Are concert ticket sales and food/beverage sales at the concert taxable when the concert is put on by a 501(c)(3) tax-exempt organization?

Plain-English summary

Someone asked whether concert sales and sales of food and beverages at a concert are taxable to the general public, referencing Rule 3.298(a)(1)(A) (Amusement Services).

The Comptroller's baseline answer: concerts are amusement services, which are generally taxable under Tax Code §§ 151.0101(a)(1) and 151.0028, and Rule 3.298(a)(1)(A). Food and beverage sales are separately taxable under § 151.314(c) and Rule 3.293.

But because the inquiry's subject line referenced "501(c)(3)," the Comptroller addressed the more specific scenario of a concert put on by an IRC 501(c)(3) tax-exempt organization: in that case, the amusement service (the concert itself) is exempt from sales tax under § 151.3101(a)(3) — but only if the proceeds don't benefit an individual, except as part of the services of a purely public charity (per Rule 3.298(g)(1)(A)).

Food and beverage sales, however, remain taxable even when sold by a 501(c)(3) organization — that exemption doesn't automatically extend to concessions. The one exception: a 501(c)(3) organization may hold two tax-free sale days per calendar year, each lasting only one day, under § 151.310(c) and Rule 3.322(g). If the food/beverage sales happen to fall on one of those designated tax-free days, they could be exempt; otherwise, they're taxable like any other food/beverage sale.

What this means for you

501(c)(3) nonprofits hosting concerts or similar amusement events

Your admission/ticket charges for the concert itself can be exempt from sales tax, but only if proceeds don't benefit any individual outside the charity's normal public-benefit activities. Don't assume that exemption extends to concessions — food and beverage sales at the same event are taxable by default, unless you strategically schedule those sales on one of your two allowed one-day tax-free sale days per year.

Event organizers partnering with nonprofits

If you're structuring a joint fundraiser/concert with a 501(c)(3), keep ticket revenue and concession revenue analytically separate — they're governed by different exemption rules, and the concert exemption doesn't carry over to food sales.

Accountants and tax professionals

Note the layered framework: general amusement-service taxability (§ 151.0101(a)(1), § 151.0028, Rule 3.298(a)(1)(A)) → 501(c)(3) carve-out for the amusement service itself (§ 151.3101(a)(3), Rule 3.298(g)(1)(A)) → food/beverage sales taxed separately regardless (§ 151.314(c), Rule 3.293) → narrow two-day-per-year tax-free sale exception for exempt organizations (§ 151.310(c), Rule 3.322(g)).

Common questions

Q: Are concerts generally taxable in Texas?
A: Yes — concerts are amusement services and are taxable by default under § 151.0101(a)(1), § 151.0028, and Rule 3.298(a)(1)(A).

Q: Does a concert by a 501(c)(3) organization automatically become tax-exempt?
A: The concert (amusement service) itself can be exempt under § 151.3101(a)(3), but only if proceeds don't benefit an individual outside the charity's public-benefit purpose.

Q: Are food and beverage sales at a 501(c)(3)'s concert exempt too?
A: Not automatically — food/beverage sales remain taxable under § 151.314(c) and Rule 3.293, unless made during one of the organization's two allowed one-day tax-free sale days per year.

Q: Can another 501(c)(3) organization rely on this letter?
A: No. It answers the general questions posed and, per STAR's usual rules, supports detrimental reliance only for the taxpayer it was issued to. A specific organization's facts (how proceeds are used, whether a tax-free day applies) should be separately confirmed.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.0101(a)(1); § 151.0028 (Amusement Services — general taxability)
• Tex. Tax Code § 151.3101(a)(3) (501(c)(3) amusement service exemption)
• Tex. Tax Code § 151.314(c) (Food and Beverage Sales)
• Tex. Tax Code § 151.310(c) (Two tax-free sale days per year for exempt organizations)
• 34 Tex. Admin. Code Rule 3.298(a)(1)(A), (g)(1)(A) (Amusement Services)
• 34 Tex. Admin. Code Rule 3.293 (Food and Beverages)
• 34 Tex. Admin. Code Rule 3.322(g) (Exempt Organizations)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200106362L

Original ruling text

June 20, 2001

"**"

Subject: Concert Sales from 501(c)(3)

Dear **:

I am responding to your email inquiry concerning the following fact situation
and questions.

You ask whether concert sales and sales of food and beverage are taxable sales
to the general public under rule 3.298(a)(1)(A).

Response: Concerts are amusement services which are a taxable service under
Texas Tax Code Sections 151.0101(a)(1) and 151.0028; Comptroller's Rule 3.298
(a)(1)(A). However, food and beverage sales are taxable sales under Texas Tax
Code Section 151.314(c) and Comptroller's Rule 3.293.

Because the subject heading of your e-mail inquiry states "concert sales from
501(c)(3)", it appears that your question may be related to sales by an
organization that has qualified under Section 501(c)(3) of the Internal Revenue
Code ("IRC 501(c)(3) organization"). If so, then the taxability response would
be modified as follows: If a concert (i.e., amusement service) is provided by
an IRC 501(c)(3) organization, then the amusement service will be exempt from
sales tax under Texas Tax Code Section 151.3101(a)(3), if the proceeds do not
go to the benefit of an individual, except as a part of the services of a
purely public charity. See also Comptroller's Rule 3.298(g)(1)(A).

Sales of beverage and food by an IRC 501(c)(3) organization are taxable.
However, an IRC 501(c)(3) organization may hold two tax-free sales during a
calendar year and each tax-free sale may continue for one day only. See Texas
Tax Code Section 151.310(c);
Comptroller's Rule 3.322(g).

A complete set of rules, along with the text of the Tax Code, and a wealth of
other information are available through our website at window.state.tx.us
through the "Texas Taxes" window.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, You may e-mail our tax help section at [email protected].
You may also call me toll-free at 1-800-531-5441, extension 3-4502. The direct
line is 512/463-4502. You may also write to Tax Policy Division, Comptroller
of Public Accounts.

Gilbert Zamora
[email protected]
Tax Policy Division