| service was actually incorporated into the tangible
(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;
(D) the ticket or admission document is actually resold.
(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
(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;
(F) jukeboxes; and
(G) batting cages.
(5) Sales tax is not due on the occasional sale of an amusement
(6) Sales tax is not due on the purchase of an amusement service
by an exempt entity for its own amusement or for the amusement of its members.
See §3.322 of this title (relating to Exempt Organizations). The seller
must secure a valid exemption certificate. An amusement service is purchased
for the amusement of its members irrespective of whether:
(A) the organization pays the admission for the members;
(B) the members reimburse the exempt organization; or
(C) the members directly pay the service provider under an
agreement by the provider to accept payments from individual members, the
aggregate total of which equals the contractual obligation of the organization.
(7) Sales tax is not due on the purchase of the admission to
an activity that may be classified as an amusement, entertainment, or recreation,
if purchased under a written prescription of a licensed practitioner of the
healing arts for the primary purpose of health maintenance or improvement.
The written prescription must specify the type of the treatment needed. If
a membership privilege is purchased pursuant to a written prescription, a
new prescription must be obtained each time the membership is renewed.
(8) Except as provided under subsection (g)(1)(E) or (F) of
this section, tax is due on an amusement service provided by an organization
that is not exempted under subsection (g) or (h) of this section, when the
facilities used to provide the amusement service are leased or rented from
an organization that is exempted under subsection (g) or (h) of this section.
(h) Governmental entities.
(1) Entities recognized as governmental entities are subject
to the provisions of this subsection even though the entities may also be
classified under the Tax Code, §151.3101(a)(3), (4), or (5).
(2) Unless an event is solely for educational purposes, an
amusement service provided by this state, an institution that this state owns
or operates, an agency of this state, a city, county, school district, special
district, or other political subdivision of this state, or any agency of the
United States, is taxable if the public entity contracts with a person, a
for-profit organization, or any other organization that is not listed in Tax
Code, §151.3101(a)(1), to provide the expertise to produce or provide
a musical concert or other amusement event. These public entities must collect
sales tax on admissions to amusement events that are provided by or in conjunction
with a person, a for-profit organization, or other organization that is not
listed in Tax Code, §151.3101(a)(1). This provision does not apply to
a public institution of higher education as defined under Education Code, §61.003(8).
Public institutions of higher education are included in the term "educational
organizations" and are subject to the provisions of subsection (g)(1)(C) of
(3) An amusement is not solely for educational purposes unless
either 100% of the proceeds from the admissions go to the educational organization,
or students at the educational institution actually perform the amusement.
(i) Collection of the tax.
(1) Persons who sell admissions to an amusement service for
resale may accept a resale certificate from the purchaser of the amusement
in lieu of tax. The resale certificate will cover all convenience fees, handling
charges, service charges, etc., that promoters, ticket services, and others
add to the sales price of the admission.
(2) Each seller of amusement services who sells to the final
consumer must collect and remit the tax to the comptroller, based on the total
receipts from all taxable sales. A seller is responsible for remitting the
correct amount of tax based on the total sales price of admissions, including
any charges that others have added.
(3) The comptroller may regard any seller of an admission to
an amusement service as the agent of the person from whom he obtains the tickets
or other admission document, if the comptroller determines that the tax will
be collected more efficiently. The seller of an admission to amusement service
is regarded as the agent if:
(A) the person who provides the tickets or other admission
documents obtains written authorization from the comptroller to assume responsibility
for the tax collection of the agent;
(B) the person who provides the tickets includes in the sales
price of the admission any convenience fee, handling charge, etc., that the
agent has added to the price; and
(C) the provider of the tickets gives to the seller/agent a
written statement that the provider holds a tax permit issued by the comptroller
and is assuming responsibility for tax collection and reporting for the agent.
(j) Records. Every seller of admissions to amusement services
is responsible for keeping accurate records of all sales and purchases. See §3.281
of this title (relating to Records Required; Information Required). Every
seller of admissions to amusement services must hold a sales tax permit and
must file reports as required by §3.286 of this title (relating to Seller's
and Purchaser's Responsibilities). A reseller of a ticket or admission document
to an amusement service who deducts the "adjusted value" of the ticket or
admission document purchased for resale from a non-permitted purchaser, as
provided in subsection (f)(5) of this section, must have records that verify
the deduction, including:
(1) the name and address of the non-permitted purchaser;
(2) the face value of any ticket or admission document that
a non-permitted purchaser has purchased;
(3) proof (such as a copy of the ticket or admission document)
showing that sales tax is included in the price of the ticket or admission
(4) the sales of tickets or admission documents; and
(5) the remaining inventory of unsold tickets or admission
(k) Local tax. City, county, transit authority, and special
purpose district tax should be allocated to the city, county, transit authority,
and/or special purpose district where the amusement event occurred.
|Source Note: The provisions of this §3.298 adopted to be effective July 8, 1985, 10 TexReg 2074; amended to be effective May 5, 1986, 11 TexReg 1833; amended to be effective July 30, 1987, 12 TexReg 2339; amended to be effective May 26, 1988, 13 TexReg 2252; amended to be effective November 13, 1989, 14 TexReg 5735; amended to be effective September 29, 1992, 17 TexReg 6372; amended to be effective July 26, 1998, 23 TexReg 7381; amended to be effective June 13, 2001, 26 TexReg 4214