Were a Texas valet-parking company's hourly charges taxable, or did supplying employees qualify as exempt temporary help?

Plain-English summary

A valet-parking company supplied at least one employee, and often additional employees, to a country club to park vehicles for members and guests. The company charged the club an hourly fee; the drivers themselves paid nothing.

The Comptroller said the hourly billing method did not control taxability. The workers were providing motor-vehicle parking service, and the arrangement did not meet the temporary-help exemption. The valet company therefore had to collect state and applicable local sales and use taxes on its total charge to the club.

The letter identified three temporary-help requirements: the agreement had to furnish temporary employees rather than an identifiable service, the customer had to supervise the workers and be able to request replacements, and the customer had to supply all necessary equipment and supplies. The arrangement described did not satisfy those requirements.

What this means for you

Calling a charge hourly labor did not make the transaction exempt staffing. The underlying service and the customer's existing workforce, supervision, and equipment responsibilities determined whether the temporary-help exemption applied.

Common questions

Were the valet company's charges taxable? Yes, in full.

Did hourly billing make the service nontaxable? No.

Why was it not exempt temporary help? The arrangement was for identifiable valet-parking services and did not meet the letter's listed staffing, supervision, and equipment conditions.

Who paid the valet company? The country club; club members and guests were not charged.

Citations and references

• No statute or administrative rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9101L1069A01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

JOHN SHARP
Comptroller January 22, 1991

Dear *:

Thank you for your recent letter regarding your client's sales and
use tax responsibilities as a valet parking company.

According to your letter, your client charges its customers an hour-
ly fee for the valet parking services, and the people having their
vehicles parked are not charged any fee.

The fact that an hourly fee is charged, rather than a weekly or
monthly fee, does not affect the taxability of a service. In
addition, inherent in the provision of a service is paying for
someone's time. The determining factor is whether the service
itself falls under any of the delineated labors taxed under the
law. If it does, the tax is due unless the service comes under
any of the exclusions or exemptions provided in the law.

We have spoken to the auditor, and as I understand the situation
at issue, your client regularly supplies at least one, and often
supplements this with other, of its employees to the country club
under audit to provide valet parking service for the club members
and their guests. As you are aware, this labor is considered to
be motor vehicle parking service.

However, there is an exemption for temporary help services. To
qualify for this, the following requirements must be met:

• The agreement must be for furnishing temporary employees,
  and not for identifiable services. That is, the help must
  supplement an existing workforce on a temporary basis, and
  the functions must be a type that are done by that workforce
  on a day-to-day basis. If the customer does not have a staff
  to regularly provide these services or is understaffed, then
  the contract will be presumed to be for services and not for
  temporary employees.

• The help is under the direct or general supervision of the
  customer. This includes the customer having the right to ask
  that a temporary helper be replaced if his/her performance is
  not satisfactory.

• The customer must provide all supplies and equipment neces-
  sary to perform the services.

Under the above requirements, your client's services do not fall
under the temporary help exemption. Therefore, your client is
required to collect and report the state and applicable local
sales/use taxes on the total charge made to its customer.

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

You may call me toll free at 1-800-252-5555, ext. 34666. The reg-
ular number is 512/463-4666. You may also write to Tax Adminis-
tration Division at the above address.

Sincerely,
Jo Ann Dieck
Tax Administration Division