Were one-way or round-trip train tickets taxable admissions when the trip ended in a historic district?

Plain-English summary

The client sold one-way and round-trip train tickets from one city station to a historic district in another city, with occasional special events offered during the trip.

The Comptroller said admissions to tour trains and buses were taxable when their primary purpose was showing tourist sights along a route. When the primary purpose was transportation, as it appeared to be here, the admission was not taxable.

The letter did not decide the tax treatment of the occasional special events because it needed more facts.

What this means for you

The route's destination and historic setting did not automatically turn transportation into a taxable tour. Providers should document the trip's primary purpose and separately analyze entertainment or event features.

Common questions

Were these train tickets taxable? No on the stated transportation facts. Were sightseeing tours taxable? Yes. Were the special events taxable? The letter did not decide.

Citations and references

• 34 Tex. Admin. Code Rule 3.298

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9111L1141A05

Original ruling text

November 21, 1991

Dear **:

Thank you for your recent letter which is restated in part with response below.

The client will sell tickets to board a train that originates at the CITY A
station and ends in the historical strand district of CITY B. The trips are
offered Friday through Sunday and may be one way or a round trip. Occasionally,
a special event may be offered on the trip.

My understanding of Rule 3.298 is that this client's sales would be classified
as transportation and exempt. Is this understanding correct?

Response: Admissions to tour trains and buses, whose primary purpose is to show
tourist sights along a route as opposed to regular transportation are subject
to sales tax. However, if the primary purpose of the admission is
transportation as it appears to be in this case, the admission is not subject
to sales tax. I'd need more information on the special events you mentioned
before I could comment on those.

This opinion is based on the facts presented. Other facts, though similar, may
yield a different results.

If you have any other questions concerning this, please call or write. You may
reach me by calling toll free, (800) 531-5441. My direct line number is
512/463-4600. The number for FAX transmissions is (512) 475-0900. You may write
to me in care of Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division