We are opening a business that offers birthday parties for children. I know in Louisiana, we don't have to charge sales tax on the birthday party itself. But we do give the children party favors. I'm trying to find out if I have to pay sales tax. And if so, is it on the whole price of the party, or just on the value of the merchandise? I called our parish (county) tax office and they had no idea! Thanks!
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I take it these parties are not conducted on your own premises; if they were, I should think the party itself would be subject to sales tax under La. Rev. Stat. Ann. § 47:301(14)(b)(i), which imposes sales tax on "admissions" to "places of amusement." I don't see any annotations on this subject, but it appears that at least the "cover charge" at a place like Chuck E. Cheese, for example, would be subject to tax. However, if you are not subject to sales tax on the amount charged for the party itself, then you are probably the consumer of the party favors. You would pay sales or use tax when you purchase those items, and would not charge sales tax to your customer. Katie in San Diego
I found a person in the tax office that knew. It was as you suggested: The parties are considered a non-taxable service and since the party favors are included in the cost of the party, no sales tax is charged. I do have to pay use tax on the merchandise. Thanks for your reply, Katie.
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