Ezel / Tax Rulings / TX
TX 8801L0855C14 Sales and/or Use Tax (State,Local,MTA) 1988-01-11

Did a newcomer welcome service collect Texas sales tax from sponsors for coupon distribution, gifts, and monthly reports?

Short answer: Yes. The service collected tax from sponsors. A church or newspaper could give a reason-specific exemption certificate, the service could buy printing and gifts for resale, and separately billed coupons or gifts distributed for the newspaper remained taxable.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 a taxpayer-specific January 1988 Texas Comptroller letter. It says the opinion may change if the facts differ and cites no statute or rule. The service visited newcomers, distributed sponsor coupons and a gift, collected household and preference information, and reported monthly to sponsors. Welcome-service, advertising, information-service, coupon, gift, newspaper, church, exemption-certificate, resale, and bundled-charge rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. 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 City Host service visited newcomers, gave them sponsor advertising coupons and a welcome gift, collected information such as address, children's ages, hobbies, and church preferences, and sent sponsors a monthly report with a bill for printing, gifts, and the report.

The service had to collect tax from its sponsors.

A church or newspaper sponsor could give an exemption certificate instead of tax, but the certificate had to state the specific exemption reason. The service could give suppliers resale certificates for printing and gifts.

If the service separately billed the newspaper for coupons and gifts it distributed, it collected tax on that separated charge.

What this means for you

The historical answer treated the sponsor-facing package as taxable and required specific documentation for exemptions and resale purchases.

Common questions

Were sponsor charges taxable? Yes.

Could a church or newspaper claim exemption? Yes, with a certificate stating the reason.

Could printing and gifts be bought for resale? Yes.

Citations and references

The letter cites no numbered statute or rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller January 11, 1988

Dear ***:

Thank you for your letter concerning the taxability of the City Host
Service you provide.

You state in your letter that you visit newcomers to your community and
give
them advertising coupons from sponsors as well and a welcoming gift. When
you make these visits, you get information on the newcomers such as
addresses, ages of children, hobbies and church preferences. You send
this
report to the sponsors at the end of each month, along with a bill for
the
printing costs of the coupons, the welcoming gift and your report. One of
the sponsors, a newspaper, prints this report each month in the paper.

You should collect tax on the charge to your sponsors. The church and
newspaper may give you an exemption certificate in lieu of tax. The
certificate should be specific as to the reason the exemption is claimed.
You may give a resale certificate to your suppliers in lieu of tax on the
printing and gifts. If you bill the newspaper for coupons and gifts you
distribute, you should separate this charge and collect tax.

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

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-252-555 from anywhere in Texas or phone
512/463-4600.

Sincerely,
Adina Whittemore
Tax Policy Division

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