Were membership dues, seminar fees, and publications taxable for a Texas membership organization?

Plain-English summary

The organization's membership fees were not taxable for either Texas or out-of-state member firms. Seminar and meeting fees were also not taxable on the facts presented.

The publication treatment was different. The organization had to pay its vendor sales tax on publications distributed free as part of membership. When it sold publications to nonmembers, it had to collect sales tax. Publications bought for resale could be purchased with a resale certificate under Rule 3.285; alternatively, tax paid to the vendor could be credited against tax collected as described in Rule 3.338.

Common questions

Were membership dues taxable? No, for both in-state and out-of-state member firms.

Were seminar or meeting fees taxable? No.

What happened when publications were included with membership? The organization paid tax to its vendor because the copies were distributed free.

What happened when publications were sold to nonmembers? The organization collected tax and could use resale-certificate or tax-credit treatment for its purchase.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8906L0953C05

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

June 22, 1989

Dear ***:

Thank you for your letter concerning the taxability of fees charged by
your
company.

Below I have restated your firm's description and your questions.

Firm Description: We are an organization devoted to helping the end
user relative to computer data centers, evolving computer technology
and management concepts. There is a membership fee for joining our
organization. For this fee we provide: 1 - companies with the oppor-
tunity to associate with other companies and exchange information and
contract. 2 - We put on related seminars around the country which
member firms can attend. The results of these seminars are published
and distributed to the member firms. 3 - If a member has a question
it can be submitted to our firm. We then query other member firms to
see if they can help us find the answer. Once we have found the answer
we forward the information back to the original file.

Question #1: Are the membership fees taxable to:
1- In state firms?
2- Out of state firms?

Answers: No. Your membership fees would not be taxable to either in
state or out of state firms. All taxable items purchased by the organi-
zation would be taxable to the organization.

Question #2: 1- Are the seminar/meeting fees held in the state of
Texas Taxable? Members pay less for attending the meetings than do
nonmembers. Some meetings are included in the original membership fee.
There are five categories of attendees:

a.) Texas firms
b.) Out of state firms
c.) Member firms
d.) Nonmember (Companies that maintain a booth at the
seminar in order to show their products. Vendors pay a fee
for this privilege.)

At these seminars nonmember firms occasionally buy the publications
that are normally distributed free of charge as part of the membership
fee to firms.

Answer: The seminar/meeting fees are not taxable. Tax must be paid to
the vendor for the publications that are distributed free of charge as
part of the membership fee. The tax must be collected on the publica-
tions sold to nonmember firms. The publications purchased for resale
can be purchased tax free under a resale certificate (rule 3.285) or,
if tax is paid to the vendor, you may take credit against the tax col-
lected. Please refer to Rule 3.338 (a)(1). Section (a)(2) regarding
credit for city tax also applies to the other local taxes (county and
MTA/CTD).

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 our
toll-free
number 1-800-252-5555. the regular number is 512/463-4600. You may
write me
at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence