Were separately stated port charges on passenger tickets for an entertainment vessel subject to Texas sales tax?

Plain-English summary

A company sold tickets for an approximately eight-hour passenger trip from a Texas port to international waters, where entertainment activities occurred. Each ticket separately listed a base ticket price, port charges, a federal exit tax, and sales tax. The port charges compensated the port for dock space and passenger parking.

The Comptroller ruled that the port charges were part of the selling price of the amusement service. The seller therefore had to collect and remit tax on the total admission price, including charges added by others.

What this means for you

Separately stating a cost did not remove it from the taxable admission price in this ruling. A seller of amusement services remained responsible for the correct tax on total receipts from taxable sales, including the port charge added to each ticket.

Common questions

Were the port charges taxable? Yes.

What did the charges pay for? Dock space for the vessel and parking space for passengers' automobiles.

Did separately listing the port charges change the result? No. The letter treated them as part of the amusement service's selling price.

What rules did the Comptroller identify? Rule 3.298 on amusement services, especially sections (a)(5) and (h)(2), and Rule 3.315 on motor vehicle parking.

Citations and references

• 34 Tex. Admin. Code Rule 3.298 (amusement services)
• 34 Tex. Admin. Code Rule 3.315 (motor vehicle parking)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9101L1070D12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

JOHN SHARP
Comptroller January 29, 1991

Dear ** :

We have received your letter requesting clarification as to the
taxability of Port Charges.

Your company is engaged in the business of transporting people
from a Texas port to international waters where various enter-
tainment activities transpire. The vessel returns in approxi-
mately eight hours to the same port from which it left earlier
that same day. The price of this entertainment is set forth on
each passenger ticket with the following items specifically set
forth:

Ticket Price $25.00
Port Charges 5.00
Federal Exit Tax 3.00
Sales Tax (7.75%) 1.94

Total collected
from passenger $34.94

The "Port Charges" are paid directly to the Port from which the
vessel operates to compensate them for dock space and parking
space where the passengers park their automobiles.

Question: We are asking for a ruling as to whether sales tax is
also applicable to Port Charges in addition to the base price
of the ticket.

Answer: The "Port Charges" are a part of the selling price of
the amusement service. Each seller of amusement services sell-
ing to the final consumer must collect and remit tax to the
Comptroller on the total receipts from all taxable sales. A sel-
ler will be responsible for remitting the correct amount of tax
based on the total sales price of admissions including any char-
ges added by others.

I have enclosed Rule 3.298- Amusement Services for your informa-
tion. Please review sections (a)(5) and (h)(2) of the rule.
Rule 3.315 on motor vehicle parking is also included for your
reference.

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

Please feel free to contact me if you have any additional ques-
tions. You may write me, call toll free 1-800-252-5555 from any-
where in the United States or phone 512/463-4600.

Sincerely,
Julie Pesl
Tax Administration Division