Is a cartoonist or caricature artist's charge for drawings at a catered party taxable under Texas sales tax law?

Subject

Caricature Artists/Cartoonists Charges For Drawings At Parties — Taxable As Graphic Art, Not Entertainment

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9310082L

Plain-English Summary

This letter responds to a caterer's question about the June 1993 "Sales Tax Update," which discussed how caterers should handle sales tax on various charges connected with parties and catered events.

The Comptroller draws a key distinction between admissions and entertainment charges versus charges for graphic art. A charge for admission to an amusement event — like a concert — is taxable as an amusement service under Rule 3.298(a)(8). But a charge for a band or other entertainment is not taxable if it is not itself a charge for admission to an event; for example, hiring a band to play at a private party (with no admission charged to attend) does not trigger sales tax on the band's fee. If admission is charged to the event where the band performs, however, that admission becomes taxable.

Cartoonists and caricature artists are treated differently. The letter states that a charge for a cartoonist is taxable as the sale of graphic art, rather than as a charge for entertainment — even if the cartoonist bills by the hour. The cartoonist must collect and remit sales tax on charges for producing the art. Alternatively, if the person hiring the cartoonist will collect and remit tax on the separately stated cartoonist charge (or on a taxable admission to an event that includes the cartoonist's art), that person may instead issue a resale certificate to the cartoonist rather than paying tax to the cartoonist directly. The letter notes this treatment isn't new: since October 2, 1984, the law has taxed admissions to amusement events, singer/band charges have not been taxable absent an admission charge, and cartoonists have always been treated as graphic artists producing tangible personal property for sale (per Rule 3.312).

The letter then walks through three sample catering invoices. Across all three, charges connected with the sale of food and beverages (per-person charges, tables, covers, chairs, decorations) are taxable to the customer, and the caterer must pay sales tax to its own vendors when purchasing, leasing, or renting that equipment. Liquor service charges are not subject to sales tax if the receipts are instead taxable under Texas Alcoholic Beverage Code Section 202.02. Story tellers, a string quartet, folklorico dancers, a mariachi band, gunslingers, and donkeys are not taxable if no admission is charged for the event, but the separately stated cartoonist charge in Sample 1 is taxable regardless (with a resale certificate available). Sample 2 illustrates that a facility owner charging consideration for use of the facility or its amusements (a Rol-A-Roper, hay ride, band, rodeo, armadillo/pig races, gunslingers and trick roper) must collect and remit tax on the total charges — though entry fees to compete in a contest or tournament, per Rule 3.298(c), are not taxable. Security services purchased for a catered event are also taxable per Rule 3.333.

What This Means For You

If you're a cartoonist, caricature artist, or hire one for an event: Treat the charge as a sale of taxable graphic art, not as an exempt entertainment fee — this applies even to hourly billing. Either the artist collects and remits sales tax on the charge, or the party that will collect tax on the admission/separately stated charge can give the artist a resale certificate instead.

If you book bands, singers, or story tellers for a private event: As long as you don't charge admission to attend, those entertainment charges are not taxable. The moment you charge admission to the event, that admission becomes a taxable amusement service.

If you're a caterer: Charges for food, beverages, tables, chairs, covers, and decorations are taxable to your customer, and you owe sales tax to your own vendors on equipment you purchase, lease, or rent for the event. Liquor service charges fall outside sales tax when taxed instead under the Alcoholic Beverage Code's gross receipts tax.

If you operate an event facility offering amusements: If you charge consideration for use of the facility or its amusements (rides, games, bands under an admission charge, rodeos, etc.), you must collect and remit sales tax on the total charges — but entry fees for contest/tournament participation are carved out as nontaxable.

If you provide security at catered events: Security services are taxable, and the customer purchasing them owes sales tax on those charges.

Q&A

Q: Is a caricature artist's or cartoonist's charge for drawings at a party taxable?
A: Yes. The letter states the charge for a cartoonist is taxable as the sale of graphic art, rather than as a charge for entertainment, and this applies even if the charge is based on an hourly rate.

Q: Can a business avoid paying sales tax to the cartoonist directly?
A: Yes, if the business collects and remits sales tax on the separately stated cartoonist charge (or on a taxable admission to an event that includes the cartoonist's art), it may issue a resale certificate to the cartoonist instead of paying sales tax to the cartoonist.

Q: Is hiring a band for a party taxable?
A: Not necessarily. A charge for a band or entertainment is not taxable if it isn't a charge for admission to an event — for example, hiring a band to play at a party without charging admission does not create sales tax on the band's charge. But if admission is charged to the event, that admission is taxable.

