Did a Texas outdoor-play company have to collect sales tax when it sold vouchers that could later be exchanged for assigned-seat tickets?

Plain-English summary

The company sold vouchers during its June-through-Thanksgiving weekend outdoor-play season. Because seating was assigned, the vouchers themselves did not admit anyone to a performance. The company recorded voucher receipts as unearned revenue until redemption.

The Comptroller said selling the vouchers was not taxable because they were not admission documents under Rule 3.298(a)(7). The company instead had to collect sales tax when a customer exchanged a voucher for an actual ticket.

What this means for you

Under this 1991 letter, tax timing followed when the customer received the admission document. A voucher that could not itself be used for entry was treated differently from the assigned-seat ticket issued at redemption.

Common questions

Was sales tax due when the voucher was sold? No.

Why was the voucher sale not taxable? The voucher was not valid for admission and therefore was not an admission document to an amusement service.

When did the company collect sales tax? When the customer exchanged the voucher for a ticket.

Did the company's accounting support that treatment? The letter notes that voucher receipts were recorded as unearned revenue in the liability section of the balance sheet.

Citations and references

• Comptroller Rule 3.298(a)(7) (definition of the sale of an amusement-service admission)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9103L1089G03

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

March 12, 1991

Dear ** :

Your letter concerning the taxability of vouchers redeemable for
tickets to an outdoor play has been assigned to me for review and
response.

Your company currently sells the vouchers for the June through
Thanksgiving week-end play season. The vouchers are not valid
for admittance to a play, as seating is assigned. Receipts from
the sale of vouchers are treated as unearned revenue in the
liability section of your balance sheet. The purpose of your
letter is to receive confirmation that sales tax is not due when
the vouchers are sold.

Section (a)(7) of Rule 3.298 Amusement Services, defines the sale
of an amusement service admission as "the transfer of title to or
possession of a ticket or other admission document for a
consideration or the collection of an admission, membership or
enrollment fee, whether by individual performance, subscription
series, or membership privilege, or through the use of a coin-
operated or credit-card-operated machine".

Since the vouchers are not an admission document to an amusement
service, this is not a transaction subject to sales tax. Sales
tax should be collected from the customer at the time the
vouchers are exchanged for tickets.

This opinion is based on the facts presented. If there are
different or additional facts, this opinion could change.

If you have further questions or need more information feel free
to call me at 512/463-4502, or 1-800-531-5441 from outside
Austin. You may write me at Tax Administration Division. [FAX
512/475-0900]

Sincerely,
Gilbert Zamora
Tax Administration Division