Ezel / Tax Rulings / TX
TX 8812L0918C01 Sales and/or Use Tax (State,Local,MTA) 1988-12-02

Was a club membership fee taxable when access to trip routing, product prices, and automobile dealer-cost information was a significant benefit?

Short answer: Yes when bundled. If the information charge was separated from other privileges, only that charge was taxable; as marketed, the entire membership fee was 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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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 club gave members access to trip-routing information, product prices, and automobile dealer costs. Although the club did not sell that information by itself, the Comptroller considered it a significant membership benefit.

If the club separately charged for information and other membership privileges, only the information charge was taxable. Because the club marketed one bundled membership, the entire fee was taxable as an information service.

Common questions

Was the bundled membership taxable? Yes.

Could the club limit tax to the information component? Yes, by separating that charge from the remaining privileges.

Did information have to be sold by itself to matter? No. Its role as a significant bundled benefit was enough under the letter.

Source

Original ruling text

Comptroller of Public Accounts
State of Texas
Austin, Texas 78774

Bob Bullock
Comptroller December 2,1988

Dear ****:

To follow-up my letter of November 16, I'm finally able to give you an
answer concerning the taxability of your company's *****.

Our people have re-examined the material you sent in July and have talked
to your marketing manager, **, about the benefits of club
membership. Among other things, club membership provides members with access
to information on trip routing, product prices, and dealer costs on
automobiles.

While this information is not directly sold by *, it is a significant
benefit of club membership.

If you separate your charges for information from the remaining
membership privileges, only the charge for information would be taxable.
However, as you currently market them, the entire charge for memberships in the
***** is subject to tax as an information service.

Once again, let me apologize for the delay in getting you an answer. If
you have additional questions, please don't hesitate to contact me.

Sincerely,
Dan Pearson
Deputy Comptroller

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