United Artists Theatre Circuit, Inc. v. State Tax Commission, 46 N.Y.2d 202 (1978)

A sales tax exemption for “motion picture theaters” extends beyond traditional motion pictures to encompass other forms of entertainment exhibited in such theaters, based on legislative intent to support the theater industry, not just the exhibition of films.

Summary

United Artists Theatre Circuit, Inc. challenged the State Tax Commission’s determination that closed-circuit telecasts of boxing matches shown in their theaters were subject to sales tax. The Court of Appeals reversed the Appellate Division’s judgment, holding that the sales tax exemption for “motion picture theaters” applied to all activities within the theater, not just the exhibition of conventional movies. The court reasoned that the legislative history demonstrated an intent to support the theater industry as a whole, regardless of the specific content being shown.

Facts

United Artists Theatre Circuit, Inc. operated movie theaters in New York. The company exhibited closed-circuit telecasts of boxing matches in its theaters. The State Tax Commission determined that the receipts from these telecasts were subject to sales tax. United Artists argued that these receipts were exempt under the sales tax exemption for “motion picture theaters.” The State Tax Commission argued that the exemption only applied to conventional motion pictures.

Procedural History

The State Tax Commission determined that the receipts from the boxing telecasts were subject to sales tax. United Artists challenged this determination in the Appellate Division, which affirmed the Tax Commission’s decision. United Artists then appealed to the New York Court of Appeals.

Issue(s)

Whether the sales tax exemption for “motion picture theaters” applies only to conventional motion pictures or extends to other forms of entertainment, such as closed-circuit telecasts of boxing matches, exhibited in such theaters.

Holding

Yes, because the legislative intent was to support the movie theater industry broadly, not just the showing of traditional motion pictures. The change in the wording of the proposed legislation, from “motion picture admissions” to “motion picture theaters”, indicates that the location of the entertainment, rather than its specific form, was the determining factor for the exemption.

Court’s Reasoning

The court focused on the legislative history of the sales tax exemption. The original bill language exempted “motion picture admissions.” However, this was changed to “motion picture theaters” before enactment. The court reasoned that this change indicated a deliberate intention to broaden the exemption’s scope. The court stated, “This deliberate change in phraseology militates against the idea that the use of the word admissions was merely a matter of semantic happenstance.” The court inferred that the legislature considered the potential impact of the tax on the movie theater industry and intended the exemption to support the industry’s vitality, regardless of whether the content shown was a traditional movie or something else, such as a boxing match telecast.

The court gave weight to the dissenting opinion in the Appellate Division, written by Presiding Justice Mahoney, which thoroughly analyzed the statutory history. The court stated that “the statutory history to which that opinion refers illumines the nature of the changes effected in the then proposed section 1105 (subd [f], part [1]) of the Tax Law during its legislative course.” This underscored the importance of legislative intent in interpreting the statute.

The court concluded that the Tax Commission’s interpretation, limiting the exemption to only conventional motion pictures, ran “counter to the indicia of legislative intent.” Because the legislative intent was to protect the movie theater industry generally, showing events other than movies in a movie theater should also be exempt from sales tax.