Were unused private-club food, beverage, and liquor minimum charges subject to Texas sales tax?

Plain-English summary

The Comptroller addressed unused portions of private-club monthly food and beverage minimums.

Those unused minimum charges were taxable for nonprofit Section 501(c)(7) clubs beginning October 1, 1991. They had been taxable for for-profit clubs since October 1, 1987.

Liquor beverage minimums subject to the alcoholic-beverage gross receipts tax were not also subject to sales tax.

What this means for you

Private clubs

Minimum charges could be taxable even when members did not consume the food or beverages. Separately identify liquor amounts governed by the gross receipts tax.

Accountants and tax professionals

This is a historical coordination rule between sales tax and alcoholic-beverage gross receipts tax. Verify current tax names, rates, and reporting rules.

Common questions

Were unused food and beverage minimums taxable? Yes.

When did the letter say nonprofit club minimums became taxable? October 1, 1991.

Were liquor minimums subject to both taxes? No. Amounts subject to alcoholic-beverage gross receipts tax were not subject to sales tax.

Citations and references

• Internal Revenue Code § 501(c)(7) (nonprofit social club status)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9201L1157A01

Original ruling text

January 31, 1992

Dear ***:

Your letter concerning the taxability of monthly food and beverage
minimums has been assigned to me for review and response. I appreciate
your patience and apologize for the delay in responding.

The unused portions of a members' monthly food and beverage minimums
are subject to sales tax, effective October 1, 1991, for nonprofit
501(c)(7) organizations. These charges have been taxable for for-profit
clubs since October 1, 1987. Liquor beverage minimums that are subject
to the gross receipts tax on alcoholic beverages would not be subject
to sales tax.

I have enclosed a listing of various charges to members and guests,
of for-profit, non-profit, and municipal or federal clubs, which
sets out the taxability of each of the charges.

This opinion is based on the facts presented. Other facts though
similar may provide a different result.

If you have other 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