Is a hotel's separate charge to trade show exhibitors for access to electrical power (outlets and extension cords) taxable, and can the hotel buy the electricity and cords tax-free for resale?

Plain-English summary

A hotel that rents booth or exhibit space for trade shows and conventions also charges exhibitors an additional fee for access to electrical power — using an "Electrical Service Order Form" — so exhibitors can plug in tables or equipment. The hotel asked whether that separate electrical charge is subject to sales tax.

The Comptroller's answer: no sales tax applies to the charge billed to exhibitors. Because the hotel is leasing or renting real property (the booth/exhibit space) and the electrical access is provided as part of that space rental, the charge for outlets and extension cords is treated as part of the real property rental, not as a standalone taxable sale of tangible personal property.

But there's a flip side: because the electricity and extension cords are being furnished incidental to a real property lease, the hotel cannot use a resale certificate to buy those items tax-free from its own suppliers. Texas Tax Code § 151.006(2) does not allow a person renting or leasing real property to claim a resale exemption on tangible personal property (like electricity or extension cords) that's merely incidental to that lease. So the hotel itself must pay sales tax when it purchases the electricity and extension cords.

What this means for you

Hotels, convention centers, and trade show/event venues

If you charge exhibitors a separate line-item fee for electrical hookups as part of renting booth or exhibit space, that fee itself isn't subject to sales tax — but you can't turn around and buy the electricity or extension cords tax-free with a resale certificate. You're the taxable consumer of those items, so budget for sales tax on your own electricity and equipment purchases even though you don't collect tax from the exhibitor on the electrical-access charge.

Trade show and convention exhibitors

If your booth-rental invoice includes a separate electrical access charge, that charge should not carry sales tax — it's treated as part of your real property space rental.

Accountants and tax professionals

This letter illustrates the general real-property-lease rule under Tex. Tax Code § 151.006(2): tangible personal property furnished incidental to a real property lease doesn't create a separate taxable retail sale to the tenant, but it also forecloses the landlord's resale exemption on that property — the landlord is the taxable consumer of items like electricity, extension cords, or similar incidentals bundled into a real property rental.

Common questions

Q: Do I need to charge sales tax on a separate electrical-access fee billed to trade show exhibitors?
A: No. It's treated as part of the real property booth/space rental, not a separate taxable sale.

Q: Can I buy the electricity and extension cords tax-free using a resale certificate, since I'm passing the cost on to exhibitors?
A: No. Texas Tax Code § 151.006(2) doesn't allow a resale certificate for tangible personal property incidental to a real property lease — you must pay sales tax on those purchases yourself.

Q: Does it matter that the electrical charge is itemized separately on the invoice?
A: No — itemizing it separately doesn't change the analysis; it's still part of the real property rental for tax purposes.

Q: Can I rely on this letter for my own venue's billing practices?
A: No. This opinion is based on the facts presented, and different facts may lead to a different answer.

Citations and references

Statutes:

• Tex. Tax Code § 151.006(2) (no resale certificate for tangible personal property incidental to a real property lease)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200004234L

Original ruling text

April 26, 2000

Dear **:

Thank you for your recent letter concerning your Texas sales tax
responsibilities.

You currently charge your clients for access to electrical power to exhibit
tables or equipment. The "Electrical Service Order Form" you sent indicates
that the electricity is provided to exhibitors renting booths or space in the
hotel during exhibitions or shows.

You are leasing or renting real property and providing electrical power. The
charges for the outlets and extension cords made to the exhibitors are not
subject to sales tax. The hotel is required to pay sales tax on its purchase of
electricity and extension cords. These charges are considered part of the booth
or space rental.

The sales tax law does not allow a person renting or leasing real property to
give a resale certificate for tangible personal property (electricity,
extension cords, etc.) incidental to the leasing of real property. See Texas
Tax Code Section 151.006(2).

You may view or down load the sales tax law at and
then click on the following:

1. State Government
2. Texas Statutes
3. Tax Code
4. Chapter 151
5. Scroll down to the referenced statutory section

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, extension 3-4683, if you have any
questions or need more information. You may write to Tax Policy Division,
Comptroller of Public Accounts, Austin, Texas 78711-3825.

Sincerely,

Eddie C. Washington
Tax Policy Division