How did Texas sales tax apply to tanning-bed leases and sales, tanning-clinic membership or session fees, and true customer rentals?

Plain-English summary

The tanning-bed leasing company had to collect sales tax when it leased beds to spas and health clubs because those businesses used the beds in their operations. A bed sale was likewise taxable unless the purchaser bought it for resale, rental, or lease; a resale certificate could not be accepted from a purchaser using the bed.

Tanning-clinic memberships and single-session fees were not taxable. The Comptroller said a tanning clinic did not qualify as an amusement service.

The distinction changed if the customer truly rented equipment. A true rental gave the customer total control and possession of the tanning equipment and was taxable. Merely using the equipment at the clinic was not a rental and was not taxable under this letter.

Common questions

Was a tanning-bed lease to a clinic taxable? Yes.

Could a clinic buying a bed for its own use give a resale certificate? No.

Were membership and single-session fees taxable? No.

When did customer use become a taxable rental? When the customer received total control and possession of the equipment.

Citations and references

• 34 Tex. Admin. Code Rule 3.298 — effective May 5, 1986, as stated in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8605L0739A03

Original ruling text

May 30, 1986

Dear ***:

Thank you for your letter of May 22, 1986 concerning the taxability
of the rental of tanning beds to tanning spas and health club.

Your clients questions and the responses follow:

Under rule 3.298, effective May 5, 1986, is the leasing
company to collect sales tax on a short-term and long-term
rentals of tanning beds to tanning spas and health clubs?

We assume not, as the spas and clubs will be collecting sales
tax from their customers. Is this the correct interpretation?

Response: The leasing company must collect sales tax on the tanning
beds leased to the spas and health clubs. The tanning spas and health
clubs are using the tanning beds in their business.

If the company sells a tanning bed to a clinic or health club,
should they collect sales tax? Should they, also have resale
certificates from the purchaser?

The company must collect sales tax on the sales price of a tanning bed
unless the purchaser is buying the bed for resale, rental or lease.
They may not accept a resale certificate when a purchaser is using the
merchandise.

Additionally, we wish to inquire as to the sales tax status of
the leasing company's customers, re: tanning clinics and
health clubs.

a) Do heath clubs that charge a specific fee for use of a
tanning bed collect sales tax?

b) Tanning spas and clinics are now opening up in many
locations. Most tanning clubs have two types of revenue
sources on their beds. Either they charge a membership fee
that allows for numerous or unlimited uses or they charge a
single session fee, each time the customer comes in.

If the tanning clinic owns all of its tanning beds, do they
charge sales tax on membership dues?

Do they charge sales tax on single session fees?

Response: Tax is not due on membership or single session fees at a
tanning clinic. A tanning clinic does not qualify as an amusement
service.

If the tanning clinic rents or leases its tanning equipment,
does it charge sales tax on membership dues or single session fees?

Response: A true rental or lease of equipment would give the client
total control and possession of the tanning equipment rather than the
use at the clinic. A true rental or lease is taxable, use of the
equipment is not.

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

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write use at
the Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division