Ezel / Tax Rulings / TX
TX 9005L1019E04 Sales and/or Use Tax (State,Local,MTA) 1990-05-03

Was a membership fee taxable when membership entitled customers to merchandise discounts at a retail outlet that also sold to nonmembers?

Short answer: No. The retail membership, whose purpose was to give members merchandise discounts unavailable to nonmembers shopping at the same store, was not taxable at the time of the letter.

Apply this to your situation

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The retail outlet sold memberships that allowed members to buy merchandise at discounts not available to nonmembers shopping at the same store.

The Comptroller ruled that the memberships were not taxable at that time.

Common questions

Did nonmembers also shop at the store? Yes, but without the member discount.

Was the membership fee taxable? No under this 1990 letter.

Source

Original ruling text

May 3, 1990

Dear *****:

Thank you for your recent letter regarding the taxability of
memberships to a retail store.

You stated your client, ***** has decided to sell
memberships to their retail outlet. The purpose of the membership
is to offer merchandise to members at a discount of up to 40$ off
the retail price. Non-members at the same store do not receive a
discount.

You specifically asked if the membership was subject to sales tax.
The memberships are not taxable at this time.

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