| (b) Charges to private club members and guests. The membership
dues, initiation fees, and other assessments and fees charged for a special
privilege, status, or membership classification in a private club or organization,
including organizations described by the Internal Revenue Code of 1986, §501(c)(7),
if the organizations provide amusements, are taxable. Taxable fees for special
privileges in the organization include, but are not limited to, liquor pool
dues, boat slip rental fees, golf cart storage fees, locker rental fees, locker
room use fees, and fees for access to the restaurant and bar. Separate charges
for amusement services by persons who operate clubs or other facilities over
and above amounts that are received for membership or initiation fees, such
as green fees or fees for admissions to swimming pools, racketball courts,
or tennis courts, are also taxable. Initiation fees that are refundable, as
evidenced by a written agreement, are not taxable.
(c) Entry fees. Entry fees will not be taxable as amusements
if:
(1) the fee substantially exceeds what would normally be paid
for use of the facility, and a person is paying to compete in a contest, and
part of the fee offsets the cost of conducting the contest and for prizes;
or
(2) an individual would not normally use the facility or pay
a fee, except for the purpose of participation in a contest.
(d) Travel agencies.
(1) Tickets to amusements that travel agencies sell as part
of a travel package are taxable only if:
(A) the price of the ticket is separately stated from the price
for the remainder of the package; or
(B) though not separately stated, the surrounding additional
costs are inconsequential.
(2) If the travel agency is not required to collect sales tax,
then sales tax must be paid at the time the travel agency purchases the tickets.
(e) Imposition of tax.
(1) Sales tax is due on the sale of an admission to an amusement
service if the event or location of the service is within the State of Texas.
Sales tax is also due on admissions to gambling ships that operate outside
Texas waters, if the ships depart from and return to Texas ports. Sales tax
is not due on the sale of an admission to an amusement service if the event
or location of the service is outside Texas.
(2) Use tax is due on an out-of-state sale of an admission
to an amusement event that will take place in Texas.
(3) When a sale of an amusement service occurs that does not
involve the transfer of a ticket or other physical evidence of admission,
possession of or title to the admission is regarded as occurring at the seller's
place of business. An example is when admission is secured by a reservation
that the seller makes for the purchaser.
(4) Sales or use tax is not due on cover charges that are taxable
under Alcoholic Beverage Code, 202.02.
(f) Taxable item sold or transferred with amusement service.
(1) Sellers of service may issue a resale certificate in lieu
of tax to suppliers of tangible personal property only if care, custody, and
control of the property is transferred to the client. For example, a taxpayer
purchases padlocks to transfer to customers when lockers are rented. The padlock
is transferred to customers, and the customers use the padlock when renting
the locker. The taxpayer may purchase the padlock tax free by issuing a resale
certificate. Tax is due on the total amount charged the customer, including
amounts for the padlock and for the services.
(2) A resale certificate may be issued for a service if the
buyer intends to transfer the service as an integral part of taxable services.
A service will be considered an integral part of a taxable service if the
service purchased is essential to the performance of the taxable service,
and without which the taxable service could not be rendered.
(3) A resale certificate may be issued for a taxable service
if the buyer intends to incorporate the service into tangible personal property
that will be resold. If the entire service is not incorporated into the tangible
personal property, the presumption is that the service is subject to tax,
and the service will only be exempt to the extent that the buyer can establish
the portion of the service that was actually incorporated into the tangible
personal property. If the buyer does not intend to incorporate the entire
service into the tangible personal property, no resale certificate may be
issued, but credit may be claimed at the time of sale of the tangible personal
property to the extent the service was actually incorporated into the tangible
personal property.
(4) Any item, such as machinery or equipment, purchased for
use in the provision of an amusement service is not an item that is transferred
with an amusement service, and is subject to sales tax.
(5) A reseller of a ticket or admission document to an amusement
service may deduct from "taxable sales reported," the "adjusted value" of
the ticket or admission document purchased for resale from a non-permitted
purchaser of the ticket or admission document. The "adjusted value" is the
face value of the ticket or admission document, less the included sales tax.
A reseller is allowed the deduction from taxable sales when filing a sales
tax report, if all of the following criteria are met:
(A) the purchaser paid the sales tax, and the purchaser does
not hold a Texas Sales and Use Tax Permit;
(B) the language on the ticket or admission document purchased
for resale states that all taxes have been included in the price of the ticket
or admission document;
(C) the ticket or admission document for which a deduction
is claimed was not purchased tax-free by use of a resale or exemption certificate;
and
(D) the ticket or admission document is actually resold.
(g) Exemptions.
(1) Sales tax is not due on the sale of an amusement service
if the service is provided exclusively:
(A) by a nonprofit organization, corporation, or association,
other than organizations described by the Internal Revenue Code of 1986, §501(c)(7),
if the proceeds do not go to the benefit of an individual, except as a part
of the services of a purely public charity. Initiation and membership fees
and other assorted fees charged by such a nonprofit organization, corporation,
or association are not taxable. Examples include organizations, corporations,
or associations recognized as nonprofit organizations under the Internal Revenue
Code, §501(c); Kiwanis clubs, labor unions, and ex-students organizations.
Organizations described by the Internal Revenue Code of 1986, §501(c)(7),
that provide amusements, do not qualify for this exemption, even though such
groups are formed as nonprofit organizations;
(B) by a nonprofit corporation organized under the laws of
this state for the purpose of encouraging agriculture by the maintenance of
public fairs and exhibitions;
(C) by an educational (including institutions of higher education
as defined under Education Code, §61.003(8)), religious, law enforcement,
or charitable association or organization, as long as no part of the proceeds
goes to the benefit of a private individual;
(D) by the United States, the State of Texas, a municipality,
county, school district, special district, or other political subdivision
of the State of Texas, other than a public institution of higher education
as defined under Education Code, §61.003(8). An amusement service is
not "exclusively provided" by a governmental entity if the entity contracts
with an entity that is not listed in the Tax Code, §151.3101(a)(1), for
the provision of the amusement;
(E) in a place that is included in the National Register of
Historic Places; or
(F) in a place that is designated as a Recorded Texas Historic
Landmark by the Texas Historical Commission.
(2) Sales tax is not due on the sale of an amusement service
by a ticket service, ticket agent, ticket outlet, or any other seller of amusement
services, when the provider of the amusement service is exempt as set forth
in paragraph (1) of this subsection.
(3) Except as provided by subsection (h) of this section, a
nonprofit group may hire a for-profit organization to provide the expertise
to produce an event without loss of the exemption provided by paragraph (1)(A)
of this subsection. The nonprofit organization must hold itself out as the
provider of the amusement, and may not be a joint venturer with the for-profit
entity.
(4) Amusement services provided through coin-operated machines
that the consumer operates are exempt from sales tax. The coin used to operate
the machine may be a token as well as a United States coin. Examples are coin-operated:
(A) pinball machines;
(B) video games and motion pictures;
(C) pool tables;
(D) televisions;
(E) shuffleboard;
Cont'd... |
