Did Texas PTA groups have to collect sales tax on concession-stand food and drink sales at school football games?

Plain-English summary

After reconsidering an earlier answer, the Comptroller said the PTA groups' football-game concession-stand sales qualified for exemption under Tax Code Section 151.314(e). The groups did not have to collect and remit tax on those sales.

The cited exemption applied when sales were made by a group associated with a public or private elementary or secondary school, were part of a fundraising drive sponsored by the organization, and all net proceeds went to the organization for its exclusive use.

The letter also let the PTAs rely on two sales-tax review bulletins allowing tax-free food sales when PTA members prepared, served, and sold the food without competing with retailers required to collect tax. It separately noted an annual one-day tax-free sale intended for items other than food.

What this means for you

The ruling did not announce that every PTA concession sale was automatically exempt. It tied the result to the school-group fundraiser requirements and exclusive use of net proceeds stated in Section 151.314(e).

Common questions

Were the described football concession sales taxable? No.

What conditions did the letter identify? The seller had to be a school-associated group, the sales had to be part of its fundraiser, and all net proceeds had to go to that organization for its exclusive use.

Did the letter discuss other PTA food fundraisers? Yes. It said PTAs could rely on bulletins covering food prepared, served, and sold by members where the sales did not compete with taxable retailers.

Was there another annual sale rule? The letter described one designated tax-free day each year for selling items other than food.

Citations and references

• Tex. Tax Code Section 151.314(e) — exemption for qualifying school-group fundraising sales
• December 1989 and September 1990 sales-tax review bulletins — PTA food sales and annual one-day sale guidance referenced 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/9109L1129G09

Original ruling text

September 18, 1991

Dear ***:

This letter is in response to telephone conversations we had
with ***** of your association concerning a taxability
letter we wrote to one of the PTA groups in your association.

The PTA group inquired about concession stand sales at football
games in Texas. Bettie Peterson wrote the group that
these sales were subject to sales tax.

Bettie' s reply was consistent with a previous letter we had
written on this subject.

We have taken another look at this issue, which has been somewhat
of a "gray" area in our sales tax code. Subsection 151.314(e)
provides an exemption for these sales if the sales are made
by a group associated with a public or private elementary or
secondary school, the sales are part of a fund- raising drive
sponsored by the organization, and all net proceeds from the
sale go to the organization for its exclusive use.

It is our opinion that your concession stand sales qualify
for this exemption. The PTA groups are not required to collect
and remit tax on these sales.

*** also referred to two sales tax review bulletins
written in December of 1989 and September of 1990. These bulletins
provide that PTA's may sell food items tax free if the
food is prepared, served and sold by members of the PTA and
the sales are not in competition with retailers that are required
to collect sales tax. These sales were intended to include
fund-raisers such as pancake suppers. Your PTA groups may rely
on these two bulletins.

In addition, the bulletins provide that the PTA' s may also
hold a "one-day, tax-free sale" each year. The organizations
may designate one day as their sales day. This one-day sale
was meant to allow a tax-free sale of items other than the sale
of food items.

*** requested us to mail this letter to your association
and you would then notify all the PTA groups that are
members of your association, including the group that wrote us
to inquire about the taxability of the concession stand sales.

If you have any questions, please call one of our tax specialists
toll free at 1- 800-252-5555. Our Austin number is 512-463-4600.

Sincerely,

Lucy Glover
Manager
Tax Administration Division