Does a state university have to collect sales tax on parking permit fees charged to its faculty, staff, and students?

Subject

College/University — Parking Fees/Permits For Faculty, Staff, Students Are Exempt

Plain-English summary

A state university was buying a new office building next to its campus that included a parking garage. About two-thirds of the building was expected to be used by school faculty and staff. The university asked the Comptroller whether sales tax applied to the parking fees charged for that garage.

The Comptroller's answer relied on a previously issued policy: fees paid for parking permits issued to faculty, staff, and students of the medical school are exempt from sales tax. That same exemption was extended to cover the new garage's permits for faculty, staff, and students. However, the letter draws a clear line -- sales tax must still be collected on parking charges paid by other tenants of the building and by the general public, since those parking users are not university faculty, staff, or students.

What this means for you

State universities and colleges

Parking permit fees you charge to your own faculty, staff, and students are exempt from sales tax. But if you also rent garage or lot space to non-university tenants or the general public, you must collect sales tax on what those other users pay.

Property managers of mixed-use university buildings

If a building is shared between university personnel/students and outside tenants, the parking fee's tax treatment depends on who is paying -- track parking revenue separately by user type (faculty/staff/student permits vs. other tenants/public) to apply the correct tax treatment.

Accountants and tax professionals

This letter confirms the exemption applies based on the previously issued policy for the medical school and extends by analogy to a different university parking garage, so long as the facts are the same (parking is for faculty, staff, and students). The Comptroller notes the opinion is based on the facts presented and could change if facts differ.

Common questions

Q: Are parking fees a university charges to its own students and staff subject to sales tax?
A: No, per this letter -- fees for parking permits issued to faculty, staff, and students are exempt from sales tax.

Q: What about parking fees charged to other tenants of a university-owned building, or to the general public?
A: Those are taxable. The letter states sales tax should be collected on parking charges to other tenants of the building and the general public.

Q: Does this exemption apply to any university, or just the one that asked?
A: The letter extends a previously issued policy (originally for a medical school) to this requester's facts. The Comptroller notes the opinion is based on the facts presented, so a different fact pattern could lead to a different result.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9605230L

Original ruling text

May 7, 1996

Dear **:

Thank you for your letter of April 22, 1996, concerning the taxability of
parking fees for a parking garage operated by a STATE UNIVERSITY.

In your letter, you provided the following information. ** will be
purchasing a new office building that is adjacent to its **** campus
and contains a parking garage for the use of its tenants. It is anticipated
that two thirds of the building will be used by school faculty and staff.

You may rely on the previously issued policy exempting from sales tax, the fees
paid for permits issued to faculty, staff, and students of the medical school.
Sales tax should be collected on the parking charges to other tenants of the
building and the general public.

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

If you have any questions, you may call me toll free at 1-800-531-5441,
extension 3-4004. You may also write to Tax Administration Division,
Comptroller of Public Accounts.

Sincerely,

Wade Anderson
Director of Tax Policy

cc: **