|(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Alcoholic beverage--Alcohol, or any beverage containing
more than 0.5% of alcohol by volume, which is capable of use for beverage
purposes, either alone or diluted.
(2) Bad debts--The unpaid portion of the gross receipts
on sales or services that have been charged off the books as a bad
debt and that are deducted for federal tax purposes during the same
or subsequent reporting period.
(3) Cash or ticket bar--A bar at a special function
at which guests can purchase alcoholic beverages. Payments for the
alcoholic beverages can be made by using cash, credit cards, or debit
cards, or by redeeming tickets that are purchased by guests.
(4) Complimentary alcoholic beverage--An alcoholic
beverage served without any consideration paid to the permittee.
(5) Mandatory gratuity charge--Any amount required
by the permittee in excess of the charge for the sale of alcoholic
(6) Mixed beverage--A serving of a beverage composed
in whole or in part of an alcoholic beverage in a sealed or unsealed
container of any legal size for consumption on the premises where
served or sold by a permittee.
(7) Open bar--A bar at a special function at which
alcoholic beverages have been paid for by the host or are prepaid
through an admission fee. This differs from the provision of complimentary
alcoholic beverages in that the alcoholic beverages are purchased
by the host or donated to the host for the purpose of being served
for free at the special function.
(8) Permittee--A person, agent, or the officer, director,
manager, or managing general partner of an entity that is the holder
of a mixed beverage permit, a mixed beverage late hours permit, a
mixed beverage permit holding a food and beverage certificate, a daily
temporary mixed beverage permit, a private club registration permit,
a private club exemption certificate permit, a private club late hours
permit, a daily temporary private club permit, a private club registration
permit holding a food and beverage certificate, a caterer's permit,
or a rectifier's and distiller's permit issued by the Texas Alcoholic
(9) Qualified employees--Employees who customarily
and regularly provide the service upon which a gratuity is based,
including, but not limited to, waiters, waitresses, busboys, service
bartenders, wine stewards, and maîtres d'hôtel. The term
does not include janitorial help, chefs, cashiers, or dishwashers.
(10) Reasonable mandatory gratuity charge--A mandatory
gratuity charge that does not exceed 20%.
(11) Source record--A dated customer service check
or ticket; a dated cash register receipt, if coded to reflect all
information required by subsection (k) of this section; or the equivalent
of a dated customer service check or a dated cash register receipt,
subject to approval by the comptroller.
(12) Temporary membership card--A card printed and
sold to a private club by the Texas Alcoholic Beverage Commission
to be sold by the private club to an individual that entitles the
individual to all the privileges of membership in the private club
for a period not to exceed three days. The card also entitles the
holder to bring not more than three persons into the private club
as the holder's guests.
(13) Voluntary gratuity--An amount added to the bill
by the purchaser or money given freely by the purchaser over and above
the price charged for the sale or service of alcoholic beverages.
(14) Walked checks or tabs--An industry term that refers
to the instance of a customer that on a particular business day consumes
alcoholic beverages and leaves the permittee's premises without paying
or providing the appropriate consideration for the alcoholic beverages.
These differ from bad debts in that no agreement exists to extend
credit to the customer; and these differ from complimentary alcoholic
beverages in that the intent is to sell the alcoholic beverages and
not be given away as complimentary alcoholic beverages.
(b) Mixed beverage gross receipts tax. Effective January
1, 2014, the rate of the tax is reduced from 14% to 6.7%. The tax
is imposed on the gross receipts of a permittee received from the
sale, preparation, or service of alcoholic beverages or from the sale,
preparation, or service of ice or nonalcoholic beverages that are
sold, prepared, or served for the purpose of being mixed with an alcoholic
beverage and consumed on the premises of the permittee. The mixed
beverage gross receipts tax is imposed in addition to the mixed beverage
sales tax imposed under Tax Code, Chapter 183, Subchapter B-1.
(1) Gross receipts tax imposed on permittee, not customer.
The mixed beverage gross receipts tax is a tax on gross receipts.
The tax may not be separately charged to or paid by the customer and
cannot be considered included in the gross receipts amount. A receipt,
bill, or other invoice for the sale or service of alcoholic beverages
may not include a charge labeled a "Tax Reimbursement."
(2) Monthly mixed beverage gross receipts tax reports.
Each permittee must file a monthly mixed beverage gross receipts tax
report on or before the 20th day of the following month even if no
sales or services of alcoholic beverages were made during the month.
The Texas Mixed Beverage Gross Receipts Tax report is due in addition
to the Texas Mixed Beverage Sales Tax report required to be filed
under Tax Code, Chapter 183, Subchapter B-1, and the Texas Sales and
Use Tax report required to be filed under Tax Code, Chapter 151.
(3) Separate tax disclosure statement. For informational
purposes only, a permittee may add a separate statement on a customer's
invoice, bill, or other receipt that is not shown as part of the charges
to the customer and that clearly discloses:
(A) the amount of mixed beverage gross receipts tax
to be paid by the permittee to the comptroller on that sale; or
(B) the total amount of mixed beverage gross receipts
tax to be paid by the permittee to the comptroller combined with the
amount of mixed beverage sales tax collected by the permittee to be
remitted to the comptroller on that sale.
(4) Examples of separate tax disclosure statements.
(c) Taxable mixed beverage gross receipts.
