Is a wilderness travel company's all-inclusive trip package price (transportation, food, lodging, cabin fees, guide fees, air fare) subject to Texas sales tax?

Subject

Out-of-State And Overseas Trips — Package Price Includes Transportation, Food, Lodging, Cabin Fees, Guide Fees, and Air Fare

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9312L1282F07

Plain-English Summary

A Houston-based wilderness travel company wrote to the Comptroller asking how sales tax applies to the trips it sells. The company offers group and customized trips within Texas, across the United States, and internationally. Customers are quoted one all-in price, but the company also provides a detailed breakdown of the underlying costs. The company adds no markup to any of the expense items — its profit comes entirely from a separate organization and guiding fee built into the package. The letter lists the components that make up a typical package: ground rental transportation, food (groceries, at cost), lodging while en route to the destination, cabin fees (exact per-person cost for park cabin use), a group gear fee, a business expense fee (covering ads, phone calls, insurance), a guide fee, the guide's own expenses, and — where applicable — air fare. All of these are divided equally among the members of the group with no additional markup.

The Comptroller's response draws a line based on where the trip takes place:

• Trips that occur within Texas: Texas tax is due on each individual taxable transaction that happens in Texas as part of the trip — the letter gives hotel occupancy tax, motor vehicle rental tax, and limited sales tax as examples. However, the Comptroller states that the per-person package charge itself is not taxable, because the whole package is considered a trip, and a trip as such is treated as non-taxable.
• Trips that occur outside Texas: If no taxable transaction occurs in Texas, Texas tax simply does not apply to that trip at all.

The Comptroller notes this opinion is based on the facts presented and that different facts, even if similar, could lead to a different answer.

What This Means For You

If you sell bundled travel packages that include transportation, lodging, food, and guide services: This letter suggests that the overall per-person package price is not itself subject to Texas sales tax — but that does not mean the trip is entirely tax-free. Any individual component of a Texas-based trip that is itself a taxable transaction (the letter specifically calls out hotel occupancy and motor vehicle rental, plus "limited sales tax" generally) is still taxable in its own right when that transaction occurs in Texas.

If your trips take place entirely outside Texas: According to this letter, as long as no taxable transaction actually occurs in Texas, Texas tax does not apply to that trip — even though the company is based in Houston.

Caution on relying on this letter for your own business: The Comptroller explicitly says this answer is based on the specific facts presented (a package sold at cost, with a separate guiding/organization fee and no markup on individual line items) and that different facts, even if only somewhat different, could lead to a different answer. If your packaging or pricing structure differs — for example, if you build a markup into individual cost components rather than isolating profit in a guide fee — this letter's conclusion may not carry over directly.

No statute or rule is cited. The letter does not reference any specific Texas Tax Code section or Comptroller rule to support its conclusions, so it should be read as a fact-specific private letter ruling rather than a citation to controlling law.

Q&A

Q: Is the total price I charge for an all-inclusive wilderness trip package subject to Texas sales tax?
A: According to this letter, no — the per-person package charge is treated as the price of a trip, which the Comptroller considers non-taxable, as long as the facts match those described (a bundled price with no markup on individual expense items, and profit isolated in a separate guiding/organization fee).

Q: If my trip takes place partly in Texas, do I still owe tax on things like hotel stays or a rental vehicle?
A: Yes. The letter states that when a trip occurs within Texas, applicable tax is still due on each taxable transaction that occurs in Texas, giving hotel occupancy tax, motor vehicle rental tax, and limited sales tax as examples — even though the overall package price is not taxed.

Q: What about trips that happen entirely outside Texas?
A: The letter says that when a trip occurs outside Texas and no taxable transaction occurs in Texas, Texas tax does not apply to that trip at all.

Q: Does this ruling mean any travel company can bundle expenses to avoid sales tax?
A: Not necessarily. The Comptroller expressly limits this answer to the facts presented and warns that different, even similar, facts might lead to a different result. The specific facts here included no markup on individual cost items and profit isolated entirely in a separate guide/organization fee.

Original ruling text

December 27, 1993

Dear **:

This is in response to your letter postmarked December 15, 1993,
regarding sales tax as it applies to the following:

FACTS: My business is a wilderness travel company based in Houston
which will offer group and customized trips in Texas, across the
United States, and internationally. The price of the trips is
presented to prospective customers as one price; however, a detailed
breakdown of charges is provided. I provide these trips at cost to
my customers with no mark-up in expenses. My profit is made by
including my organization and guiding fee in the trip package cost.
An example of the expenses involved are as follows:

Transportation (ground rental transportation) Food (groceries for the
trip at cost) Lodging (lodging used while en route to destination)
Cabin Fees (exact cost per person for use of park cabins) Group Gear
Fee (fee reflects cost to maintain group gear) Business Expense (fee
for ads, telephone calls, insurance) Guide Fee (fee for guide's
service) Guide's Expenses. The total cost is divided equally among
customers in the group. The total cost ofthe above plus air fare if
applicable is without additional mark-up.

RESPONSE: When a trip occurs within Texas, applicable tax is due on
each taxabletransaction that occurs in Texas, e.g., hotel occupancy,
motor vehicle rental, and limited sales tax. The per person charge
is not taxable as we consider the entire package as a trip and
non-taxable.

When a trip occurs outside Texas (and no taxable transaction occurs in
Texas), the Texas tax does not apply.

This opinion is based on the facts presented. Different facts, though
similar, might lead to different answers. If you have any questions
or need more information, please write or call me toll free at
1-800-531-5441, extension 50330, or 512-475-0330.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 9402032L.4 and/or 9402032L