Was a separately stated 1% airport authority gross-receipts or commission fee included in the taxable sales price?

Plain-English summary

An airport authority charged the requester a 1% gross-receipts tax or airport commission fee on sales of parts and labor. The requester passed that fee to customers.

The Comptroller said the fee was part of the taxable sales price when connected with a taxable item or taxable labor. It was an overhead cost and could not be excluded merely by stating it separately on the invoice.

Overhead connected with nontaxable labor was not taxable. The letter said the issue had also been confirmed in Comptroller Hearing No. 16,799, with a final decision dated January 31, 1985.

What this means for you

Under the 1988 guidance, a separately stated regulatory or commission cost followed the taxability of the underlying sale rather than becoming an independent nontaxable charge.

Common questions

Was the airport fee taxable on a taxable sale? Yes.

Did separate invoicing remove it from the tax base? No.

Was overhead tied to nontaxable labor taxable? No.

Citations and references

• Texas Comptroller Hearing No. 16,799, final decision issued January 31, 1985, cited as confirming the result.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8803L0861G13

Original ruling text

February 8, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delayin answering
your question involving changes in the sales tax law. This isn't the way we normally
do business.

Our people were, and still are, swamped by a deluge of inquiries as they attempted to
interpret provisions of the new law and draft rules which would not adversely impact
businesses. In many instances, an answer to a question just wasn't available when the
question arrived.

In your letter you stated *** Airport Authority levies a 1% gross receipts tax
or airport commission fee on all sales, parts as well as labor. You asked whether your
company was liable to collect sales tax on the amount of this 1% fee.

Yes, this 1% airport commission fee is a part of the sales price of any taxable item or
taxable labor. It represents one of the many items of overhead in your business operations
and when passed through to your customer cannot be excluded from the sales price, even
though separately stated on an invoice or other statement to your customer. Overhead
charges, in connection with nontaxable labor, are not taxable. This is the treated the
same as any other part of a sales price for any nontaxable item.

This issue has been confirmed in a hearing before the Comptroller of Public Accounts between
your company and the tax division. The hearing number is 16,799 and the final decision in
this hearing was issued January 31, 1985.

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

You may write me at the Tax Policy Division.

Sincerely,

Tax Policy Division