Q: How are liquor service charges at a catered event handled?
A: Per the letter, the charge for liquor services is not subject to sales tax if the receipts are taxable under Texas Alcoholic Beverage Code Section 202.02.

Q: Are entry fees to compete in a contest, like a rodeo event, taxable?
A: No. The letter states that entry fees to compete in a contest or tournament as specified in Rule 3.298(c) are not taxable, distinguishing them from taxable admission and facility-use charges.

Original ruling text

October 4, 1993

Dear **:

Thank you for your letter concerning the information on caterers contained in
the June 1993 "Sales Tax Update."

A charge for admission to an amusement event is taxable. For example, an
admission to a concert is taxable as an amusement service. A charge for a band
or entertainment is not taxable if not a charge for admission to an event. For
example, a person may hire a band to play at a party without owing sales tax on
the charge for the band. If admission is charged to an event at which the band
performs, the admission is taxable. The enclosed Rule 3.298(a)(8) on amusement
services has information on the sale of an amusement service admission.

The charge for a cartoonist is taxable as the sale of graphic art, rather than
as a charge for entertainment. A cartoonist is required to collect and remit
sales tax on charges to produce art, even if the charges are based on an hourly
rate. A person who collects and remits sales tax on separately stated charges
for a cartoonist or who collects and remits sales tax on taxable admissions to
an amusement event at which the cartoonist's art is included may issue a resale
certificate to the cartoonist in lieu of paying sales tax to the cartoonist.
Otherwise, the person must pay sales tax to the cartoonist on his or her
charges.

The above information is not a result of recent hearings or other changes.
Beginning October 2, 1984, the law taxed admissions to amusement events. The
charges for singers and bands are not taxable, unless an admission is charged
for an event. Cartoonists have always been considered graphic artists who
produced tangible personal property for sale. The enclosed Rule 3.312 has
information concerning graphic artists.

With this information in mind, I have reviewed the three sample invoices
included with your letter and have the following comments concerning
taxability:

Sample 1 (Invoice # **)

The total charges connected with the sale of food and beverages (other than
mixed drinks subject to alcohol beverage gross receipts tax) are taxable to the
customer. These would include the charges per person, for tables, for covers,
and for chairs ($**). Sales tax must be paid to the vendor when
purchasing, leasing, or renting tables, covers, and chairs used in catering
meals.

If no admission is charged, sales tax is not due on the charges for the string
quartet and the story teller. The separately stated charge ($**) for
the cartoonist is taxable to the customer. A resale certificate may be given
the cartoonist for art sold to customers.

The charge for liquor services ($**) is not subject to sales tax if
the receipts are taxable under Texas Alcoholic Beverage Code Section 202.02.

Sample 2 (Invoice # **)

The total charges connected with the sale of food and beverages (other than
mixed drinks subject to alcohol beverage gross receipts tax) are taxable to the
customer. This includes charges per person and for security ($**).
Sales tax must be paid to the vendor when purchasing, leasing, or renting
tables, covers, chairs. In addition, sales tax is due on the purchase of
taxable security services used at a catered event. See the enclosed Rule 3.333
concerning security services.

A person who owns a facility in which amusement services are provided is
charging admission if consideration is paid for the use of the facility or for
the amusements provided at the facility. The amusement provider must collect
and remit sales tax on the total charges for the use of the amusement facility
and for the amusement services that are provided. Sales tax is due on
$** charges for use of the facility ($*), the charges for
the Rol-A-Roper ($*), for the hay ride ($*), for the band
($*), for the rodeo ($*), for the armadillo/pig races
($*), and for the gunslingers and trickroper ($****). Entry
fees to compete in a contest or tournament as specified in Rule 3.298(c) are
not taxable.

The charge for liquor services ($**) is not subject to sales tax if
the receipts are taxable under Texas Alcoholic Beverage Code Section 202.02.

Sample 3 (Invoice # **)

The total charges connected with the sale of food and beverages (other than
mixed drinks subject to alcohol beverage gross receipts tax) are taxable to the
customer. This includes charges per person, for tables, for covers, for chairs,
and for decorations ($**). Sales tax must be paid to the vendor when
purchasing or renting tables, covers, chairs, and decorations. If the
decorations are sold (become property of the customer), the seller collects and
remits tax on the sale and may issue a resale certificate for decorations
purchased from a vender.

If no admission is charged, sales tax is not due on the charges for the
folklorico dancers, mariachi band, gunslingers, and donkeys.

The charge for liquor services ($**) is not subject to sales tax if
the receipts are taxable under Texas Alcoholic Beverage Code Section 202.02.

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

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct line is
512/475-0030. You may also write to Tax Administration, Comptroller of Public
Accounts.

Sincerely,

David Somerville
Tax Administration Division