ATF Ruling 73-3
The Bureau of Alcohol, Tobacco and Firearms has been asked whether an airline company, engaged in the mass transportation of persons, incurs special tax liability in connection with its operations of "clubs" at various passenger terminals throughout the United States.
In consideration of an annual membership fee paid to the airline company, "club" members are granted entry to all such "clubs" where complimentary alcoholic and non-alcoholic beverages and snacks are served. Membership also entitles members to preferential hotel reservation service and airline check in, and check cashing privileges not ordinarily granted to other passengers.
26 U.S.C. 5121 imposes a special tax of $54.00 per year on a retail dealer in liquors. 26 U.S.C. 5122 defines a retail liquor dealer as a person who sells, or offers for sale, any distilled spirits, wines, or beer to any person other than a dealer. Under 26 U.S.C. 5143 and 26 CFR 194.51, a special tax must be paid at each place where distilled spirits, wines, or beer are sold or offered for sale. 26 CFR 194.22 provides that whether a person is engaged in a business of "selling or offering for sale, even though to a restricted class of persons, or without a view to profit, is within the meaning of the statute.
The sale need not be direct, indirect sales create special tax liability. This is illustrated by 26 CFR 194.30, which provides that special tax liability is incurred where proprietors of restaurants serve liquors with meals with no specific or separate charge being made for the liquors.
Under the plan discussed above, entrance to "clubs can be gained only through payment of an annual membership fee. Therefore, although club membership is intended to be a customer service, proffered with a view to inducing the customer to use airline transportation, the annual membership fee must be considered as part of the cost of the alcoholic beverages served to such customers during the year. The airline company's acceptance of the application for membership and its retention of the accompanying fee results in a contract between the airline company, as seller, and the applicant as purchaser. The airline company, therefore, incurs special tax liability at each "club" locations where it serves the "complimentary liquor" to club members, since it is at those locations that ownership of the liquor passes from the airline company to the club member.
26 CFR 194.22, 194.30, 194.51.