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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER OSTATE SALES AND USE TAX
RULE §3.298Amusement Services

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

  (1) Amusement services--Entertainment, recreation, sport, pastime, diversion, or enjoyment that is a pleasurable occupation of the senses. Amusement services and places that offer amusement services include, but are not limited to, the following:

    (A) live or recorded performances, whether by individual ticket or by season tickets:

      (i) ballet performances;

      (ii) circuses;

      (iii) ice skating shows;

      (iv) motion pictures;

      (v) musical concerts;

      (vi) opera performances;

      (vii) outdoor theatres; and

      (viii) theatres (movies and plays);

    (B) exhibitions or displays:

      (i) animal shows (contests, exhibitions);

      (ii) antique shows;

      (iii) aquatic shows;

      (iv) arts and crafts, and art shows (fairs);

      (v) auto shows;

      (vi) museums (that display art objects, wax figures, antique autos, etc.); and

      (vii) zoos;

    (C) spectator sports:

      (i) drag strip operation;

      (ii) horse shows (horse riding exhibitions);

      (iii) motorcycle races;

      (iv) automobile races (full size and miniature cars);

      (v) rodeo;

      (vi) sporting events such as football, baseball, basketball, hockey, and soccer games; and

      (vii) wrestling, boxing, or arm wrestling;

    (D) participatory sports or games:

      (i) athletic clubs;

      (ii) bowling games;

      (iii) court fees--tennis, racketball, handball, etc.;

      (iv) domino games (including by the hour);

      (v) go-cart raceways;

      (vi) golf courses;

      (vii) golf driving ranges;

      (viii) health clubs (spas), (admissions and memberships);

      (ix) miniature golf courses;

      (x) chartered boat or party boat excursions (see paragraph (2) of this subsection for excursions of more than one day duration, and for excursions on which fishing guide services are provided);

      (xi) pool (billiards) games (by the game or by the hour);

      (xii) skate board tracks;

      (xiii) skating rinks (roller skating and ice skating);

      (xiv) swimming pools;

      (xv) water slides; and

      (xvi) physical fitness centers;

    (E) fairs or carnivals:

      (i) amusement parks;

      (ii) carnivals;

      (iii) fairs;

      (iv) games of skill, at a circus, carnival, etc.;

      (v) shooting galleries (ranges); and

      (vi) side shows;

    (F) other:

      (i) except as provided by subsection (e)(4) of this section, cover charges (for admission to night clubs, dance halls, discos, etc., that provide dancing, music, or other entertainment);

      (ii) hot tub concessions;

      (iii) parties (New Year's Eve) that radio stations, hotels, etc., sponsor. Ticket price includes meal, set-ups, entertainment, party favors;

      (iv) rides for pleasure (in hot-air balloons, helicopters, trains, ships, boats, etc.);

      (v) tour trains and buses, whose primary purpose is to show tourist sights along a route, as opposed to regular transportation;

      (vi) tours of tourist attractions, including ships, buildings, monuments, and natural wonders such as caves and caverns; and

      (vii) palm reading, fortune telling, and astrological chart preparation;

    (G) country clubs and other private clubs and organizations that provide entertainment, recreation, sports, dining, or social facilities to members.

  (2) Nonamusement services--Activities that are primarily instructional in nature, or nontaxable personal services. Places, services, and clubs that the tax on amusement services does not cover include, but are not limited to:

    (A) hobby clubs (stamp collecting clubs, toastmaster clubs, camera clubs, amateur radio clubs);

    (B) instructions for any sport or musical discipline;

    (C) camps for children (day camps or boarding camps);

    (D) video cassette clubs;

    (E) political fundraisers;

    (F) campground admissions;

    (G) cruises that last longer than 24 hours and extend offshore beyond Texas territorial limits;

    (H) fishing and hunting leases and guide services; and

    (I) membership in sororities and fraternities.

  (3) Occasional sale--The sale of not more than 10 admissions for amusement services during a 12-month period by a person who does not hold himself out as engaging, or does not habitually engage, in the sale of amusement services.

  (4) Provider of an amusement service--The person who has legal rights of ownership over, or the legal right to provide, present, or offer, an amusement, entertainment, or recreation that is rendered on a regular basis at a fixed location, and for which admissions are sold, such as the owner of the wax figure display at a wax museum. The provider of an amusement service is also the person who has legal rights of ownership to an amusement, entertainment, or recreation that will not be rendered on a regular basis at a fixed location, and for which amusement service admissions will be sold, such as the provider of a singer's one-night live performance. A provider of an amusement service may be, but is not always, the owner of the facility (land and/or building) at which the amusement service is offered or performed. A provider of an amusement service may gain the right of providing an amusement service by virtue of a contract or agreement (lease, rental, concession right) with the performer(s) of the entertainment, or with a facility owner when the use of that facility constitutes the amusement service. Terms used within the amusements industry to refer to a provider include manager, promoter, concessionaire, tenant, or association (or club) president.

  (5) Sales price of an amusement service--The fee charged for admission to an amusement, including a convenience fee, handling charge, service charge, or other amount that is over and above the amount that would be charged for an amusement admission at the ticket counter of the facility at which the amusement service will be rendered. Sales price also includes dues, initiation fees, and other charges, assessments, and fees required for a special privilege, status, or membership classification in a private club or organization. Receipts subject to tax under the Texas Alcoholic Beverage Code, §202.02, are not included in the sales price of an amusement service.

  (6) Sales price of membership to country clubs, including clubs described by the Internal Revenue Code of 1986, §501(c)(7)--The sales price includes dues, initiation fees, and other charges, assessments, and fees required for a special privilege, status, or membership classification in a private club or organization. Whether the club has its own facilities is irrelevant to the determination of sales price. Receipts subject to tax under Texas Alcoholic Beverage Code, §202.02, are not included in the sales price of an amusement service.

  (7) Seller of admissions to amusement services--A person who sells more than 10 admissions to amusement services during a 12-month period, and includes those persons who hold themselves out as engaging, or who habitually engage, in the sale of admissions to amusement services.

  (8) Sale of an amusement service admission--The transfer of title to, or possession of, a ticket or other admission document for consideration, or the collection of an admission, membership, or enrollment fee, whether by individual performance, subscription series, or membership privilege, or through the use of a coin-operated or credit-card-operated machine. The consideration paid may secure the admission privilege for an individual or a group of individuals. The contract or agreement whereby the right is secured for a provider to offer an amusement, recreation, or entertainment as an amusement service is not the sale of an admission to an amusement service and is not subject to sales tax, such as the payment of a fee to a singer for a performance that the payer of the fee will provide as an amusement service through the sales of tickets.

(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 Cont'd...

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