April 14, 1981
You request a ruling concerning the application of the sales tax on meals to cover charges collected by the ********** ("Club"). The Club sells and collects tickets as evidence of the cover charge.
The Club plays disco music and has dancing and dining facilities. Customers are not required to purchase any food or beverages. On Friday and Saturday evenings the cover charge is $3.00 and does not include drinks; the Club operates a cash bar which sells drinks at regular prices. On Thursday evenings between 8:30 p.m. and 10:30 p.m. the cover charge is $5.00 ($3.50 if the patron has a discount card) and includes unlimited drinks until 10:30 when the Club resumes operation of the cash bar.
Food and alcoholic beverages provided by a restaurant are subject to the sales tax. (M.G.L. c. 64H, s. 6(h).) "Sales price", which is the amount upon which the tax is imposed, is defined in Chapter 64H, Section 1(14) as "the total amount paid by a purchaser to a vendor as consideration for a retail sale, valued in money or otherwise." The term "retail sale" does not include "sales of tickets for admissions to places of amusement and sports." (M.G.L. c. 64H, s. 1(13).)
Based on the foregoing it is ruled that:
1. The cover charge is not subject to the sales tax if: a ticket is sold and collected as evidence of the charge for admission, the patron is not required to purchase any food or beverages, the charge is made for admission only and does not include payment for any food, beverage or service other than entertainment, and the cover charge is accounted for separately from other receipts in the books and records of the business.
2. The entire amount of the cover charge which entitles patrons to unlimited drinks, whether an admission ticket is collected or not, is part of the sales price of the food and beverages within the meaning of Chapter 64H and is subject to the sales tax.
Very truly yours,
/s/L. Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue
LJH:RSF:mf
LR 81-31