How was an all-day charter taxed when nontaxable business transportation included a guided city tour?

Plain-English summary

A group chartered a bus for technical or business meetings and added a brief narrated city tour. The Comptroller treated transportation to and from the meetings as nontaxable, but treated the guided tour as a taxable amusement service.

The taxable amusement charge included both the guide and the chartered-bus time used for the tour. Those charges had to be separated from the transportation portion; otherwise the entire combined charge was taxable. Merely separating the bus charge from the guide charge did not make a bus hired for a guided tour nontaxable.

Common questions

Was business-meeting transportation taxable? No under the stated facts.

What part of the city tour was taxable? Both the guide charge and the charge for bus time during the guided tour.

What if transportation and amusement were not separately stated? The total amount was taxable.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8901L0921D01

Original ruling text

January 20, 1989

Dear **:

I am responding to your letter requesting clarification on the taxability of
charter bus service with a guide.

You stated that you have groups that will charter a bus all day for technical
or business meetings, but during this all-day period, they want a brief
narrated city tour. Also, you stated that charges for the charter bus and
guided tours were separately stated in your billing.

Separately stating the charges for the charter bus from the charges for the
guide does not affect the taxability of a taxable amusement service provided.
You are correct in collecting tax on the total charge for the bus and guide
when the purpose of the charter is to Provide a guided tour. Please see Rule
3.298(F)(. , enclosed.

It is true that the charge for chartered buses that provide transportation are
not taxable. The charge to charter a bus for transportation to and from
technical or business meetings is a not taxable charge. However, in the example
provided in your letter, you are combining a non-taxable (transportation)
service with a taxable (amusement) service. You must separately state the
charge for the "transportation" from the charge for the "amusement". If you do
not separately state these charges the total amount is taxable.

The charge for the amusement includes the charge for the guide and the charge
for the chartered bus during the time of the guided tour. In your example you
must charge tax on the 3 hour charge for the guide and for the 3 hour charge
for the chartered bus.

If the guided tour is conducted in the initial four hour period of the
chartered bus then the taxable portion is:

$142.50 chartered bus
$50.00 guide charge
$192.50 taxable total

If the guided tour is conducted after the initial four hour period of the
chartered bus then the taxable portion is:

$90.00 chartered bus
$50.00 guide charge
$140.00 taxable total

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

You may write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence