When a catering/event company provides entertainment (mariachis, armadillo races, hay rides) at a party, does it owe Texas sales tax on the entertainment charges?

Plain-English summary

The Texas Comptroller's Tax Policy Division answered a question from what appears to be an event-planning/catering business (referred to in the letter as "ABC Company of Texas, Inc.") about whether charges for entertainment furnished at parties — including mariachi bands, armadillo races, a "roll-a-roper," ranch rental, security, and hay rides — are taxable "amusement services" under Rule 3.298.

The key legal point: ownership of the facility where entertainment happens isn't what decides who owes tax. A person becomes a taxable "amusement service" provider if they gain the right to offer the entertainment through a lease, rental, or concession agreement — even on property someone else owns — and then sell an "admission" to that entertainment. Simply paying a performer their fee is not the same as selling an admission.

The letter then walks through four real invoice situations submitted by the company:

• Situation 1 — Mariachis at the customer's own premises: Not taxable. The mariachis are charging a performance fee, not selling an admission, and the company is just passing that fee through — the customer isn't paying for admission to an amusement event or facility.
• Situation 2 — Armadillo races and roll-a-roper at the company's leased ranch: Taxable. Because the company leased the ranch and sold access to the races and roll-a-roper there, it is an amusement service provider selling a taxable admission.
• Situation 3 — Ranch rental ($1.00/person), security, and hay rides at the company's ranch: Taxable. Again the company is providing amusement services and selling admissions. Under Tex. Tax Code Sec. 151.007, the taxable "sales price" of an amusement service is the total amount charged, so it includes not just the $1.00 ranch-rental charge but also the cost of security and any cashier expense bundled into the party charge.
• Situation 4 — Armadillo races on the customer's own rented premises: Not taxable to the company. Under Rule 3.298(a)(8), the contract by which the company secures the right to bring in the armadillo races isn't itself a sale of an admission. But if the customer then charges its own guests an admission to the races, the customer — not the company — becomes the one who must collect sales tax on those admission charges.

What this means for you

Caterers and event planners who bring in entertainment

Whether you owe tax on an entertainment charge depends on whether you're selling an "admission" to an amusement, not on who technically owns the building or ranch. If you lease a venue and sell access to entertainment happening there (races, dances, rides, etc.), you're an amusement-service provider and must collect tax on the full charge — including bundled costs like rental fees, security, and staffing. If you're simply arranging and passing through a performer's fee (a band, a mariachi group) with no separate admission charge, that fee isn't taxable as an amusement admission.

Businesses that host events on a customer's premises

If you bring entertainment (like armadillo races) to a party at a location the customer owns or rents, and you don't sell an admission yourself, you're generally not the one who owes amusement-service tax. But the responsibility can shift to your customer if they then charge their own guests an admission fee to that entertainment — they would need to collect and remit the tax on those admissions.

Anyone structuring event pricing with bundled fees

Watch how you bundle charges. This letter confirms that when an amusement admission is taxable, the taxable "sales price" includes the whole package — rental charges, security, and other expenses rolled into the price — not just a stand-alone "admission" line item.

Common questions

Q: Is a fee paid to a band or mariachi group for playing at a party taxable?
A: Based on this letter, no — a straight performance fee is not a sale of an amusement admission, whether paid directly to the performers or passed through by the event company.

Q: If my company leases a ranch or venue and offers activities like armadillo races or hay rides there, do I owe sales tax?
A: According to this letter, yes. Leasing the facility and selling access to activities held there makes the company a provider of amusement services, and charges for those activities (plus bundled costs like rental fees and security) are taxable.

Q: Does the tax only apply to the specific "admission" charge, or to everything on the invoice?
A: The letter states that under Tex. Tax Code Sec. 151.007, the taxable sales price of an amusement service is the total amount for which it's sold, including expenses — so bundled charges like ranch rental, security, and cashier costs are part of the taxable price.

Q: What if the entertainment is provided at a party held on the customer's own property?
A: This letter says the company isn't taxable in that situation merely for arranging the entertainment (e.g., armadillo races), because contracting for the right to bring in the entertainment isn't itself a sale of an admission. However, if the customer then charges its own guests admission to the entertainment, the customer must collect the tax on those admissions.

