Does sales tax apply to cover charges?

A cover charge is generally a fee that is collected from guests to allow guests entry to a specific event or activity. The tax application depends upon the specific activity for which the charge is made.

• Retail sales tax applies to cover charges that provide a guest the opportunity to dance or to participate in a contest, such as karaoke. Gross receipts are subject to B&O tax under the Retailing classification.
• Sales tax may be included in the amount charged if it is properly posted that tax is included. Refer to the Including Sales Tax in the Price section.
• Retail sales tax does not apply to fees collected for the privilege of listening to music or watching a pay-per-view show, and no dance floor is available. The gross amount received is subject to B&O tax under the Service and Other Activities classification.