A family dining and entertainment center (taxpayer) was not subject to Virginia tax on the sale of Play Points (points) sold to customers as part of party packages. The taxpayer was issued a tax assessment since it did not charge sales tax on the sales of tokens, coupons, and points sold as part of party packages. The auditor had likened the points to sales of admissions. Virginia sales and use tax does not apply to sales of tickets, fees, charges, or voluntary contributions for admissions to places of amusement, entertainment, exhibition, display, or athletic contests, nor to charges made for participation in games or amusement activities. However “cover charges” or “minimum charges” which include the provision of or the entitlement to food, drinks, or other tangible property constitute a sale of property and are subject to the tax. Admission fees or “door charges” which entail no right to receipt of or credit toward the purchase of food or other tangible personal property are not subject to the tax.
As per the Determination, the taxpayer does not charge customers a fee for admission, and the points are not charges for admission. Rather, the points are only used activate games and rides at the centers. Accordingly, the points are not subject to sales tax as an admissions fee when sold as part of the packages. The fact that the points are sold as part of the packages with food does not make the points subject to sales tax. The points are not connected with the sale of or provision of food. The points sold as part of the packages are not considered cover, minimum and room service charges in connection with the provision of meals. Additionally, the points are not a service that is subject to the sales tax. As such, the points are not subject to Virginia sales tax. (Ruling of Commissioner, P.D. 20-6, Virginia Department of Taxation, January 21, 2020, released April 2020)