Ezel / Tax Rulings / TX
TX 9008L1037E08 Sales and/or Use Tax (State,Local,MTA) 1990-08-15

Did a sales-tax-exempt anti-drug organization have to collect Texas tax when it sold its own campaign book and a red ribbon?

Short answer: The book was exempt as a writing, but the red ribbon was taxable. The organization's exempt status protected qualifying purchases for its own use; it did not excuse the organization from collecting tax on taxable items it sold.

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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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 organization's Drug-Free Texas Youth in Action book was exempt from sales tax because it was a writing that the organization wrote and published.

The red ribbon was taxable because it was not a periodical or writing. The Comptroller also explained that an organization's exemption on purchases for its own qualifying use does not eliminate its duty to collect tax when it sells taxable items.

Common questions

Was the book taxable? No.

Was the red ribbon taxable? Yes.

Did the seller's exempt status cover every fundraising sale? No. It still had to collect tax on taxable items sold.

Citations and references

  • Comptroller Rule 3.299.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

August 15, 1990

Dear **:

Thank you for your letter concerning the collection of sales tax
on a book, Drug-Free Texas Youth in Action, and a Red Ribbon.

Texans' War on Drugs is an exempt organization for sales and use
tax purposes. This means that the organization is exempt from
paying sales and use tax on taxable items it purchases for its
own use if the items relate to the purpose of the exempt organi-
zation. However, sales tax exempt status does not exempt the
organization from collecting sales tax on taxable items it sells.

The book, Drug-Free Texas Youth in Action, which you stated was
written and published by the organization, is exempt from sales
tax; therefore, sales tax is not due on the sale of the book. The
Red Ribbon is not a periodical or writing; therefore, sales tax
must be collected on the sale of the Red Ribbon. Enclosed is Rule
3.299 for your information about the exemption for writings and
periodicals.

This opinion is based on the facts presented. If there are addi-
tional or different facts, the opinion may change.

If you have any questions or need additional information, you may
call 463-4600 or the toll-free 1- 800- 252-5555. My extension is
3-4666. You may write to Tax Correspondence, Comptroller of public
Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence

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