When could nonprofit volunteer groups sell food and drinks tax free at an annual fundraiser, and were festival T-shirts taxable?

Plain-English summary

The nonprofit had to collect sales tax on its $6 T-shirt charge.

Food and drink at a fundraiser could qualify for exemption only if the event was annual, lasted no more than one week, and was exclusively sponsored as a fundraising project by one or more nonprofit volunteer organizations. Quarterly and semiannual events did not qualify.

The food and drink could not be catered, resold, or bought from a caterer or other retailer. No one could be hired to prepare or serve them; every aspect of the sale had to be volunteer-run except purchasing food and drink for further preparation.

Commercial concessions and concession stands at ballparks, recreation halls, gymnasiums, and similar places were excluded. The exemption also failed if volunteer groups competed at the same event with a retailer required to collect tax: every food-and-drink seller at the event had to be a volunteer group.

Common questions

Were the T-shirts covered by the food-and-drink treatment? No; their $6 charge was taxable. Could the event happen twice a year? No; semiannual events did not qualify. Could paid workers serve the food? No. Could one commercial food vendor participate? No under the stated conditions.

Citations and references

The reproduced letter cites 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/8502L0628A01

Original ruling text

February 22, 1985

Dear ***:

Thank you for your letter of February 13, 1985, concerning the
taxability of food, drinks and T-shirts sold during the Fall Festival.

Sales tax is to be collected on the $6.00 charge for T-Shirts, however, a
non-profit organization may qualify for exemption from collecting sales
tax on food and drink at fund raising events if the following criteria is
met:

• The event is an annual event (quarterly and semi-annual events do
  not qualify).

• The event does not exceed one week.

• The event must be a fund raising project and exclusively sponsored
  by a non-profit volunteer organization or organizations.

• Food and drink cannot be catered or resold or purchased from a
  caterer or other type retailer.

• Concession at the event must be non-commercial in every respect;
  no one shall be hired to prepare or serve the food and drink.
  Every aspect of the sale must be on a volunteer basis except the
  purchase of food and drink for further preparation.

• Concession stands at ball parks, recreation halls, gymnasiums and
  other like places are not to be included in the exemption.

• Under no circumstances is the exemption to apply if the volunteer
  groups are in competition with a retailer who is required to collect
  the tax on his food and drinks at the same event. IN OTHER WORDS, ALL
  FOOD AND DRINK SALES AT THE EVENT MUST BE MADE BY VOLUNTEER GROUPS.

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

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the Tax
Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division