Was a Texas sightseeing tour exempt if it combined registered historic landmarks with other locations?

Plain-English summary

A tour operator asked how to tax tours that combined registered historic places with other tourist sites. The Comptroller corrected an earlier response and rejected a primary-purpose or majority-of-stops approach.

Tax Code Section 151.3101 exempted amusement services only when exclusively provided in a place recorded as a Texas Historic Landmark or included in the National Register of Historic Places.

A tour covering multiple locations was therefore fully taxable if any location fell outside those two categories. A tour exclusively of qualifying Texas Historic Landmarks or National Register places was exempt.

What this means for you

Under this letter, the exemption was all-or-nothing for the described tour package. Mixing exempt historic sites with nonqualifying stops made the entire tour taxable.

Common questions

Were tours of qualifying historic landmarks exempt? Yes.

What if one tour included both qualifying and nonqualifying locations? The entire charge was taxable.

Could the operator decide based on a majority of qualifying stops? No such method was allowed; the letter applied the statute's exclusive-use language.

Did it matter that the tour was arranged for a corporation rather than the public? The letter based its answer on the locations included, not on whether the tour was public.

Citations and references

• Tex. Tax Code § 151.3101(2)(A)-(B) (amusement-service exemptions for historic places)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9011L1056C07

Original ruling text

November 2, 1990

Dear **:

I have examined your facts and agree that to separate tours into taxable and
non taxable segments would be difficult at best.

I have also reexamined your second question and believe that the last part of
my response was misleading. Please accept my apologies.

Tax Code Section 151.3101. Amusement Service Exemptions says, "Amusement
services are exempted from the taxes imposed by this chapter only if
exclusively provided:

(2) in a place that:
(A) is designated as a recorded Texas Historic Landmark by the Historical
Commission; or
(B) is included in the National Register of Historic Places."

Based on this, charges for tours that include multiple locations including some
that are not covered under (A) or (B) above will be fully taxable.

Of course, tours of locations which are designated as Texas Historic landmarks
or which are included in the National Register of Historic Places are exempt
from tax.

Again, please accept my apologies for any inconvenience my error has caused.
And, please don't hesitate to contact me any time I can be of assistance to
you.

Sincerely,

Al Van Allen
Taxability Section
Legal Services Division

October 9, 1990

Mr. Al Van Allen
Taxability Section
Legal Services Division
State of Texas
Austin, Texas 78774

Dear Mr. Van Allen:

Thank you for your detailed letter and wonderful explanation of the tax laws as
applied to our tour and convention business. We do have one question regarding
(2).

(2) Tours--Once again these tours are for specific corporation or organization
and not offered to the general public. In the conduct of these tours, visitors
are transported from one place to another, and the cost is usually calculated
on a cost per person and submitted to the sponsoring organization.

Response: Tours whose primary purpose is to show tourist sights along a route
are normally taxable. However, tours of place that are included in the National
Register of Historic Places or of places designated as Recorded Texas Historic
Landmarks by the Texas Historical Commission are specifically exempted. If a
tour consisted of taxable and non-taxable elements, we would need to make a
judgement as to the essential nature of the tour package.

Enclosed is a list of the usual tour sights which we visit. We have called the
National Register of Historic Places and recorded Texas Historic Landmarks and
found the ones which are registered with them and they are so marked. We would
appreciate a ruling from you concerning tours which include these places on the
tour along with other sites. Since we give several hundred tours a year we find
it would be a cumbersome task to judge each tour individually. Would there be a
possibility of our determining the taxability based on the majority of the
places visited?

Thank you again for your very complete and explicit rulings concerning our
business. We will expect an additional answer from you in the near future. If
you need additional information, please do not hesitate to let me know.

Very truly yours,