Were Texas seminar fees taxable, and who owed tax on books, audiotapes, and course materials distributed to participants?

Plain-English summary

The Comptroller said fees for a seminar, training class, or other educational course were not subject to Texas sales or use tax. Separate sales of tangible items such as books and audiotapes were taxable.

Materials handed to participants for free were taxable to the seminar company itself. If brought into Texas from another state, Texas use tax was based on the rate where the materials were first used or stored. Because the provider hired people to act as its representatives in Texas, it was engaged in business in the state and had to collect tax on its taxable sales.

What this means for you

The letter separated the nontaxable educational service from taxable physical materials. Calling materials free did not eliminate the provider's own tax responsibility, and using in-state representatives created a Texas collection obligation on book and audiotape sales.

Common questions

Was the seminar admission fee taxable? No.

Were books and audiotapes taxable? Yes.

Who paid tax on free participant materials? The seminar provider.

Why did the out-of-state provider have to collect Texas tax? It had hired people to act as its representatives in Texas.

Citations and references

• 34 Tex. Admin. Code Rule 3.346 — use tax
• 34 Tex. Admin. Code Rule 3.286 — seller and purchaser responsibilities

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9109L1131E01

Original ruling text

September 25, 1991

Dear ****:

Thank you for your letter concerning the continuing education seminar that
**** plans to present in Texas this year.

Texas does not impose sales or use tax on fees paid for a seminar, training
class or other educational courses or classes. Tax is due, however, on
sales of tangible personal property including books and audiotapes.

Materials that are provided free to seminar participants will be taxable to
your company. If the materials are brought into Texas from outside the
state, Texas use tax is due based on the tax rate at the location where the
materials are first used or stored. See Rule 3.346-Use Tax. (copy enclosed)

** will be required to collect the Texas tax on sales of books
and audiotapes. Because it has hired persons to act as its representatives,
** is "engaged in business" in Texas and must comply with
Texas tax law. Please review Rule 3.286-Sellers and Purchasers
Responsibilities.

An application for a permit to collect sales and use tax may be obtained by
calling our toll-free number or visiting one of our field offices located
throughout the state.

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

Please feel free to contact me if you have any additional questions. You may
write me, call toll free 1-800-252-5555, ext. 34685, from anywhere in the
United States or phone 512/463-4685.

Sincerely,

Julie Pesl
Tax Administration Division