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Ezel / Tax Rulings / TX
TX 9006L1021F14 Sales and/or Use Tax (State,Local,MTA) 1990-06-13

Could a restaurant buy toys and theme boxes in Happy Meals tax-free for resale when it collected tax on the meal's total selling price?

Short answer: Yes. The Comptroller treated both the toy and theme box as resold with the meal, even if the package was discounted. The restaurant could issue resale certificates to its suppliers and had to collect tax on the Happy Meal's full sales price.

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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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The restaurant could buy Happy Meal toys and theme boxes tax-free by issuing resale certificates to its suppliers.

The Comptroller treated both items as resold with the food package, even if the Happy Meal was discounted. The restaurant had to collect tax on the total selling price of each meal.

Common questions

Toy bought for resale? Yes.

Theme box bought for resale? Yes.

Did a package discount change the result? No.

What amount was taxed to the customer? The full Happy Meal sales price.

Source

Original ruling text

June 13, 1990

Re: Happy Meals

Dear *****:

Martin Cherry has moved to another division, and I have taken
his place.

You wrote and asked whether the toys and theme boxes included
with food sold as "Happy Meals" can he purchased tax free
because tax will be collected on the selling price of each Happy
Meal.

You can buy the toys and boxes tax free by issuing resale
certificates to your suppliers. We do consider that you are
reselling both items, regardless of whether the Happy Meal is
discounted, although I understand from your letter that usually
the Happy Meal costs more than the individual food items would
cost if sold separately.

Be sure to collect tax on the total sales price of the Happy
Meal.

This opinion is based on the facts presented in your letter.
If there are additional facts, or if the circumstances change,
the opinion may change.

Please call or write me if you have any questions. Our toll
free number is 1-800-531-5441, and my extension is 3-4677. The
regular number is 512/463-4677.

Sincerely,

Lucy Glover

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