| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Clothing--A garment used to cover the body, or
a part of the body, typically consisting of cloth or a cloth-like
material. Paint, latex, wax, gel, foam, film, coatings, and other
substances applied to the body in a liquid or semi-liquid state are
not clothing.
(2) Customer--Any person on the premises of a sexually
oriented business except:
(A) an owner, operator, independent contractor of the
business or an employee of that sexually oriented business; or
(B) a person who is on the premises exclusively for
repair or maintenance of the premises or for the delivery of goods
to the premises.
(3) Nude--To be entirely unclothed, or clothed in a
manner that leaves uncovered or visible through less than fully opaque
clothing any portion of the breasts below the top of the areola of
the breasts, if the person is female, or any portion of the genitals
or buttocks.
(4) Sexually oriented business--A nightclub, bar, restaurant,
or similar commercial enterprise that:
(A) provides for an audience of two or more individuals
live nude entertainment or live nude performances; and
(B) authorizes on-premises consumption of alcoholic
beverages, regardless of whether the consumption of alcoholic beverages
is under a license or permit issued under the Alcoholic Beverage Code.
(b) Clothing requirements. An entertainer or performer
will be considered "nude" for purposes of this section unless the
entertainer or performer wears fully opaque clothing that covers all
portions of the genitals and buttocks, and if the entertainer or performer
is a female, the entertainer or performer must also wear fully opaque
clothing that covers the portions of the breasts below the top of
the areola of the breasts.
(c) Questionnaire. A sexually oriented business, as
defined in this section, is required to complete and submit a Texas
Sexually Oriented Business Fee Questionnaire, Form AP-225 or a subsequent
form prescribed by the comptroller to file the report and remit the
fee imposed under Business and Commerce Code, Chapter 102 (Sexually
Oriented Businesses).
(d) Imposition and Calculation of Fee.
(1) A $5.00 fee is imposed on a sexually oriented business
for each entry by each customer admitted to the business. In determining
the amount of fee due by a sexually oriented business for more than
one entry by the same customer on the same business day at the same
location, it shall be presumed to have been one entry by the customer
and the fee amount due from the business for the entry is $5.00. A
business day begins when the business opens and continues until the
close of business.
(2) A sexually oriented business has the discretion
to determine how it will derive the money to pay the fee. All door
and cover charges, including reimbursement of the sexually oriented
business fee from its customers, are subject to sales tax as provided
by Tax Code, Chapter 151 (Limited Sales, Excise and Use Tax). A sexually
oriented business that chooses to recover the fee from its customer
by including a separately stated charge for the fee on the customer
check or invoice must clearly identify the charge as a reimbursement.
A charge not clearly identified as reimbursement of the fee is considered
a tax collected from the customer and these amounts must be remitted
to the comptroller in addition to the $5.00 entry fee.
(3) The comptroller will presume that a business is
a sexually oriented business if the business holds itself out as a
sexually oriented business. Evidence that the comptroller may consider
includes signage, advertising, social media, publication of images,
inspections, investigations, and the reputation of the business. To
rebut the presumption, a business may prove by a preponderance of
the evidence the instances in which the business did not operate as
a sexually oriented business.
(e) Report forms. The sexually oriented business fee
must be reported on a form as prescribed by the comptroller. The fact
that the sexually oriented business does not receive the form or does
not receive the correct form from the comptroller for the filing of
the return does not relieve the business of the responsibility of
filing a return and remitting the fee.
(f) Due date of report and payment.
(1) The sexually oriented business fee report and payment
are due no later than the 20th day of the month following the calendar
quarter month in which the liability for the fee is incurred.
(2) A sexually oriented business must file a quarterly
report even if there is no fee to report.
(g) Penalty. Penalties due on delinquent fees and reports
shall be imposed as provided by Tax Code, §111.061 (Penalty on
Delinquent Tax or Tax Reports).
(h) Interest. Interest due on delinquent fees shall
be imposed as provided by Tax Code, §111.060 (Interest on Delinquent
Tax).
(i) Records required.
(1) A sexually oriented business is required to maintain
records, statements, books, or accounts necessary to determine the
amount of fee for which the business is liable to pay.
(2) A sexually oriented business shall record daily
the number of customers admitted to the business. The manner in which
a sexually oriented business maintains records of the number of customers
admitted to the business may be written, stored on data processing
equipment, or may be in any form that the comptroller may readily
examine.
(3) The comptroller or an authorized representative
has the right to examine any records or equipment of any person liable
for the fee in order to verify the accuracy of any report made or
to determine the fee liability in the event no return is filed.
(4) Records required by the comptroller must be kept
for at least four years after the date on which the records are prepared,
and throughout any period in which any tax, fee, penalty, or interest
may be assessed, collected, or refunded by the comptroller or in which
an administrative hearing or judicial proceedings is pending, unless
the comptroller authorizes in writing a shorter retention period.
A business must make records available for inspection and audit on
request by the comptroller.
(j) Failure to keep accurate records. If a sexually
oriented business fails to keep accurate records of the number of
customers admitted to the business, the comptroller may estimate the
amount of fee liability based on any available information that includes,
but is not limited to, any reports required to be filed per Tax Code,
Chapter 151, Chapter 171 (Franchise Tax), or Chapter 183 (Mixed Beverage
Taxes).
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