Ezel / Tax Rulings / TX
TX 9001L0976E13 Sales and/or Use Tax (State,Local,MTA) 1990-01-17

Were valet-parking contract charges, mandatory patron fees, and voluntary tips subject to Texas sales tax?

Short answer: The business customer's contract price and any mandatory patron charge were taxable. A genuinely voluntary gratuity from a patron was not taxable.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Valet parking was taxable when the charge was a fixed amount rather than a voluntary gratuity.

The nightclub or restaurant contracting for the service owed tax on the agreed contract price. A mandatory charge collected directly from an individual patron was also taxable. A voluntary gratuity from a patron was not taxable.

Common questions

Was the venue's contract payment taxable? Yes.

Was a mandatory customer fee taxable? Yes.

Was a voluntary tip taxable? No.

Source

Original ruling text

January 17, 1990

Dear **:

Thank you for your recent letter regarding the taxability of valet parking.

You state that you provide a valet parking service for night clubs and
restaurants on a contract basis, and in some instances
a charge is collected directly from patrons for your service.

Valet parking is subject to sales tax when the charge is a fixed amount, rather
than a voluntary gratuity.

The business that contracts with you to provide the valet parking service will
owe sales tax to you on the agreed contract price of the service. Sales tax is
also due on the charge to patrons on an individual basis, if the charge is
mandatory. A voluntary gratuity given by a patron is not taxable.

An application for a sales tax permit is being mailed to you under a separate
cover.

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 additional information, you may call me
toll-free at 1-800-252-5555, extension 5-0330. The regular number is
512/463-4600, or write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Bettie U. Peterson
Tax Correspondence Division

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