Can a racetrack buy simulcast horse/dog racing signal services tax-free using a resale certificate?

Plain-English summary

The Comptroller's office had previously told a racetrack that simulcasting services — the signal a track buys from another track to broadcast live horse or dog races for wagering — are subject to Texas sales tax. The track then asked whether it could instead give the sending track a resale certificate and skip paying sales tax on those simulcasting charges.

The Comptroller answered yes, but only under a specific condition: the resale certificate is valid if the receiving track charges an admission fee to see the live races and/or the simulcast. Charges by a racetrack for admission to see live or simulcast racing are themselves treated as a taxable amusement service. Because the simulcast signal is being resold as a component of that taxable amusement service, the track purchasing the simulcast may buy it tax-free under a resale certificate.

If, on the other hand, the track does not charge an admission fee, it cannot use a resale certificate for the simulcast purchase. In that case, the track must either pay sales tax to the track sending the signal or accrue use tax itself and report it to the Comptroller.

The letter also addresses tracks that already paid tax on simulcast services that were, in fact, resold: they may give the sending track a resale certificate after the fact, and the sending track can refund the tax and take credit for the refund on its next return, or assign its right to a refund back to the Comptroller's office along with a refund request.

What this means for you

Racetrack operators

If your track charges an admission fee to view live races or simulcast broadcasts, you can furnish a resale certificate to the track sending you the simulcast signal instead of paying sales tax on that purchase — because you are reselling the simulcast as part of your own taxable amusement charge. If you do not charge admission, you cannot use a resale certificate for the simulcast purchase; you must pay sales tax to the sending track or self-accrue and report use tax.

Accountants and tax professionals

This letter is useful for advising racetrack clients on resale-certificate eligibility for simulcast purchases: the deciding factor is simply whether the client's track charges admission to see the races and/or the simulcast, since that admission charge is what makes the simulcast a "resold" component of a taxable amusement service. It also confirms the refund mechanics for tracks that already paid tax on simulcast charges that turned out to be resold — either a refund-and-credit from the sending track, or an assignment of the refund claim to the Comptroller.

Common questions

Q: Can a racetrack buy simulcast racing signals tax-free with a resale certificate?
A: Yes, but only if the receiving track charges an admission fee to see the live races and/or the simulcast, since that makes the simulcast a resold component of a taxable amusement service.

Q: What if the track does not charge admission to view the races or simulcast?
A: Then the simulcast may not be purchased under a resale certificate. The track must either pay sales tax to the sending track or accrue use tax and report it to the Comptroller.

Q: What if a track already paid tax on simulcast services that were actually resold?
A: The track may give the sending track a resale certificate; the sending track can then refund the tax and take a credit on its next return, or the track can issue an assignment of its right to the refund and send that assignment with a refund request to the Comptroller's office.

Citations and references

No specific statutes or administrative rules are cited in the text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9411L1322A13

Original ruling text

November 9, 1994

Dear *****:

Previously, my office notified your track that simulcasting services are
subject to sales tax. Since then, I have been asked whether a track
could giveba resale certificate for the simulcasting services and not pay
sales tax. Thebanswer is yes.

This is the case if the receiving track charges an admission fee to see
thebraces and/or the simulcast. As you know, charges by the race track
to see livebor simulcast racing are considered taxable amusement services.
Because theybare being resold as part of a taxable amusement service, the
simulcast servicesbmay be purchased under a resale certificate.

On the other hand, if the track does not charge an admission fee, the
simulcast may not be purchased under a resale certificate, and the track
must either pay the sales tax to the sending track or accrue use tax and
report it to the Comptroller.

If your track paid tax for simulcast services which were resold, you may
give a resale certificate to the sending track. The track can then refund
the tax and take credit for the refunded tax on its next return.
Alternatively, it may issue an assignment of its right to receive a refund.
Send the assignment along with your request for refund to the Comptroller's
office.

If you have any additional questions, please write Nancy Wilkins in our
Audit Division at 111 East 17th Street, Austin, Texas 78774, or call her at
1-800-531-5441, extension 5-0245.

Sincerely,

JOHN SHARP
Comptroller of Public Accounts

cc: Nancy Wilkins

NOTE: Previous Accession Number 9411672L