How many one-day tax-free sales or auctions can a 501(c)(3) organization and its chapters hold each calendar year in Texas?

Subject

Two One-Day Tax-Free Sales Or Auctions Allowed To 501(c)(3) Organizations And Their Chapters

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9308L1255B03

Plain-English Summary

A taxpayer's representative wrote asking for a ruling confirming that, effective August 30, 1993, the Junior League of [redacted city], a 501(c)(3) organization, would be eligible to hold two tax-free sales each calendar year.

The Comptroller's response confirms this. The 73rd Texas legislative session, which ended in May 1993, passed HB 1660, amending Texas Tax Code 151.310(c) to allow organizations under sections (a)(1) or (a)(2) — and each chapter of each organization — to hold two tax-free sales or auctions during a calendar year. This amendment took effect August 30, 1993.

The letter tells the Junior League that, as a 501(c)(3) organization, it will qualify to hold two tax-free sales or fundraisers each calendar year once the legislation takes effect. It also reminds the taxpayer that each sale can last no longer than 24 consecutive hours.

What This Means For You

The two-sale limit applies per organization AND per chapter. The letter states that "each chapter of each organization" covered by Tax Code 151.310(c)'s sections (a)(1) or (a)(2) may hold its own two tax-free sales or auctions each calendar year — the allowance isn't just a single two-sale limit shared across an entire organization.

Each sale is capped at 24 consecutive hours. The letter emphasizes this limit directly: "each sale can last no longer than 24 consecutive hours." A tax-free sale or auction event that runs longer than one day (24 hours straight) would fall outside the guidance given here.

This applies to 501(c)(3) organizations under Tax Code 151.310(c), sections (a)(1) or (a)(2). The letter's ruling is specifically about the Junior League as a 501(c)(3) organization; it doesn't address other subsections of 151.310 or other types of exempt organizations.

Know the effective date. The two-tax-free-sale allowance described in this letter took effect August 30, 1993, as a result of HB 1660 passed in the 73rd legislative session. The ruling was issued in anticipation of that effective date.

Q&A

Q: How many tax-free sales or auctions can a 501(c)(3) organization hold each calendar year under this letter?
A: Two. The letter confirms that a 501(c)(3) organization under Tax Code 151.310(c) sections (a)(1) or (a)(2) may hold two tax-free sales or auctions during a calendar year.

Q: Does the two-sale allowance apply separately to each chapter of an organization?
A: Yes. The letter states the amendment allows "each chapter of each organization" covered by the relevant sections to hold two tax-free sales or auctions during a calendar year.

Q: How long can each tax-free sale last?
A: No longer than 24 consecutive hours, per the letter.

Q: What law changed to allow this, and when did it take effect?
A: HB 1660, passed by the 73rd Texas legislative session (which ended in May 1993), amended Texas Tax Code 151.310(c). The amendment was effective August 30, 1993.

Q: What kind of organization was asking for this ruling?
A: The Junior League of [a redacted city], described in the letter as a 501(c)(3) organization.

Q: Does this letter address organizations that aren't covered by sections (a)(1) or (a)(2) of Tax Code 151.310(c)?
A: No, the letter only addresses organizations under sections (a)(1) or (a)(2) of that Tax Code provision.

Original ruling text

August 27, 1993

Dear **:

This is in response to your letter dated August 17, 1993, requesting a
ruling that states effective August 30, 1993, the Junior League of
**, a 501 (c)(3) organization, will be eligible to hold two
tax-free sales each calendar year.

The 73rd legislative session that ended in May 1993, passed HB 1660,
which amends the Texas Tax Code 151.31 0(c) to allow organizations under
sections (a)(1 ) or (a)(2) and each chapter of each organization to hold
two tax-free sales or auctions during a calendar year. This amendment to
the Tax Code is effective August 30, 1993.

Your client, the Junior League of **, as a 501 (c)(3)
organization will qualify to hold two tax-free sales or fundraisers each
calendar year when the legislation above takes effect. I am sure you and
your client are aware that each sale can last no longer than 24
consecutive hours.

If you have any questions or need more information, please write or call
me at 1-800-531-5441, extension 50330, or 512-475-0330.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 93070142L2 and/or 9307142L