Which skating-rink admissions, rentals, facility charges, and lesson fees did Texas treat as taxable in Letter Ruling 8408L0590A01?

Plain-English summary

The Texas Comptroller classified a skating rink's charges as follows:

• Taxable: admission for skaters at public sessions, including applicable city and Metropolitan Transit Authority taxes.
• Taxable: skate rentals, as rentals of tangible personal property.
• Taxable: admission fees charged to non-skaters.
• Taxable: a license fee for exclusive rental of the rink building, including the ice surface, because it was a taxable amusement service.
• Not taxable: group lessons taught by salaried rink employees, because lessons and classes were not amusement services.
• Not taxable: individual private lessons taught by independent contractors over whom the rink had no control.

Purchases of otherwise taxable items and services by qualified tax-exempt entities were not subject to tax.

The letter also addressed a binding contract for monthly service from January 1 through December 31, 1984. It said the taxable service was not subject to tax for that entire contract period, regardless of when the customer paid. The letter does not reproduce the contract or identify the transition rule supporting that result.

What this means for you

Skating-rink operators

The historical treatment separated admissions, rentals, and exclusive facility use from instructional charges. The identity and relationship of the lesson provider also mattered.

Instructors and independent contractors

Group instruction by salaried rink employees and private instruction by independent contractors outside the rink's control were both treated as nontaxable.

Accountants and tax professionals

The contract paragraph is narrow and fact-specific. Do not infer a general grandfather rule beyond the stated 1984 contract period.

Common questions

Q: Was admission taxable if a person did not skate?
A: Yes.

Q: Were skate rentals taxable?
A: Yes, as rentals of tangible personal property.

Q: Were skating lessons taxable?
A: No for the two arrangements described: salaried-employee group lessons and independent-contractor private lessons outside the rink's control.

Q: Was exclusive use of the rink taxable?
A: Yes. The license fee was treated as the purchase of a taxable amusement service.

Citations and references

• The letter does not identify a statute, rule, or legislative act.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8408L0590A01

Original ruling text

August 30, 1984

Dear **:

Thank you for your letter of August 17, 1984, regarding the taxation of
skating rink charges.

1. Admission charges for skaters at public sessions are subject to state
   sales tax as well as applicable city and MTA taxes.

2. The rental of skates has been and will continue to be taxable as a
   rental of tangible personal property

3. Admission fees to non-skaters are also subject to tax.

4. A "license fee paid for exclusive rental of rink building (including
   ice surface), usually on a per hour basis," is the purchase of a taxable
   amusement service.

5. Group lessons taught by salaried employees of the rink are not
   subject to tax. Lessons and classes are not amusement services.

6. Individual private skating lessons taught by independent contractors
   (over which the rink has no control) are not subject to tax.

Purchases of taxable items and services made by qualified tax-exempt
entities are not subject to tax.

In response to your second area of inquiry regarding "a binding contract
. . . for service provided monthly for the period January 1, 1984, to
December 31, 1984," the taxable service is not subject to tax for the
entire period of the contract, regardless of when customer pays.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You
may write me, call toll free 1-800-252-5555 from anywhere in Texas or
phone 512/475-1931.

Sincerely,

Miss Jeannon Kralj
Tax Policy Section
Tax Administration Division