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Ezel / Tax Rulings / TX
TX 9003L0995F13 Sales and/or Use Tax (State,Local,MTA) 1990-03-12

Could a nonprofit fundraising raffle buy a boat and trailer tax-free for use as prizes?

Short answer: No. Sales tax was due when the boat was purchased, and motor-vehicle tax was due to the county on the trailer. The nonprofit could not use a resale certificate because it was raffling rather than reselling the prizes, or an exemption certificate because the prizes were not for its own use.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A fundraising business planned to sell donation tickets for a nonprofit raffle whose prizes were a boat and trailer.

Sales tax was due when the boat was purchased, and motor-vehicle tax on the trailer was due to the county tax assessor-collector. Items bought as raffle prizes were taxable at purchase.

The nonprofit could not give a resale certificate because it was not reselling the boat and trailer. Even if it qualified as exempt, it could not give an exemption certificate because the prizes were not purchased for the organization's own use.

Common questions

Was the boat purchase taxable? Yes.

What tax applied to the trailer? Motor-vehicle tax paid to the county.

Could the nonprofit use a resale or exemption certificate? No, under these facts.

Source

Original ruling text

March 12, 1990

Dear *:

Thank you for your recent letter regarding the taxability of a
proposed fund raising event.

You stated that you are in the fund raising business and are now
putting together a fund raising project that will include a boat
and trailer, which will be raffled off by the sale of tickets.
You stated that the tickets sold are donations to a non profit
organization.

Sales tax is due at the time of purchase when you buy the boat and
motor vehicle tax is due to the county tax assessor/collector on
the trailer. Items purchased to be used as prizes in a raffle are
subject to tax at the time of purchase.

Because the non profit organization is not reselling the boat and
trailer, it cannot issue a resale certificate to you. The items
are not for its use; therefore an exemption certificate cannot be
issued (if the organization is an exempt entity).

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 additional information, you may
call me toll free at 1-800-252-5555, extension 5-0330. The
regular number is 512/463-4600, or write me at Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,

Bettie U. Peterson
Tax Correspondence Division

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