In a decision involving the application of the sales tax laws to a game preserve, a New York State Administrative Law Judge has held that the charges hunters pay to shoot birds at a game preserve represent charges for the sale of tangible personal property and are subject to sales tax. Matter of Frank M. Gugliotta D/B/A Parkview Lodge and Upland Game Preserve, DTA No. 823157 (N.Y.S. Div. of Tax App., Dec. 30, 2010).

The taxpayer operates a lodge and game preserve, and offers hunting of pheasant, chukar and quail. Hunters direct the preserve to release birds before the hunt begins, and then have a set period of time to shoot the birds that were released at their request, as well as any other birds that remain from previous hunts, or that may have happened to fly by. Pricing is based solely on the number of birds the hunter wants to have released, with some set minimums, and varies depending upon the type of bird. There is no guarantee that the hunter who paid for a set number of birds will kill all, or even any, of them, since the birds may escape or the hunter may simply not be skillful enough. While the decision says that hunters may take more or fewer birds than are released without a change in the fee, there is no indication of how often the actual number of birds shot varies from the amount charged, or whether it is commonly larger or smaller. The preserve is not permitted to sell live birds to the public, but only to a licensed breeder or a preserve operator. Following the hunt, most hunters clean their own birds in an area provided by the preserve, although some use a birdcleaning service provided by the preserve for a separate charge, or a taxidermy service also available at an extra charge. The decision says hunters “often” eat their birds, but doesn’t say how often.

In 1965, the Division had provided advice to other hunting preserves, stating that the provision of game birds at a charge by bird on a private shooting preserve is not subject to sales tax, and this advice was confirmed in letters issued in 1971 and 1991. Despite this earlier advice, the Division was now taking the position that the charges were taxable.

The ALJ held that the charges per bird were for the sale of tangible personal property for use in conjunction with a participatory sporting activity.

The ALJ held that the charges per bird were for the sale of tangible personal property for use in conjunction with a participatory sporting activity, and analogized the sales to the rental of bowling shoes. Although hunters received both game birds and the right to hunt for the charge, since the game preserve chose to charge only for the birds, the per-bird charges were considered to be sales of tangible personal property in their entirety. Even if the charges were deemed to include an amount allocable to the nontaxable activity of hunting, they would still be fully taxable as a single charge with both taxable and nontaxable components that are not separately broken out, leaving the entire charge subject to tax. The ALJ rejected the taxpayer’s argument that the charges were hunting fees, since the preserve charged only for the birds. He also rejected the argument that the birds were nontaxable “food sold for human consumption,” finding that they were sold as prey under conditions where the success of the hunt was not guaranteed.

However, the ALJ did set aside the penalty, finding that the petitioner reasonably relied on the prior written advice from the Division to others operating similar businesses.

Additional Insights

This case raises interesting questions that are not answered by the decision. While the ALJ notes that success of the hunt is not guaranteed, and uses that as a rationale for finding that the birds were not being sold as food, there is no discussion of what correlation there might be between the number of birds generally paid for and the number of birds taken home. If hunters commonly pay, for example, for 12 birds, and most only end up shooting 6, it seems odd to hold that the charge for the 6 that got away is a charge for tangible personal property, since no tangible personal property ended up being transferred to the hunter. On the other hand, the sales tax law does include, within the definition of “sale,” “[a]ny transfer of title or possession or both, … lease or license to use or consume … conditional or otherwise…”, Tax Law § 1101(b)(5), so perhaps it could be argued that the hunters paid for a “conditional” “license” to the birds that got away. However, the analogy to the rental of bowling shoes seems misplaced: bowlers who rent shoes clearly pay for one pair and receive the use of one pair. Here, while a hunter is required to pay for at least some birds, a hunter could conceivably leave with no birds at all. Moreover, under the rationale of this decision, it appears that a game preserve could use a different billing system, for example, charging solely by the hour, and fit comfortably within the sales tax exclusion provided by Tax Law § 1105(f) (1), which provides that sales tax does not apply to charges to a patron for admission to or use of facilities for sporting activities in which the patron is to be a participant.