Which charges at a Texas chili-cookoff fair were taxable, including food, drinks, admissions, rides, souvenirs, booths, and contest entries?

Plain-English summary

The Texas Comptroller said sales of soft drinks, candy, ice, ready-to-eat food, and cigarettes at the event were taxable. Beer and wine were subject to sales tax unless the organization held a mixed-beverage permit; with that permit, the sales were included with mixed beverages in the amount reported to the Alcoholic Beverage Commission for the then-applicable gross-receipts tax.

Because the organization had not received Texas exempt status, fairground and concert admissions were taxable unless it had obtained an income-tax exemption from the IRS. Carnival rides and souvenirs such as caps, T-shirts, and posters were taxable.

Booth rental charges for food sales and arts-and-crafts exhibitions were not taxable. Entry fees for chili cookoffs, beauty contests, and foot races were not taxable when the person paid to compete and part of the fee covered conducting the contest and prizes.

What this means for you

A single event could have many tax treatments. Retail sales, admissions, amusement rides, rental of selling space, and competitor entry fees each had to be classified separately, and alcoholic-beverage permitting changed the reporting method.

Common questions

Were food and soft-drink sales taxable? Yes.

Were admissions taxable? Yes absent the exemption status described in the letter.

Were carnival rides and souvenirs taxable? Yes.

Was booth rent taxable? No.

Were contest entry fees taxable? Not when paid to compete and partly used for contest costs and prizes.

Citations and references

• The letter cited no numbered statute or Comptroller rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8701L0787G09

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

BOB BULLOCK
Comptroller January 13, 1987

Dear ****:

Thank you for your letter of December 22, 1986 concerning the taxability
of
various items sold at the ***.

Sales of soft drinks, candy, ice, food ready for immediate consumption
and
cigarettes are taxable. Beer and wine are subject to sales tax unless
you
hold a mixed beverage permit issued by the Alcoholic Beverage Commission.
If so, the beer and wine sales are reported along with mixed beverages in
the amount reported to the ABC as subject to the 12% gross receipts tax.

Your organization has not been granted exempt status by the Comptroller's
Office. Unless the organization has obtained an exemption from income
tax
by the Internal Revenue Service, admissions to the fair ground and
concerts
are subject to sales tax. Carnival rides are taxable as are souvenir
items
such as caps, T-shirts, posters, etc.

Charges for rental of booths for food sales and arts and crafts
exhibitions
are not taxable.

Entry fees for the chili cookoffs, beauty contests and foot races are not
taxable if a person is paying to compete in a contest and part of the fee
goes toward the cost of conducting the contest and for prizes.

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 me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Julie Pesl
Tax Policy Section
Tax Administration Division