Could an amusement provider and its ticket agent decide by contract which party collected and remitted Texas ticket sales tax?

Plain-English summary

The Comptroller identified Company A as the provider of a taxable amusement service and therefore ordinarily responsible for collecting and remitting tax on admission-ticket sales. Rule 3.298 also allowed the parties' contract or agreement to determine the amusement-service provider for these purposes.

Based on the described arrangement, Company B acted as Company A's ticket agent, sold tickets, and remitted proceeds and collected tax to A, which reported and paid the tax. After Company C acquired B, C claimed responsibility for collection and remittance.

The contract between the parties had to address that allocation and related payment timing. The Comptroller was not a party to the agreement and was not bound by it. Either party could be assigned responsibility between themselves, but if tax was not reported and paid, the Comptroller would hold both the amusement provider and the ticket agent liable.

What this means for you

Amusement providers and ticket platforms should document who collects, reports, remits, and transfers proceeds. That private allocation does not shield either party from state collection if the tax is unpaid.

Common questions

Who was ordinarily responsible? The amusement-service provider. Could the contract assign duties? Yes. Did the contract bind the Comptroller? No. Who was liable if tax went unpaid? Both parties.

Citations and references

• Texas Tax Code Sections 151.010, 151.0101(a)(1), and 151.051
• 34 Tex. Admin. Code Rule 3.298(a)(4)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9111L1145E07

Original ruling text

November 14, 1991

Dear **:

Your letter of October 7, 1991, concerning your telephone conversation
with **** was forwarded to me for response.

You are requesting approval that the Comptroller designate your client,
COMPANY A as the party responsible for the remittance of sales tax on all
ticket sales. Section 151.051 imposes a sales tax on the sales price of a
taxable item. A taxable item is defined in Section 151.010 as tangible
personal property and taxable services. Section 151.0101(a)(1) defines taxable
services to include amusement services.

COMPANY A is the provider of an amusement service as defined under
section (a)(4) of Rule 3.298 (34 TAC Sec. 3.298) concerning amusement services.
As the provider of a taxable service, COMPANY A is responsible for the
collection and remittance of sales tax on sales of admission tickets to the
amusement service. However, under this section of Rule 3.298, an amusement
services provider may be determined by a contract or agreement between parties.

While we have not reviewed the contract or agreement that was executed
between COMPANY A and COMPANY B, based on your statement, it appears that
COMPANY B was a ticket agent for COMPANY A. Apparently under the agreement,
COMPANY B sold the tickets for COMPANY A and remitted the proceeds (and tax
collected) to COMPANY A. COMPANY A then filed reports and remitted the tax to
the Comptroller.

COMPANY C acquired COMPANY B and now contends that it (COMPANY C) is
responsible for collecting and remitting the sales tax. This contention is the
reason for your request that the Comptroller designate COMPANY A solely as the
party responsible for the collection and remittance of the sales tax. This
matter should be addressed in the contract executed between COMPANY A and
COMPANY B, unless it was modified by COMPANY C.

Nevertheless, the Comptroller is not a part to any agreement between the
parties and will not be bound by any such agreement. Under the agreement
between the parties, either party may be responsible for the collection and
remittance of the tax.

However, if the sales tax due is not reported and paid to the state, the
Comptroller will hold both parties, COMPANY C and COMPANY A, liable for the
unpaid sales tax.

Likewise, the agreement between the parties should address other
potential concerns such as when the proceeds should be remitted from COMPANY C
to COMPANY A.

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

You may call toll free 1-800-252-5555 if you have any questions or need
more information. You may write to Tax Administration Division, Comptroller of
Public Accounts.

Sincerely,

Eddie C. Washington
Tax Administration Division