Ezel / Tax Rulings / TX
TX 8702L0797F02 Sales and/or Use Tax (State,Local,MTA) 1987-02-17

Were admission fees, boat and equipment rentals, and food sales at a 501(c)(4) association's Texas lake project taxable?

Short answer: Lake-admission fees were exempt. Boat, umbrella, game-equipment, and similar rentals were taxable, as were food and drink sales from stands, pushcarts, or vehicles.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
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 1987 Texas Comptroller letter applies to a lake project operated by an association described as federally exempt under § 501(c)(4). Federal status alone does not establish current Texas treatment, and admission, amusement, rental, food-service, nonprofit, permit, and local-tax rules may have changed. STAR documents may no longer represent current policy even when not marked superseded. Identities 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 Texas Comptroller said admission fees to the association's lake facilities were exempt from sales tax.

Charges for renting boats, umbrellas, game equipment, and similar items were taxable. Food and drink sales from hamburger or fast-food stands, pushcarts, and motor vehicles were also taxable.

What this means for you

The association's lake operation contained both exempt and taxable revenue streams. The admission charge received one treatment, while rentals and prepared-food or beverage sales required collection.

Common questions

Were lake-admission fees taxable? No.

Were boat rentals taxable? Yes.

Were umbrella and game-equipment rentals taxable? Yes.

Were food and drink sales taxable? Yes, for the stands and mobile-vendor formats described.

Citations and references

  • Internal Revenue Code § 501(c)(4) — the federal exemption status stated for the association.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 17, 1987

Dear ***:

Thank you for your letter of January 28, 1987, concerning the taxability
of admission fees to ASSOCIATION A's lake project.

According to your letter ASSOCIATION A is exempted from federal income
tax under Internal Revenue Code Sec. 501(c)(4). The admissions fee to
the lake facilities is exempt from sales tax. Rentals of boats and other
items such as umbrellas, game equipment, etc. are taxable. Sales tax
must be collected on food and drinks sold at hamburger/fast food stands
and from pushcarts or motor vehicles.

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 me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Julie Pesl
Tax Policy Section
Tax Administration Division

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