Which destination-management charges for transportation, tours, guides, parties, convention trips, and resale goods were taxable?

Plain-English summary

The Comptroller classified six destination-management offerings:

• Airport, hotel, and in-city transportation was nontaxable.
• Tours primarily showing sights along a route were taxable, even when sold only to a particular organization. Tours of National Register sites or Recorded Texas Historic Landmarks were exempt; mixed tours depended on their essential nature.
• A local guide placed on another company's bus was taxable.
• A per-person party package with space, transportation, supervision, and separately taxed catering inputs was nontaxable; the provider paid tax to caterers and other taxable suppliers.
• A pre- or post-convention trip with an escort and overnight accommodation was nontaxable on these facts because the bus primarily transported guests to an amusement rather than displaying sights along the route.
• Cowboy hats, cookbooks, and similar resale goods were taxable to the customer, while the provider could buy them with a resale certificate.

What this means for you

The bus itself did not determine taxability. Sightseeing purpose, transportation purpose, historic status, and the essential nature of a mixed package controlled the outcomes stated here.

Common questions

Was ordinary passenger transportation taxable? No.

Was a step-on tour guide taxable? Yes.

Were historic-place tours exempt? Yes, for the listed designations.

Were resale goods taxable to customers? Yes.

Citations and references

• No numbered statute or rule was cited in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9009L1046B01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller September 27, 1990

Dear *****:

Thank you for your recent letter and explanation of the services
you provide. Each of these is restated with responses below.

(1) Transportation --- This involves transporting people from the
airport to various hotels or transporting people to various sites
within the city.

Response: Not taxable.

(2) Tours---Once again these tours are for a specific corporation
or organization and not offered to the general public. In the
conduct of these tours, visitors are transported from one place
to another, and the cost is usually calculated on a cost per per-
son and submitted to the sponsoring organization.

Response: Tours whose primary purpose is to show tourist sights
along a route are normally taxable. However, tours of places that
are included in the National Register of Historic Places or of
places designated as Recorded Texas Historic Landmarks by the
Texas Historical Commission are specifically exempted. If a tour
consisted of taxable and non-taxable elements, we would need to
make a judgment as to the essential nature of the tour package.

(3) Step On Tour Guide Service---When a tour company arrives from
another city and supplies the bus, but wants a guide from San An-
tonio to give information about the city, we place a tour guide
on that bus to direct the driver and to tell about San Antonio.

Response: Taxable.

(4) Parties--** does rent party space, provides trans-
portation, and provides supervision. A caterer is hired and tax
paid on the caterer's charges. The price is usually calculated
and given as a per person price, but is not sold to the general
public and once again is for a specific group or corporation.

Response: Not Taxable. You are correct in paying tax to the cater-
er and other suppliers of taxable goods and services that you use
in producing the party.

(5) Post or pre convention tours-This involves busing to the hill
country, *, **** and an escort is provided, along
with overnight accommodations. We pay taxes to hotels, restau-
rants, and attractions, but question if our service is taxable.

Response: Charges for tour buses, whose primary purpose is to
show tourists sights along a route as opposed to regular transpor-
tation, are taxable. In this case the primary purpose of the bus
ride appears to be transportation to an amusement. So, the charge
is not taxable.

(6) Items for resale-We currently pay sales tax on any item which
we buy at wholesale price and resell at a higher price. For exam-
ple; cowboy hats, cookbooks, etc.

Response: The charge you make to your customers for cowboy hats,
cookbooks, etc. is subject to tax. You may give your suppliers a
resale certificate in-lieu-of tax at the time of purchase.

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