So get this, my son, Andy, has his 7-year old birthday party a couple of weeks ago, and we coordinate with a local Y.M.C.A. to use their indoor pool that has all these great water features. Shallow water ... life vests ... I get soaked ... kids have a blast. I'm still questioning my wife's decision to take the labels off the water bottles; put numbers on them; and throw them in for a little under-water number search ... especially when the kids starting throwing the water bottles around the pool. Almost. A. Complete. Train. Wreck.
We start to pack up and the Y.M.C.A. coordinator comes over with the bill, and we pay it and head out to get some much-needed R&R. The next day, I look at the bill, and I see sales tax on the bill, and I start thinking that the Y.M.C.A. needs to hire the @TNTaxLawyer. I'm prepared to exert my intellectual prowess and send a letter to the Y.M.C.A., explaining to them why I need a refund of the sales tax they collected, but then I think - better make sure you are right before you send that letter, so I start doing a little research.
Tennessee Code Section 67-6-205(c)(8) provides for sales tax when a vendor leases space and the lessee of the space is a transient vendor that will be selling tangible personal property - think parking lot fair, but that is not us. Note that there are some exemptions in this statute for certain nonprofits and flea markets. Still not us.
Section 67-6-205(c)(1) imposes a sales tax on the "sale, rental or charges for any rooms, lodgings, or accommodations furnished to person by any hotel, inn, tourist court, tourist camp, tourist cabin, motel, or any place in which rooms, lodgings or accommodations are furnished to persons for a consideration." Maybe this is it, but then I find Letter Ruling 11-41 that says that renting rooms for a birthday party is not subject to tax unless it is offered by a facility that offers rooms for overnight stays. That is not this Y.M.C.A., so I keep digging.
Then I find it, or at least I think I find it. Tennessee Code Section 67-6-212(a)(1) ... the amusement tax. This section provides that "fees to membership sports and recreation clubs ... including fees paid for the use of the facilities or services rendered at a health spa or club or any similar facility or business." I've always thought that just covered the monthly fees, but when you read it in context of my man Andy's birthday party, I can see where it covers that charge as well, because we were clearly "using" the facilities.
Luckily I found this before I blasted off my refund request. The lesson learned is that while the Tennessee sales tax generally applies only to sales of tangible personal property and certain services, there are some provisions that tax the use of space/real estate. We can debate whether it makes sense to tax birthday party venues or not, but the Y.M.C.A. has it right. Thought I would share this out there for other party venues to see where they may fall in this analysis. May be taxable, maybe not, but I think this is the thought process to go through in making that determination.
So that's why.... "It's fun to stay at the Y.M.C.A." ....