Which charges by a convention coordinator were taxable, including bundled planning services and private bus tours?

Plain-English summary

A convention coordinator arranged locations, security, catering, transportation, decorations, entertainment, speakers, supervision, and information booths. It billed one per-person charge and paid applicable tax on food, decorations, favors, and other taxable purchases.

The Comptroller compared those bundled services to a travel agent's work and said the coordinator's single charge was not taxable. Separately billed airfare into the city and hotel accommodations were also not subject to sales tax under the letter.

Bus outings required a separate analysis. A ride designed mainly to show sights along a route was a taxable amusement even when limited to association members. Transportation whose primary purpose was reaching a location where an amusement occurred was not taxable. Mixed arrangements depended on their essential nature. Tours of places on the National Register of Historic Places or designated as Recorded Texas Historic Places were specifically exempt.

The stated exempt-organization provisions did not apply merely because some clients were exempt. The coordinator produced events for the clients' own members, and the facts did not fit the provisions discussed in Rule 3.298(g).

What this means for you

A bundled planning and coordination service was nontaxable here, but a separately provided bus experience could become a taxable amusement depending on whether sightseeing or transportation was its essential purpose.

Common questions

Was the single convention-coordination charge taxable? No.

Did the coordinator still pay tax on taxable inputs? Yes.

Was a private sightseeing bus tour taxable? Yes.

Was a bus ride mainly transporting attendees to an amusement taxable? No.

Were qualifying historic-place tours exempt? Yes.

Citations and references

• Comptroller Rule 3.298(g)(1)(A) and (g)(3) — amusement services and exempt organizations

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9009L1046A01

Original ruling text

September 28, 1990

Dear **:

Your letter concerning sales tax responsibilities on the services your company
provides has been forwarded to me.

** (COORDINATORS) contacts groups and associations that have
scheduled conventions or meetings in CITY and offers its services which could
include the following:

1. Securing and contracting for an adequate location for the event; obtaining
   security services, if necessary.

2. Securing and contracting with food caterers to provide meals for the
   function.

3. Arranging for transportation for the meeting or conventions which may
   include airfare to CITY, airport transfers, shuttle bus service to and from
   hotels; bus service to convention centers, parties and meeting sites;
   transportation for tour.

4. Determining themes for the events consistent with the stated purpose of the
   meeting; securing services for decorations, party favors, music and
   entertainment.

5. Contracting with speakers for meetings and events.

6. On-site supervision and coordination of all convention activities; staffing
   information booths.

Your, company bills the client a single charge, which is merely a calculation
based on the number of people attending the event multiplied by an agreed
amount per person.

Applicable sales tax is paid by your company for the food from caterers,
decorations, party favors, etc.

Charges for airfare into CITY and for hotel accommodations are billed
separately to your clients and are not subject to sales tax.

Your services are similar to that of a travel agent when you provide banquets
or parties, security and transportation to and from the event. The single
charge to your client is not taxable. You should continue to pay applicable
taxes on purchases of taxable items and services.

Another type of service provided by your company is arranging for a chartered
motorbus to pick up members of your client association and take them through or
to various points of interest in CITY. An employee of COORDINATORS acts as a
guide. Only members of the client association are allowed on the bus; the
"tour" is not available to the general public.

Tours that are designed primarily to show sights along a route are normally
taxable. If the client's members remain on the bus for a tour of points of
interest, this will be considered a taxable amusement service.

If the primary purpose of the bus ride is to provide transportation to a
location at which an amusement may be provided, the charge is not taxable.

In cases where the bus ride or tour contains elements of both, that is,
transportation to an amusement and a bus tour, we will have to make a decision
as to the essential nature of the arrangement.

Also, tours of places that are included in the National Register of Historic
Places or of places designated as Recorded Texas Historic Places by the Texas
Historical commission are specifically exempted from tax.

You mentioned subsection (g) (1) (A) of Rule 3.298, Amusement Services, which
provides for an exemption for amusement services provided by certain exempt
organizations. Some of your clients could possibly be exempt organizations, but
COORDINATORS is hired to provide an event for the members of these
organizations, not for a third party.

Subsection (g) (3) of the same ruling provides that a nonprofit group may hire
a for-profit organization to produce an event as long as the non-profit group
holds itself out as the provider of the amusement. Once again, the events
COORDINATORS produces are for the use and enjoyment of the client's own
members, and this subsection does not apply.

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

Please write or call if you have any questions. You can call toll-free at
800-531-5441. our regular number is 512-463-3830 and our FAX number is
512-475-0900.

Sincerely,

Larry Koenig
Taxability Section
Legal Services Division