Ezel / Tax Rulings / TX
TX 8511L0677B02 Sales and/or Use Tax (State,Local,MTA) 1985-11-08

Was the fee for membership in a merchant discount-card service subject to Texas sales tax?

Short answer: No. The Comptroller said selling memberships in the discount service was not a taxable transaction.

Apply this to your situation

This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1985 Texas Comptroller taxpayer-response letter based on a membership service arranging discounts from participating local, state, regional, and national merchants. It decides only the sales-tax treatment of the membership; the letter forwarded the franchise-tax question elsewhere and does not reproduce an answer. It expressly says different facts could change the opinion. Current membership, discount, referral, digital-platform, franchise-tax, and sales-tax rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The organization arranged for participating merchants to give discounts to members who presented a membership card. The Comptroller said selling memberships in that discount service was not a taxable transaction.

The letter referenced Rule 3.286 on seller responsibilities and forwarded the separate franchise-tax question for review, but it does not reproduce any franchise-tax conclusion.

Common questions

Was the membership fee subject to sales tax? No.

Did the letter decide the retailers' tax duties? It cited Rule 3.286 but did not give additional classifications.

Did it decide the service's franchise-tax responsibility? No.

Citations and references

  • Texas Comptroller Rule 3.286 — seller responsibilities, enclosed with the letter.

Source

Original ruling text

November 8, 1985

Dear ***:

Thank you for your letter of October 30, 1985, concerning the tax
responsibilities of your client.

I understand your client provides a member discount service.

"A member discount service is being established. The organization will arrange
with various merchants on a local, state, regional and national level to
provide discount to organization members who present their membership card at the
time they make a purchase."

Selling memberships to a member discount service is not a taxable transaction.

I am enclosing State Sales and Use Tax Rule 3.286, Seller's Responsibilities,
for your information.

I am also forwarding a copy of your letter to *** for information
on your client's franchise tax responsibilities.

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

Get today's answer for your situation

You just read a 1985 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.