Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 515.0012.820


515.0012.820 Play-by-Mail Games. A taxpayer is a moderator of historical, science fiction, and fantasy games which are played through the mail in much the same way that chess is sometimes played through the mail. When a customer signs up for a game, the taxpayer sends the player a rule book which explains how the game is played. To play the game, the player indicates how he will move his units in the game by filling out a form the taxpayer provides or by sending the move on note paper. The taxpayer provides the services of evaluating the movements the player has made to determine the success of the moves. This back and forth process through the mail or occasionally by phone may last for several years until the game is eventually won or lost. The player pays $3.50 or more (depending on the game) for each move submitted.

If each player obtains the forms free of charge independently of purchases of rule books and independently of the charges for accepting turns submitted by the players, the taxpayer is providing a nontaxable service of moderating the play-by-mail games, and the forms the taxpayer uses are incidental to that service under Regulation 1501. This is based on the assumption that all charges for the turns are optional with the players and there is not a certain number of turns to which the player is entitled with the purchase of the rule book. Thus, no tax would apply to the charge made for the player to submit turns. However, tax does apply to the purchase of the forms by the taxpayer from the printer since the taxpayer is the consumer of the forms which are used incidentally in the service provided.

On the other hand, if the form and computer cards which the moderator provides to the players were integral parts of the game and the players submitted all their turns on either the forms or cards, depending on the game, then the services provided as moderator of the play-by-mail games are taxable as part of the sale of the forms and cards since the players could not participate without obtaining these items. In all cases, the initial furnishing of the rule book is subject to tax. 4/28/88.