A university holds various events — rock concerts, a student-organization movie showing, and a monster truck rally — sometimes alone, sometimes with a performer's agent, sometimes with a promoter under a profit/loss-sharing contract. In which of these five scenarios are the admission tickets taxable amusement services?

Plain-English summary

A university asked the Comptroller to walk through five scenarios for amusement services (concerts, a movie, a monster truck rally) held on its campus, to determine which admission tickets are taxable.

The governing framework: Tex. Tax Code § 151.3101 exempts amusement services provided exclusively by an educational, religious, law enforcement, or charitable organization. House Bill 3211 (effective October 1, 1999) extended this exemption to entities described by Education Code § 61.003(8) or (15) — meaning public colleges and universities. The key test throughout is whether the university (or its recognized student organization) is "held out as the provider" of the event — a perception created by brochures, flyers, tickets, and advertisements available to the public. A promoter's name can appear on advertising as "producer" or "produced by" without losing the exemption, as long as the exempt entity is presented as the actual provider of the amusement; merely sponsoring, benefiting from, or staffing an event doesn't make the exempt entity the provider.

Scenario-by-scenario results:

1. Rock concert via a performer's agent, paid a percentage of ticket sales — not taxable if the university is held out as the event's provider.
2. Rock concert via a promoter, where payment to the promoter is based on actual revenue and expenses, and profit or loss is shared between the university and the promoter — taxable. The exemption is lost when a nonprofit hires a for-profit corporation to co-provide an amusement event as a genuine joint venture. A joint venture requires sharing BOTH profit and loss (equally or on a percentage basis) — a contract where one party bears all the losses while profit is divided does not create a joint venture, so watch this distinction carefully.
3. Movie shown by a student organization, which pays a flat rental fee for the rights to show it — not taxable if the university or a recognized student organization/chapter is held out as the event's provider.
4. Concert with a flat fee paid to the performer or agent — not taxable if the university is held out as the provider.
5. Monster truck rally, where the university receives a flat arena rental payment but ticket revenue (sold through a university outlet) is remitted to the promoter running the show — taxable.

What this means for you

Colleges, universities, and student organizations hosting ticketed events

Whether your event's tickets are tax-exempt often comes down to two things: (1) is the university/organization publicly presented as the event's provider (not just a sponsor, beneficiary, or staffer), and (2) if a for-profit promoter is involved, is it a genuine profit-AND-loss-sharing joint venture, or does the university retain a fixed/flat arrangement (rental fee, flat performer fee)? A flat rental or flat fee arrangement tends to preserve the exemption; a true revenue/expense-sharing joint venture with a for-profit promoter loses it.

Event promoters working with exempt educational institutions

If you want the university's event to keep its tax-exempt status, avoid a profit-and-loss-sharing structure — a flat fee or straightforward rental arrangement, with the university clearly held out as the provider in all public-facing materials, preserves the exemption; a joint-venture-style revenue/expense split does not.

Accountants and tax professionals

This letter is a compact five-scenario reference matrix for the "held out as provider" + "joint venture profit-and-loss-sharing" test under § 151.3101 as extended to public universities by HB 3211 — useful any time a nonprofit or educational client structures event deals with for-profit co-producers or promoters.

Common questions

Q: Are amusement service tickets exempt just because a university is involved somehow?
A: No — the university (or its recognized student organization) must be "held out as the provider" of the event, based on how brochures, flyers, tickets, and ads present it to the public.

Q: Does having a for-profit promoter automatically make ticket sales taxable?
A: Not automatically — it depends on the payment structure. A flat fee to the promoter/performer can preserve the exemption; a genuine profit-and-loss-sharing joint venture with the promoter does not.

Q: What makes an arrangement a "joint venture" that loses the exemption?
A: Sharing BOTH profit and loss (equally or on a percentage basis). A contract where one party bears all the losses while profit is simply divided is not a joint venture under this letter's analysis.

Q: Is renting out a university arena to an outside promoter tax-exempt?
A: Not in this letter's fifth scenario — where the university merely collects a rental fee while the promoter runs the show and receives the ticket revenue, the tickets are taxable.

Q: Can I rely on this letter for my own university's or organization's event structure?
A: No. This opinion is based on the facts presented, and additional or different facts may change the opinion; it can be relied on only by the taxpayer it was issued to.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.3101 (exemption for amusement services provided exclusively by an educational, religious, law enforcement, or charitable organization)
• Tex. Educ. Code § 61.003(8), (15), as incorporated by House Bill 3211 (effective 10/1/1999) (extends the § 151.3101 exemption to public colleges and universities)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200001994L

Original ruling text

January 14, 2000

Thank you for your recent letter concerning the taxability of amusement
services provided at UNIVERSITY. You would like me to address the following
scenarios.

1. A rock concert is held using an agent for the performer. The payment of
   the fee to the performer is based on a portion of the tickets sold for the
   event. Are these tickets taxable?

Response. These tickets are not taxable if the university is held out as the
provider of the event. Section 151.3101 of the Texas Tax Code exempts
amusement services provided exclusively by an educational, religious, law
enforcement association, or charitable organization. House Bill 3211
(effective October 1, 1999) includes an entity described by Section 61.003(8)
or (15) of the Education Code. This exempts amusement services provided by
public colleges and universities.

2. A rock concert is held using a promoter to contract with the artist. A
   payment I made to the promoter based on the actual revenue and expenses
   associated with the concert (as outlined in the contract). Profit or loss,
   from the concert, is shared by the university and the promoter. Are these
   tickets taxable?

Response. Yes. The exemption is lost when a non-profit organization hires a
for-profit corporation to co-provide an amusement event as a joint venture
between the exempt entity and the for-profit entity. In order for a joint
venture to exist, there must be a sharing of both profit and loss. The losses
must be shared equally or on a percentage basis. A contract that provides one
party will bear all the losses and the profit will be divided, does not create
a joint venture.

3. A movie is provided by a student organization. The organization pays a
   flat rental fee to a company to the rights to show the movie. Are these
   tickets taxable?

Response. These tickets are not taxable if the university or recognized
organization or chapter of the university is held out as the provider of the
event.

4. A concert is held for which a flat fee is paid to the performer or his/her
   agent. Are these tickets taxable?

Response. These tickets are not taxable if the university is held out as the
provider of the event.

5. A monster truck rally is held for which UNIVERSITY receives a payment for
   rental of the arena. The tickets are sold through a UNIVERSITY ticket outlet,
   but remitted to the promoter who holds the show. Are these tickets taxable?

Response. Yes.

I should clarify that the term "held out as the provider of the amusement" is
the perception created by brochures, flyers, tickets, and advertisements that
are available to the public. The producer's name may appear on all advertising
without loss of exemption as long as they are referred to as the "producer" or
"produced by" and the exempt entity is referred to as the provider of the
amusement. Simply sponsoring, benefiting from, or staffing an event does not
indicate that the exempt entity is acting as the provider of the amusement
service.

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

You may call me toll free at 1-800-531-5441, ext. 5-0613. The direct line is
512/475-0613. You may also write to Tax Policy Division, Comptroller of Public
Accounts.

Sincerely,

Kevin Koller
Tax Policy Division