Which gun-club membership fees, contest entry fees, reloading supplies, and club supplies were taxable in Texas?

Plain-English summary

The Texas Comptroller said a gun club's annual membership fees were taxable.

Contest or match entry fees were not taxable as amusements when either of these tests was met:

• the fee substantially exceeded the normal charge to use the facility, the participant paid to compete, and part of the fee funded the contest and prizes; or
• the facilities were not generally used by the public except when people participated in a contest.

The gun club could buy reloading supplies tax-free for resale by giving its supplier a properly completed resale certificate. It then had to collect sales tax when it sold those supplies to members. Targets and other supplies bought for the club's own use were taxable to the club.

What this means for you

Gun clubs

Membership dues and club-use supplies were taxable under the letter. Contest fees required a separate facts-based analysis.

Match organizers

The letter's nontaxable contest treatment depended on the fee and facility-use conditions it listed; it did not create an unrestricted exemption for every entry fee.

Accountants and tax professionals

Distinguish inventory bought for resale from targets and supplies consumed by the club, and retain the resale certificate supporting inventory purchases.

Common questions

Q: Were annual gun-club membership fees taxable?
A: Yes.

Q: Were all match entry fees nontaxable?
A: No. The letter made nontaxability depend on specified contest-fee or facility-use conditions.

Q: Could reloading supplies be purchased for resale without tax?
A: Yes, with a properly completed resale certificate, followed by collection of tax from members when the supplies were sold.

Q: Were targets purchased for club use taxable?
A: Yes.

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/8412L0606C02

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 12, 1984

Dear **:

Thank you for your November 21, 1984, letter concerning the gun club's
sales tax
responsibilities under the new changes in the sales tax law.

The yearly membership fees paid to the gun club are taxable.

Entry fees for contests or matches are not taxable as amusements if:

1. a. the fee substantially exceeds what would normally be paid for using
   the
   facility,
   b. a person is paying to compete in a contest,
   c. part of the fee goes toward the cost of the contest and for prizes, or

2. if the facilities are not generally used by the public except when
   participating in a contest.

Reloading supplies may be purchased tax free by the gun club for resale
to the
members. The gun club must issue a properly completed resale certificate
to the
supplier. The gun club is required to collect sales tax when the
reloading supplies are
sold to the members.

Targets and other supplies are taxable when purchased for use by the gun
club.

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,
Eddie C. Washington
Tax Policy Section
Tax Administration