Was $1 paid for a token redeemable for food or drink taxable as an amusement admission, and when was food tax collected?

Plain-English summary

After receiving a fuller explanation of the business, the January 30 letter said the $1 paid for a token redeemable for food or beverage was not taxable as an admission charge. The token was like a gift certificate.

Sales tax became due when the customer redeemed the token for food or beverage.

An attached December 19 letter, based on the earlier facts, had treated a charge to enter the complex as a taxable admission even though each entrant received a $1 clubhouse token. It also said customer-operated coin batting cages were not taxable and league and tournament entry fees were not taxable. The January letter clarifies the separately described token transaction; it does not erase those other statements.

Common questions

Was the token itself an amusement admission? No. When was tax collected on the food or drink? At redemption. Did the attached older letter address other charges? Yes, including entrance charges, consumer-operated batting cages, and league and tournament fees.

Citations and references

The reproduced letters cite no numbered statute or 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/8501L0616D13

Original ruling text

January 30, 1985

Dear ***:

Thank you for your January 15, 1985 letter, which better explains your
business operation.

The $1.00 paid by persons to receive a token which is redeemable for
food or beverage is not taxable as an admission charge. The token is
like a gift certificate. Sales tax is due and must be collected when the
token is redeemed for food or beverage.

You may write to the Tax Administration Division.

Sincerely,

Tax Policy
Tax Administration Division

December 19, 1984

Dear ***:

Thank you for your December 13, 1984, letter concerning your sales tax
responsibilities under the new tax code.

The admissions charged to everyone to enter the complex are taxable even
though each person is given a token valued at $1.00 to be used to buy
food and beverage in your clubhouse. The sales tax is a transaction tax and the
sale of an admission is a separate transaction from the food and beverage sales.

The receipts from the coin-operated batting cages are not taxable if
they are operated by the consumer (customer).

League and tournament entry fees are not taxable.

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 questions.

Sincerely,

Tax Policy
Tax Administration Division