Q: Can another business rely on this letter for its own events?
A: No. The letter notes the opinion is based on the specific facts submitted, and that other facts, though similar, may yield different results. STAR letters generally may be relied on only by the taxpayer to whom they were issued.

Citations and references

Statutes and rules:

• 34 Tex. Admin. Code Rule 3.298 (Amusement Services), including subsections (a)(4) (definition of amusement service provider) and (a)(8) (definition of sale of an amusement service admission)
• Tex. Tax Code Sec. 151.007 (sales price of an amusement service includes total consideration, including expenses)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9510L1378F02

Original ruling text

October 26, 1995

Dear *****:

Thank you for your letter concerning the taxability of
entertainment provided in connection with catering services.

The enclosed Rule 3.298 provides important guidelines in determining
whether a person is a provider of an amusement service selling taxable
admissions to amusement services. The definition of a provider of an
amusement service can be found in subsection (a)(4) of the rule. While
the owner of a facility (land and/or building) may be an amusement
provider, a person can gain the right of providing an amusement service
by virtue of a contract or agreement (lease, rental, concession right)
with the performer(s) of the entertainment or with a facility owner when
the use of that facility constitutes the amusement service. Therefore,
the ownership of the facility is not the sole factor in determining
whether a person is an amusement service provider. For example, we would
consider someone that leases a building and who then sells admissions to
dances in the building as an amusement provider even if the building
is actually owned by someone else.

The sale of an amusement service admission is defined in subsection
(a)(8) of the rule. This can include the consideration paid by a group
of individuals to secure an admission privilege.

With these definitions in mind, we have reviewed the situations presented
in your letter in regards to the invoices by ABC Company of Texas, Inc.
(corporation). In some of these situations, the entertainment is
provided at premises that the customer owns or rents and, in other
situations, the entertainment is provided at a facility leased by ABC
Company of Texas, Inc. from ABC Company proprietor.

Situation 1 (Invoice #**)

This illustrates a party provided on the customer premises where Mariachis
were provided to perform. The fee by the Mariachis performers is not
taxable to the corporation because the Mariachis are simply charging a fee
for their performance rather than an admission. Likewise, the charge
for the Mariachis by the corporation to the customer is not taxable because
the customer is not paying for an admission to an amusement event or an
amusement facility in this situation.

Situation 2 (Invoice #**)

This illustrates a party held at the ABC Company ranch (leased by the
corporation providing party from family members) at which armadillo races
were held and a roll-a-roper was provided. The charges for the
armadillo races and the roll-a-roper are taxable admission charges for
amusement services because the corporation is a provider of amusement
services selling admissions to a facility that the corporation has leased
to provide amusement services.

Situation 3 (Invoice #**)

This illustrates a party held at the ABC Company ranch at which there was
$1.00 charged per person for ranch rental, security was provided to
party guests, and hay rides were provided to party guests. The corporation
is a provider of amusement services selling taxable admissions. The total
sales price of the amusement service includes the $1.00 charge per person
for ranch rental, the expense of security at the facility, the expense of a
cashier, and the charge for the hay rides. Texas Tax Code Sec. 151.007
defines the sales price of an amusement service to be the total amount,
including expenses, for which it is sold.

Situation 4 (Invoice #**)

This illustrates armadillo races provided on customer's rented premises.
Rule 3.298(a)(8) states that the contract or agreement whereby the right
is secured for a provider to offer an amusement, recreation or entertainment
as an amusement service is not the sale of an admission to an amusement
service and is not subject to sales tax. However, if the customer is a
provider of amusement services and charges an admission to the armadillo
races, sales tax must be collected by the customer on the admissions.

This opinion is based on the facts you submitted. Other facts, though
similar, may yield different results.

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct
line is 512/475-0030. You may also write to Tax Policy, Comptroller
of Public Accounts.

Sincerely,

David Somerville
Tax Policy Division

NOTE: Previous Accession Number 9510668L