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Ezel / Tax Rulings / TX
TX 9602958L Sales and/or Use Tax (State,Local,MTA) 1996-02-07

Is a $1 surcharge that a private club must collect from baseball ticket purchasers and remit to a sports facility authority (as required under the Development Corporation Act of 1979) subject to Texas sales tax?

Short answer: No. A $1 surcharge that a sports facility authority requires a private club to collect from ticket purchasers and remit directly to the authority — authorized under the Development Corporation Act of 1979 — is not subject to Texas sales tax, as long as it is separately stated on the tickets and clearly identified as a surcharge imposed on behalf of the sports facility.

Apply this to your situation

This page answers the general question as of 1996. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1996
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 sports facility requires a private club to collect a $1 surcharge from baseball ticket purchasers and remit it directly to the sports facility. The taxpayer explained that the sports facility is authorized to impose this fee under the Development Corporation Act of 1979. The Comptroller determined that sales tax is not due on this surcharge, as long as it is separately stated on the tickets provided to purchasers and clearly identified as a surcharge imposed on behalf of the sports facility.

What this means for you

Sports facilities, clubs, and ticket sellers collecting surcharges on behalf of a third party

If a club or ticket seller is required to collect a fee (such as this $1 surcharge) on behalf of a sports facility authority and remit it directly to that facility, the fee is not subject to Texas sales tax — but only if it is separately stated on the ticket and clearly identified as a surcharge collected on the facility's behalf. If the surcharge is bundled into the ticket price without separate statement and identification, this letter's reasoning would not apply.

Businesses relying on this letter

This is a short, fact-specific letter addressed to a single taxpayer. It does not cite any statute or administrative rule by number, and it does not explain the Comptroller's underlying legal reasoning beyond the separately-stated/clearly-identified condition. Businesses in a similar situation should confirm current treatment with the Comptroller rather than relying solely on this letter.

Common questions

Q: Is the $1 surcharge on baseball tickets subject to Texas sales tax?
A: No — the Comptroller determined sales tax is not due on the surcharge, provided it is separately stated on the tickets and clearly identified as a surcharge imposed on behalf of the sports facility.

Q: What happens if the surcharge is not separately stated on the ticket?
A: The letter's conclusion is conditioned on the surcharge being "separately stated on the tickets provided to purchasers and clearly identified" as a surcharge for the sports facility. The letter does not address what happens if those conditions aren't met.

Q: Under what authority was the sports facility permitted to impose this surcharge?
A: The taxpayer explained that the sports facility is authorized to impose the fee under the provisions of the Development Corporation Act of 1979. The letter does not cite a specific statutory section.

Q: Can I rely on this letter for my own business?
A: No. This is a letter addressed to a specific taxpayer based on the facts that taxpayer described; other facts, though similar, may yield different results, and only the addressee may rely on it for detrimental-reliance purposes.

Citations and references

No statutes, administrative rules, or case law are cited by number in this letter. The taxpayer referenced the Development Corporation Act of 1979 as the source of the sports facility's authority to impose the surcharge, but the letter itself does not cite a specific statutory section.

Source

Original ruling text

February 7, 1996

Dear ***:

At our recent meeting, I asked my staff to review the issue you raised
concerning the $1 surcharge the SPORTS FACILITY requires the CLUB A to collect
from ticket purchasers and remit directly to the SPORTS FACILITY. You explained
that the SPORTS FACILITY is authorized to impose such a fee under the
provisions of the Development Corporation Act of 1979.

Based on the information you provided and my staffs review, I have determined
sales tax is not due on the surcharge when it is separately stated on the
tickets provided to purchasers and clearly identified as a surcharge imposed on
behalf of the SPORTS FACILITY.

I hope this addresses your questions on this issue. Please let me know if I can
be of any further
assistance.

Sincerely,

John Sharp
Comptroller of Public Accounts

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