The New York Department of Taxation and Finance ("Department") recently released an opinion stating that the owner of a game room containing coin-operated amusement devices did not need a certificate of authority from the state.
The taxpayer had a small game room containing a pinball machine, a jukebox, and two billiard tables. All these devices were coin-operated. The taxpayer did not charge for entrance to the game room and did not sell food or drink to its patrons. The sole source of income from the game room was the coin-operated devices.
New York requires every person who must collect sales tax to get a certificate of authority from the state. This certificate empowers a person to collect sales tax on behalf of the state. Sales tax applies to sales of tangible personal property and certain services, including admissions to places of amusement. A taxable admission charge is the amount paid for admission, including any service charge, and any charge for entertainment or amusement or for the use of facilities for entertainment or amusement.
The Department decided that the taxpayer did not need a certificate of authority because it was not required to collect sales tax. The taxpayer did not charge admission to its game room and did not sell any tangible personal property. The charges for the coin-operated amusement devices were also not subject to tax; they were charges for the use of the devices rather than charges for admission to amusement.