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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

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;

    (F) jukeboxes; and

    (G) batting cages.

  (5) Sales tax is not due on the occasional sale of an amusement service.

  (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 this section.

  (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 document;

  (4) the sales of tickets or admission documents; and

  (5) the remaining inventory of unsold tickets or admission documents.

(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

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