked about tax on the revenue from coin operated amusement machines.
Under an agreement with the owner of the machines AMUSEMENT PARK A keeps 50% of
the revenue from the machines. The other 50% is sent to the machine owner. This
shared revenue is not considered a least payment and is not subject to sales
tax.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me. The
toll-free number is 1-800-531-5441. The regular number is 512/463-4614. Or you
may write me at the Taxability Section of Legal Division. [(FAX) 512-475-0900]

Sincerely,

Adina Whittemore
Taxability Section
Legal Division

April 19, 1989

Adina Whittemore
Legal Services
111 W. 6th St.
Austin, TX 78701

Ms. Whittemore,

I am writing to request that you confirm in writing your opinion regarding the
way in which AMUSEMENT PARK A communicates and handles admission discounts.

As I told you in our conversation on April 13th, AMUSEMENT PARK A has always
remitted the proper amount of sales tax to the State. However, a local
enforcement officer with the State Controller's Office expressed some concern
about how AMUSEMENT PARK A was handling discounts.

Subsequent to our conversation on the 13th, AMUSEMENT PARK A's signs at the
front gate were changed to indicate that our admission price is
"$** Tax Included." The new signs were posted before opening for
the weekend.

All new discount coupons/offers will bear the statement "discount is from the
tax included full price admission."

Please confirm your opinion that AMUSEMENT PARK A is properly handling
admission discounting. Thanks for your help in this matter. Please call if I
can be of any assistance.

Sincerely,

Vice President
Finance and Administration
AMUSEMENT PARK A

cc: **