Was a professionally performed fireworks display a taxable sale of fireworks, and could the provider buy the fireworks tax-free for resale?

Plain-English summary

A seller that handed fireworks to a customer made a taxable sale of tangible personal property. But a person hired to stage and ignite a fireworks display provided a nontaxable service instead, even if the invoice separately stated an amount for fireworks.

The customer received neither title nor possession of the fireworks, and the fireworks were immediately consumed rather than remaining useful to the customer. The display provider was therefore the consumer of the fireworks and supplies and owed tax when purchasing them. The provider could not give suppliers a resale or exemption certificate, regardless of the customer's exempt status.

Admissions charged to viewers were normally taxable amusement services. The letter noted that Rule 3.298(g) could exempt admissions sold by certain nonprofit or governmental providers.

What this means for you

The transaction's substance controlled. Selling fireworks to a customer was a property sale; performing a display was a service. Separately listing the fireworks did not turn the provider's consumed inputs into a resale.

Common questions

Was the display itself taxable? No. The letter treated it as a nontaxable service.

Did separately stating the fireworks charge change the result? No.

Could the display provider buy fireworks tax-free for resale? No. The provider consumed them and owed tax on the fireworks and supplies.

Were viewer admissions taxable? Normally yes as amusement services, although the cited rule exempted certain nonprofit and governmental providers.

Citations and references

• 34 Tex. Admin. Code Rule 3.298(g)
• Microfiche 1089C05, cited by the letter for service-versus-sale analysis

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9204L1165E13

Original ruling text

DATE: April 15, 1992

TO: Monica Brawner, Houston South Audit

FROM: David Sommerville, Tax Administration

SUBJECT: Taxability of Fireworks Displays

RE: **

A person selling fireworks without setting them off for the
customer is selling tangible personal property. When a person is
hired to provide a fireworks display, he or she is performing a
service for the customer rather than selling fireworks. Even when
an amount is separately stated for the fireworks used in the
display, a sale of tangible personal property has not occurred.
Neither title nor possession of fireworks is actually passing
to the customer for a consideration. In addition, the fireworks
are immediately consumed and are not used or useful to the
customer over a period of time (See microfiche 1089C05 regarding a
service vs. a sale).

Instead, the essence of the transaction is the non-taxable service
of providing a fireworks display. This is similar to a band
performing a concert. The fireworks and any supplies used in
providing the display are taxable to the service provider at the
time of purchase, regardless of the exempt status of the customer.
The service provider is the consumer of these taxable items and
may not issue a resale or exemption certificate in lieu of tax to
suppliers.

The admission charged persons to view a fireworks display would
normally be a taxable amusement service. However, in many cases
the admission may be sold tax free because of the exemption found
in Rule 3.298(g) regarding certain non-profit and governmental
entities that are the providers of amusement services.