Were a nonprofit private dining club's initiation fees, dues, privileges, and amusement services exempt because the club occupied a historic landmark?

Plain-English summary

The Comptroller said a nonprofit private dining club did not have to collect sales tax on initiation fees, dues, special-privilege fees, and other amusement services because it operated exclusively in a building listed in the National Register of Historic Places and designated as a Recorded Texas Historic Landmark.

The location-based amusement exemption did not cover everything the club sold. Meals and beverages sold to members and guests remained subject to sales tax. Alcoholic beverages subject to the Texas Alcoholic Beverage Commission gross-receipts tax were not subject to sales tax.

What this means for you

The exemption depended on the club's qualifying historic location and applied to amusement-service charges. The ruling kept food and beverage sales separate from exempt dues and entertainment-related fees.

Common questions

Were initiation fees and dues exempt? Yes, on the facts presented.

Were special-privilege and amusement charges exempt? Yes.

Were meals and beverages exempt too? No. The club still had to collect sales tax on meals and nonalcoholic beverages.

Citations and references

• 34 Tex. Admin. Code Rule 3.298(a)(1) — definition of amusement service
• 34 Tex. Admin. Code Rule 3.298(g)(1)(F)-(G) — qualifying historic places
• I.R.C. § 501(c)(7) — social clubs

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9109L1134G10

Original ruling text

September 30, 1991

Dear **:

Your letter concerning your exemption from collecting sales tax on
amusement services has been assigned to me for review and response.

** is a non-profit (Sec. 501 (c) (7)), private dining club
organized in 1981. You occupy a restored structure of the old BUILDING
B which is designated as a Recorded Texas Historical Landmark by the
Texas Historical Commission and is also listed in the National
Register of Historic Places.

Section (a) (1) of Rule 3.298, Amusement Services, defines an "amusement
service" to be "entertainment, recreation, sport, pastime, diversion,
or enjoyment that is a pleasurable occupation of the senses." Places
offering amusement services include private clubs offering dining or
social facilities to members.

Sections (g)(1)(F) and (G) of this rule, exempt amusement services
provided exclusively in a place that is included in the National
Register of Historic Places or that is designated as a "Recorded Texas
Historic Landmark" by the Texas Historical Commission.

Based on the statements contained in your letter, ** is
exempt from having to collect sales tax on its charge to its members
for: initiation fees, dues, other fees charged for special privileges
and other amusement services. *** must continue to collect
and report sales tax on meals and beverages sold to its members and
guests. Alcoholic beverages subject to Texas Alcoholic Beverage
Commission gross receipts tax are not subject to sales tax.

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, you may call
512/463-4600, or 1-800-252-5555 from outside Austin. You may write to
Tax Administration Division.

Sincerely,

Gilbert Zamora
Tax Administration Division