Admissions and Amusement Taxes on Sales During Entertainment

Businesses that have remitted amusement taxes on sales during periods of entertainment may be eligible for a refund of those taxes paid from May, 2003 through April, 2006, as a result of the 2003 court case, Comptroller of the Treasury v. Clyde's of Chevy Chase, Inc., et al

Clyde's restaurants court decision

In that court case involving Clyde's of Chevy Chase and Clyde's of Columbia restaurants, the courts found that there was no "connection" between the prices charged for food and beverages and the cost of the entertainment to Clyde's. The undisputed facts of the case were that during periods of entertainment Clyde's did not impose a cover charge, raise the price of food and beverages sold, or impose a minimum purchase requirement on patrons. Without a "connection" established, the courts found that Clyde's was not liable for amusement taxes assessed by the Comptroller's Office.

Similar operation may qualify for refund

Businesses providing entertainment that operate in the same manner as Clyde's qualify for a refund of amusement taxes paid. By statute, refunds of amusement taxes may not be granted beyond three years from the date that the taxes were paid. Businesses seeking a refund must file an admissions and amusement tax refund application with the Comptroller. The Comptroller will not refund any taxes paid in error without first receiving a refund application. Businesses that file a claim for refund will be required to demonstrate that their operation was similar to that noted in the Clyde's court case before receiving a refund.

Any business currently operating in the same manner as Clyde's will no longer have an obligation to continue to remit amusement taxes on sales during periods of entertainment. Businesses should review the facts of the Clyde's case thoroughly before discontinuing the remittance of the amusement taxes. If a business stops remitting amusement taxes and the business operation changes, and a minimum is imposed or refreshment prices are raised during periods of entertainment, the tax will apply.

For more information about admissions and amusement taxes, call 410-767-1511 in the Baltimore area or toll free 1-800-492-1752 elsewhere. For information about the refund process, contact the refund supervisor at 410-767-1538 in the Baltimore area of toll free 1-800-492-1752 elsewhere.