(1) The mixed beverage gross receipts tax base includes,
but is not limited to, receipts for the following items:
(A) receipts from the sale or service of alcoholic
(B) receipts from the sale or service of nonalcoholic
beverages that are mixed and consumed with alcoholic beverages on
the permittee's premises;
(C) receipts from cover charges, door charges, entry
fees, or admission fees when the Texas Alcoholic Beverage Commission
has determined that the collection of the cover charge, door charge,
entry fee, or admission fee is in violation of the Texas Alcoholic
Beverage Commission rules or regulations. In this instance the tax
base is the entire receipts from the cover charge, door charge, entry
fee, or admission fee plus the reduced sales or service prices received
for the alcoholic beverages;
(D) the normal selling price of alcoholic beverages
served with meals with no separate charge. If the specific alcoholic
beverage is being sold or served at a reduced price at the same time
as the meal, the tax base for the alcoholic beverage is the reduced
(E) any portion of a reasonable mandatory gratuity
charge that is not disbursed to qualified employees;
(F) the entire mandatory gratuity charge when in excess
of 20%, regardless of how the gratuity is disbursed;
(G) miscellaneous charges in conjunction with the sale
or service of alcoholic beverages such as bar set-up fees, bartender
fees, corkage fees, maîtres d'hôtel charges, etc.;
(H) all sales or services of alcoholic beverages by
(I) all sales or services of alcoholic beverages sold
or served by the holder of a temporary permit listed in subsection
(a)(8) of this section or by the holder of a beer and wine only temporary
permit issued to a mixed beverage permittee; and
(J) all sales of coupons, tokens, tickets, etc., that
are redeemed or used in any manner to purchase or pay for the sale
or service of an alcoholic beverage.
(2) Thefts of money or legal tender received from the
sale or service of alcoholic beverages are not deductible from the
mixed beverage gross receipts tax base.
(d) Private clubs, special events, and functions. The
gross receipts from alcoholic beverages served at special events or
functions, such as golf or tennis tournaments at private clubs when
a lump-sum charge entitles the member or guest to various items such
as green fees, food, alcoholic beverages, golf cart rentals, etc.,
shall be computed by one of the following methods.
(1) The club shall maintain documentation that shows
the normal cost to a member or guest for each of the items provided
for the lump-sum charge. The permittee may then compute the percentage
of the total of all the charges attributable to the sale or service
of the alcoholic beverages. This percentage is then applied to the
actual lump-sum amount paid by the member or guest to determine the
amount of gross receipts subject to the mixed beverage gross receipts
tax. For example, if the total of all the items would normally cost
$300 and the permittee estimates that the portion attributable to
the sale or service of alcoholic beverages is $30, then 10% of the
actual lump-sum amount would be reported as subject to the mixed beverage
gross receipts tax. If the lump-sum amount paid by the member or guest
is $200, then the mixed beverage gross receipts tax base would be
$20. The documentation used by the permittee is subject to review
by the comptroller's personnel and any amounts determined to be inaccurate
or unreasonable may be adjusted.
(2) The permittee may choose to use the normal sales
or service prices of the alcoholic beverages as the tax base for the
mixed beverage gross receipts tax.
(e) Nonprofit organizations holding fundraising and
other special events where 100% of the net profit of the event goes
to the nonprofit organization. Nonprofit organizations with an IRS
Section 501(c)(3), (4), (8), (10), or (19) status who are permittees,
including organizations who have been issued a temporary permit, are
responsible for paying the mixed beverage gross receipts tax as follows:
(1) if tickets are sold to an event with an open bar,
the nonprofit organization owes mixed beverage gross receipts tax
on the cost to the organization of any alcoholic beverages purchased
for the event;
(2) if tickets are sold to an event with an open bar
and the alcoholic beverages are donated to the nonprofit organization,
the nonprofit organization does not owe mixed beverage gross receipts
tax or use tax as provided by Tax Code, Chapter 151, on the donated
alcoholic beverages, but owes mixed beverage gross receipts tax on
the cost of any alcoholic beverages purchased for the event;
(3) if an event is one with a cash or ticket bar (with
or without an entry fee), the nonprofit organization owes mixed beverage
gross receipts tax on the total receipts from the sale and service
of alcoholic beverages;
(4) if an event is one with no entry fee and an open
bar, the nonprofit organization does not owe mixed beverage gross
receipts tax, but owes use tax as provided by Tax Code, Chapter 151,
on the cost of any alcoholic beverages purchased by the organization
for the event.
(f) Items excluded from the mixed beverage gross receipts
tax base. The mixed beverage gross receipts tax does not apply to
receipts for the items described in this subsection.
(1) Complimentary alcoholic beverages. Use tax as provided
by Tax Code, Chapter 151, is due on the taxable ingredients of the
complimentary alcoholic beverages. A serving of an alcoholic beverage
shall not be a complimentary alcoholic beverage if any consideration
is paid to the permittee, which may include, but is not limited to,
the following: the alcoholic beverage is served in connection with
food or any other thing sold to the recipient or an entertainment
or entry fee is charged that includes one or more drink coupons or
tickets. Any alcoholic beverage served under the identified or similar
conditions is subject to the gross receipts tax, computed on the basis
of the normal charge for the sale or service of such alcoholic beverage.
(2) Complimentary alcoholic beverages served during
promotional periods such as happy hours at hotels or motels. If, however,
there is an increase in guest room rates attributable to the promotional
periods, the comptroller will have the option to tax either the increase
in the room rate under Tax Code, Chapter 156 (Hotel Occupancy Tax),
or assess use tax on the taxable ingredients of the complimentary
drinks. The comptroller will have the authority to use information
such as the room rates at comparable hotels and motels in the area
to determine if an increased rate is attributable to the promotional
period of alcoholic beverages.
(3) Complimentary alcoholic beverages served to holders
of free drink cards or free drink tokens, for which no consideration
was paid to the permittee.
(4) Voluntary gratuities.
(5) Reasonable mandatory gratuity charges, subject
to the requirements of subsection (i)(1) of this section.
(6) Walked checks or tabs.