When were Texas zoo admissions, rides, tours, tobacco sales, and vendor commissions taxable?

Plain-English summary

The Texas Comptroller tied zoo admission taxability to the operating society's status. Admissions were taxable if the society was profit-making, but not taxable if it proved Internal Revenue Service exempt status as a 501(c)-type organization.

Boat rides and tours directly provided by the society followed that same status-based treatment. If a profit-making contractor operated the rides or tours for the privilege of doing business at the zoo, its charges were taxable, and the contractor needed a state sales-tax permit and had to collect and remit tax.

Commissions the society received from tobacco vendors were not taxable. The vendors themselves had to collect tax on tobacco sales beginning October 2, 1984.

What this means for you

Zoo and nonprofit operators

The letter required proof of exempt status for nontaxable admissions and society-provided amusement services.

For-profit ride and tour contractors

Operating at a nonprofit zoo did not make the contractor's charges nontaxable.

Vendors and accountants

Separate nontaxable commissions received by the zoo from the vendor's taxable retail sales.

Common questions

Q: Were zoo admissions taxable?
A: Only if the operating society was profit-making; proof of 501(c)-type exempt status made them nontaxable under the letter.

Q: What if a for-profit contractor ran the boat rides or tours?
A: Its charges were taxable, and it needed a permit and had to collect and remit tax.

Q: Were vendor commissions taxable to the zoo society?
A: No.

Q: Were the vendors' tobacco sales taxable?
A: Yes, beginning October 2, 1984.

Citations and references

• The letter refers to 501(c)-type IRS exempt status but cites no specific subsection.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8410L0630A01

Original ruling text

October 16, 1984

Dear ***:

Thank you for your letter of September 14, 1984, regarding the
taxation of various charges made to visitors at the CITY A ZOO.

1. Admissions are subject to tax only if the CITY A SOCIETY
   is a profit making entity. If the Society, who operates the
   zoo, has proof of Internal Revenue Service exempt status as
   a 501(c)-type organization, admissions are not taxable.

2. If the Society is the direct provider of the boat ride and
   tours amusement services at the zoo, the taxability of the
   charges will be determined as set out in 1 above. If,
   however, the services are provided by a profit-making entity
   who contracts with the Society for the privilege of operating
   these business at the zoo, the charges for the rides and
   tours are taxable and this provider would need to become
   permitted for state sales tax and collect and remit tax.

3. Commissions received from vendors for sales of tobacco on the
   zoo grounds are not subject to tax. However, these vendors must
   collect sales tax on their tobacco sales as of October 2, 1984.

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

Please feel free to contact us if you have additional question. You
may write us, call toll free 1-800-252-5555 from anywhere in Texas.

Sincerely,

Tax Administration Division