When is a packaged bus tour taxable as an amusement service rather than nontaxable transportation, and how are meals and admission fees treated?

Plain-English summary

The Comptroller used the essence of the service to classify a packaged bus tour. A trip that was primarily a guided scenic tour was a taxable amusement service. A trip mainly transporting passengers to and from amusement locations, with sightseeing only incidental or absent, was nontaxable transportation.

If transportation was primary and the organizer sold one package price, it did not have to collect tax from customers or hold a sales-tax permit for the package. It instead had to pay tax on the catered meals and prepaid taxable admission fees. If it separately charged customers for food, admissions, and transportation, it needed a permit and had to collect tax on food and taxable admissions, while excluding the separately stated transportation charge.

If the bus tour itself was amusement, the organizer needed a permit and had to collect tax on the tour charge, food, and taxable admissions. Amusement services exempt under Rule 3.298 remained exempt. With a permit, the organizer could buy food and admissions using a resale certificate or pay supplier tax and claim the credit described in Rule 3.338.

What this means for you

Packaging everything under one price did not settle the tax result. The trip's primary purpose controlled whether the bus service was transportation or amusement, while meals and admission components required their own tax treatment.

Common questions

Was a guided scenic bus tour taxable? Yes. The letter treated it as an amusement service.

Was a bus trip mainly taking customers to attractions taxable? The transportation charge was not taxable when transportation was primary and sightseeing was only incidental or absent.

Who paid tax on meals and admissions in a transportation package? Under a single package price, the organizer paid tax on catered meals and taxable prepaid admissions. With separate charges, it collected tax from customers on those components.

Could exempt attraction admissions remain untaxed? Yes. The letter preserved exemptions under Rule 3.298.

Citations and references

• 34 Tex. Admin. Code Rule 3.298 — amusement-service exemptions referenced by the letter
• 34 Tex. Admin. Code Rule 3.338 — credit for tax paid to suppliers or paid in error

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9109L1131D01

Original ruling text

September 19, 1991

Dear ***:

Thank you for your recent letter, in which you requested an explanation
of your tax responsibilities under the following facts:

We are arranging bus tours. We shall rent a bus, plan the tours, have
a lunch catered, and prepay all exhibits and entrance fees. This package
will be sold to the public.

Whether or not you are required to hold a permit and collect tax depends
on whether the essence of your service is transportation or amusement.
If your bus trip is primarily a guided, scenic tour, then the charge to
your customers for the bus trip is taxable as an amusement service.
However, if the bus trip serves primarily to transport passengers to and
from amusement service locations, and only incidentally (if at all)
involves sightseeing along the way, then the charge for transportation is
not taxable.

If you are providing primarily transportation services, then you are
not required to hold a sales tax permit or to collect tax from your
customers on your charge for the package tour. You would be required
to pay tax on the catered meals you provide, and on the amusement service
admission fees that you prepay (unless, of course, the amusement service
is exempt from tax under Rule 3.298, Amusement Services).

If you choose to charge your customers separately for food, amusement
service admissions, and transportation, then you should obtain a sales
tax permit. You would be required to collect tax from your customers on
the charges for food and amusement service admissions, but you could
exclude from tax the separately stated charge for transportation services.

If you do obtain the permit, you may issue a resale certificate to
purchase the food and amusement service admissions tax free, or you may
pay tax to the supplier and then take a credit on your tax report for
tax paid (as per enclosed Rule 3.338, Credit; Tax Paid to Suppliers,
Paid in Error).

If the bus tour itself is an amusement service (a guided, scenic tour),
as described above, then you are required to hold a sales tax permit
and must collect tax on the charges for the bus tour, amusement service
admissions, and food. You could issue a resale certificate for food and
amusement service admissions, or pay tax and take a credit on your tax
report as discussed above.

Of course, you would still not be required to collect tax from your
customers on the charges in the package tour that are attributable to
amusement services exempt from tax under Rule 3.298.

This opinion is based on the facts presented. Different facts, though
similar, might lead to different answers. If you have further questions,
feel free to write or call me at 1-800-252-5555, ext. 3-3889.

Sincerely,

John Christian, Attorney
Tax Administration