Could a corporation lease employee parking with a resale certificate when it charged some employees but let others park free?

Plain-English summary

Corporation X leased parking spaces for $100 per month, charged some employees $50 to park, and let others park free.

For spaces relet to employees for a charge, the corporation could give the parking company a resale certificate validated with its permit number. It then had to collect and remit tax on the $50 employee fee.

For parking provided free, the corporation had to pay tax to the parking company on the $100 lease charge because it was not leasing those spaces for resale.

What this means for you

Employers providing parking

Charging an employee and giving parking away produced different resale and tax-payment treatment under the letter.

Parking companies

A resale certificate applied to spaces the corporate customer actually relet, not spaces consumed as a free employee benefit.

Accountants and tax professionals

Track paid and free employee spaces separately and retain the permit-validated resale certificate.

Common questions

Q: Could the corporation give a resale certificate for paid employee parking?
A: Yes.

Q: Was the employee's $50 parking fee taxable?
A: Yes.

Q: Who paid tax when the employee parked free?
A: The corporation paid tax on its $100 charge from the parking company.

Citations and references

• The letter cites no statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8410L0607E02

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller October 22, 1984

Dear **:

Thank you for your letter of October 10, 1984, regarding sales tax on
parking fees. The specific situation is listed below with response:

Corporation X leases parking spaces for $100 per month. X then charges
some of its employees $50 to park in the spaces and allows other
employees to park in the spaces free of charge.

The parking spaces leased by Corporation X for release to its employees
can be leased tax free by issuing a resale certificate to the parking
company. The resale certificate must be validated with Corporation X's
permit number. Corporation X would then be required to collect and remit
the tax on the $50 fee charged to the employee.

In the case where the employee is not charged for parking, Corporation X
must pay tax to the parking company on the $100 parking fee.
Corporation X is not leasing the parking for release to its employees.

This opinion is based upon the facts you represented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You
may write me, call toll free 1-800-252-5555 from anywhere in Texas or
phone 512/475-1931.

Sincerely,
(Mrs.) Jo Ann Dieck
Tax Policy Section
Tax Administration Division