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Ezel / Tax Rulings / TX
TX 9404L1297B13 Sales and/or Use Tax (State,Local,MTA) 1994-04-22

Does a private dining and athletic club have to collect sales tax on dues and food charged to the federal or a state government?

Short answer: No. The Comptroller ruled that a company providing private dining and athletic club services is not required to collect sales tax on membership dues, food, or services when a federal, federal-related, or Texas government agency pays and provides a valid exemption certificate.

Apply this to your situation

This page answers the general question as of 1994. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1994
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

A company that runs a private dining and athletic club asked the Comptroller whether it had to collect sales tax on monthly membership dues and purchases of food and services when those charges were paid by the federal government, a related federal agency, or a Texas state agency, and the governmental purchaser presented an exemption certificate. The Comptroller answered "no": if the club accepts an exemption certificate from the federal government, a related federal agency, or a Texas agency, it does not have to collect tax on membership dues, food, or services provided to that governmental purchaser.

The letter is short and does not cite a specific statute or Comptroller rule by number — it simply states the conclusion in response to the taxpayer's question.

What this means for you

Clubs and businesses serving government clients

If your business provides memberships, dining, or athletic services and a federal government agency, a federal-related agency, or a Texas state agency pays for the membership or services and gives you a valid exemption certificate, this letter indicates you are not required to collect sales tax on those dues, food, or service charges. Keep the exemption certificate on file to support not collecting tax on that sale.

Accountants and tax professionals

This letter confirms the general expectation that a valid exemption certificate from the federal government or a Texas government agency relieves a seller of the obligation to collect sales tax — here applied specifically to health/athletic club dues and associated food and service purchases. Because the letter does not cite a statute or rule, it should be treated as a narrow, fact-specific confirmation rather than a full explanation of the governmental exemption rules.

Government agencies and their employees

If your agency is purchasing club memberships, dining, or athletic services on behalf of the agency (not as a personal purchase), this letter indicates that presenting an exemption certificate to the club should relieve the club of the duty to collect sales tax on those charges.

Common questions

Q: Does a health/athletic club have to charge sales tax on dues paid by the federal government?
A: No, according to this letter, not if the federal government (or a related federal agency) presents an exemption certificate.

Q: What about a Texas state agency instead of the federal government?
A: The letter treats a Texas agency the same way — no tax collection is required if the Texas agency provides an exemption certificate.

Q: Does the exemption cover just membership dues, or also food and services?
A: The letter states the club is not required to collect tax on "membership dues, food, or services" purchased by the qualifying governmental purchaser with an exemption certificate.

Q: Does the letter cite a specific statute for this exemption?
A: No. The letter states the conclusion directly without citing a statute or rule number.

Citations and references

The original letter does not cite any specific statute or rule by number.

Source

Original ruling text

April 22, 1994

Dear **:

On April 18,1994, you asked whether a company that is
engaged in the business of providing private dining and
athletic club services was required to collect sales
tax on monthly dues and purchases of food and services made
by the federal government and its related agencies or a
state (assuming Texas) agency if the governmental agency
issues an exemption certificate. The answer is "no."

If your client accepts an exemption certificate from either
the federal government, a related federal agency, or a Texas
agency, it is not required to collect tax on membership
dues, food, or services.

I hope this satisfactorily answers your questions, If you
have any additional questions, please call me at 1-800-531-
5441, extension 3-4004.

Sincerely,

Wade Anderson
Assistant Director
Tax Administration

NOTE: Previous Accession Number 9404274L

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