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Ezel / Tax Rulings / TX
TX 9306L1242D13 Sales and/or Use Tax (State,Local,MTA) 1993-06-16

Is a two-hour boat trip to watch dolphins in the wild a taxable amusement service in Texas?

Short answer: Yes. The Comptroller ruled that a two-hour dolphin-watching boat trip on the Gulf of Mexico (with no food or drinks provided) is a taxable amusement service under Rule 3.298, because the trip does not last longer than 24 hours. Under that rule, only trips lasting more than 24 hours would escape taxation as an amusement service.

Apply this to your situation

This page answers the general question as of 1993. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1993
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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.

Subject

Dolphin Watch — Two-Hour Boat Trip To Observe Dolphins In The Wild

Source

Plain-English Summary

A company wrote to the Comptroller on June 8, 1993, asking about the taxability of a "dolphin watch" service it offered: a two-hour trip on the Gulf of Mexico during which passengers observe dolphins in the wild. No food or drinks are served on the trip.

The Comptroller responded on June 16, 1993, citing Rule 3.298 on amusement services. Under that rule, a service like this is taxable as an amusement service unless the trip lasts longer than 24 hours. Because the dolphin-watching trip is only two hours long, it does not qualify for the exception and is therefore a taxable amusement service.

The letter notes that this opinion is based on the facts presented, and that the outcome could change if there are additional or different facts.

What This Means For You

If you operate short recreational boat trips or tours

A sightseeing, wildlife-watching, or similar recreational boat trip is treated as a taxable amusement service under Rule 3.298 if the trip is 24 hours or shorter. Whether or not food, drinks, or other amenities are provided did not change the outcome in this letter — the length of the trip was the deciding factor cited by the Comptroller.

If you are structuring the length of an excursion

This letter suggests that trips exceeding 24 hours may fall outside the amusement services tax under Rule 3.298. Businesses considering longer multi-day excursions should review Rule 3.298 directly and consider requesting their own ruling, since this letter applies only to the specific two-hour trip described.

If you are an accountant or tax professional advising a tour operator

This letter is a useful data point for how the Comptroller applies the 24-hour threshold in Rule 3.298 to short wildlife-watching boat excursions, but because it was issued to a specific taxpayer on specific facts, it should not be relied upon for a different taxpayer's situation without independent verification.

Q&A

Q: Is a two-hour dolphin-watching boat trip taxable in Texas?
A: Yes. The Comptroller ruled that this service is taxable as an amusement service under Rule 3.298 because the trip does not last longer than 24 hours.

Q: What rule did the Comptroller rely on?
A: Rule 3.298, the Comptroller's rule on amusement services.

Q: Would the answer be different if the trip lasted longer?
A: Yes, according to the letter — a trip lasting longer than 24 hours would not be taxable as an amusement service under Rule 3.298.

Q: Did it matter that no food or drinks were served on the trip?
A: The letter does not indicate that this affected the outcome; the taxability turned on the length of the trip, not on whether refreshments were provided.

Q: Can this taxpayer rely on this letter if the facts change?
A: No. The letter states that the opinion is based on the facts presented, and that the opinion may change if there are additional or different facts.

Original ruling text

June 16, 1993

Dear ****:

Thank you for your letter of June 8, 1993, concerning the taxability
of the "****" service your company provides. You describe this
service as a two-hour trip on the Gulf of Mexico to observe dolphins in the
wild. No food or drinks are provided.

According to our Rule 3.298 on amusement services, this service would
be taxable unless the trip lasted longer than 24 hours.

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

You may call me toll free at 1-800-531-5441 or the regular Austin
number 512/463-4600 if you have any questions or need additional
information. You may also write to Tax Administration Division,
Comptroller of Public Accounts.

Sincerely,

Pat Werner
Tax Administration Division

NOTE: Previous Accession Number 9308002L.2 and/or 9308002L

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