Ezel / Tax Rulings / TX
TX 9007L1031A04 Sales and/or Use Tax (State,Local,MTA) 1990-07-03

Was a required $15 hospital contribution taxable when the contributor received a photograph worth an amount commensurate with the required payment?

Short answer: Yes. Although the objective was to raise money for a hospital, the payment was mandatory and the photograph's value was commensurate with it. The Comptroller therefore treated the transaction as a taxable sale rather than a free-will donation.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The photograph transaction was taxable even though its purpose was to raise money for a hospital.

The Comptroller asked whether the contribution was mandatory and whether the value received was commensurate with the payment. Both answers were yes, so the arrangement was a sale rather than a free-will donation. The same result would apply if the hospital sold the photographs directly for a required $15 contribution.

Common questions

Did the charitable objective control? No.

What made the transaction a sale? The required payment and commensurate value received.

Would direct sale by the hospital change the result? No.

Source

Original ruling text

July 3, 1990

Dear **:

Thank you for your recent letter to Ms. Glover. I have been asked to respond.

I have examined your fact situation and agree that the objective of the
transaction is to collect money for the ** Hospital. Unfortunately,
it is styled as a sale rather than a free will donation. In determining if a
transaction is a sale or a donation, there are two questions that are
appropriate to ask:

  • Is the amount of the donation mandatory? And, if so:

  • Is the value given commensurate with the donation?

In this case, both answers are yes. Because the transactions are styled as
sales rather than free will donations and the value given is commensurate with
the donation, they are taxable. We would reach the same result if the hospital
were selling the photographs directly to the public and requiring a donation of
$15.

This opinion is based on the facts you presented. Other facts, though similar,
may yield different results.

If you have questions or need more information, please call our toll-free
number 1-800-531-5441. My direct line number is 463-4680 [FAX (512) 475-0900].
You may write to me in care of Taxability Section.

Sincerely,

Al Van Allen
Taxability Section
Legal Services Division

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