Could a for-profit club buy membership cards, certificates, newsletters, and other printed materials tax-free for resale with taxable dues?

Plain-English summary

For-profit clubs that collected sales tax on membership dues could buy membership cards, certificates, and other printed materials tax-free when those items were given to members as part of membership. The club gave its printer a resale certificate instead of paying tax.

The letter said this treatment had been available beginning October 1, 1987, but refund requests were subject to a four-year statute of limitations. A club seeking a refund had to obtain it from the person to whom the tax was paid.

STAR later added an alert directing readers to Rule 3.285, as amended November 1, 2017, for care, custody, and control guidance concerning tangible personal property used with a taxable service.

What this means for you

The resale result depended on the printed materials being included as part of taxable membership dues. Clubs should retain resale certificates and pursue any seller-collected-tax refund through the seller within applicable deadlines.

Common questions

Could the club buy membership cards tax-free? Yes. What supported resale treatment? The club taxed membership dues and transferred the printed materials as part of membership. Who handled a refund? The person to whom the tax was paid. Did STAR flag later guidance? Yes, Rule 3.285.

Citations and references

• 34 Tex. Admin. Code Rule 3.285, as identified in STAR's later alert

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9111L1142D09

Original ruling text

ALERT: For specific guidance relating to the care, custody and control of TPP when providing a taxable service, please see Rule 3.285, Resale Certificates; Sales for Resale (amended 11/01/2017.

November 18, 1991

Dear ****:

Thank you for your letter of October 31, 1991, asking about the
taxability of membership certificates, membership cards, etc. purchased by
for-profit clubs.

Membership cards, membership certificates, and other printed material
given to members as a part of their membership in the club may be purchased tax
free if the club is required to collect sales tax on membership dues. The
printed material is purchased tax free by issuing the printer a resale
certificate in lieu of tax.

This printed material purchased by clubs required to collect sales tax on
membership dues could have been purchased tax free beginning October 1, 1987;
however, there is a four year statute of limitation on refund requests.

If you seek a refund of sales tax on this material, you must obtain the
refund from the person to whom the tax was paid. If you have any questions
about the refund procedure, you should contact ** at 512/463-4548.
** may also be reached on the toll-free number 1-800-252-5555,
extension 3-4548.

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

If you have any questions or need more information, you may call me toll
free at 1-800-252-5555, extension 3-4633. The regular number is
512/463-4633. You may also write to Tax Administration Division.

Sincerely,

Wanda Hutcheson
Tax Administration Division