Ezel / Tax Rulings / TX
TX 9004L1018G10 Sales and/or Use Tax (State,Local,MTA) 1990-04-26

Could a Texas tax-exempt hospital buy tickets to taxable amusement services tax-free for its members, and what happened if it resold the tickets to employees?

Short answer: The exempt hospital could buy amusement services tax-free for itself or its members, but it had to collect sales tax if it bought taxable tickets and then sold them to employees.

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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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

A qualifying tax-exempt entity could buy an amusement service tax-free for its own amusement or for the amusement of its members under Rule 3.298(g)(6).

That exemption did not cover a different transaction: if the exempt hospital bought tickets to a taxable amusement service and then sold the tickets to employees, it had to collect sales tax on those sales. Exempt organizations were still required to collect tax when they sold taxable items.

Common questions

Could the hospital buy tickets tax-free for its members? Yes, if it qualified for the exemption described in Rule 3.298(g)(6).

Could it resell taxable tickets to employees without collecting tax? No. The hospital had to collect sales tax on those employee sales.

Source

Original ruling text

April 26, 1990

Dear **:

Thank you for your letter dated April 19, 1990, concerning the
purchase of tickets to various amusement services by a 501(c)(3)
hospital.

As stated in section (g)(6) of Rule 3.298 on amusement services,
an entity that qualifies for exemption from paying sales tax, may
purchase an amusement service tax free either for its own
amusement or for the amusement of its members.

There is no exemption available, however, if the exempt entity
purchases tickets to a taxable amusement service and then sells
the tickets to its employees. Exempt entities are required to
collect sales tax on the sale of taxable items. Please refer to
section (g) of the enclosed Rule 3.322 Exempt Organizations.

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

Please feel free to contact me if you have any additional
questions. You may write me, call toll free 1-800-252-5555 (ext.
3-4685) from anywhere in the United States or phone 512/463-4685.

Sincerely,

Julie Pesl
Tax Correspondence

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