Is selling coupon books or passbooks taxable under Texas sales tax?

Subject

Coupon Book/Passbook/Coupons — Sold To Consumers — Sale Of An Intangible

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9409690L

Plain-English Summary

A PTA asked the Texas Comptroller whether selling "passbooks" — booklets of discount coupons good for things like percentage-off deals or buy-one-get-one-free offers at various retailers — is exempt from Texas sales tax. The Comptroller's answer: selling a coupon book is treated as a sale of an intangible, not a sale of tangible personal property, so it isn't taxable at all. The ruling doesn't turn on any nonprofit exemption; it's simply that Texas sales tax applies to tangible personal property and taxable services, and a book of coupons — despite being a physical booklet you can hold — is legally categorized as intangible for this purpose. The letter notes the answer is based on the facts as presented and could change if the facts were different.

What This Means For You

This ruling is most directly useful for PTAs, booster clubs, schools, and other nonprofit or community groups that run fundraisers selling coupon books or "passbooks" of discount coupons redeemable at local businesses. It tells them they don't need to collect Texas sales tax on the sale price of the coupon book itself. It would also be relevant to any business or organization selling similar discount coupon booklets to consumers, since the ruling's reasoning (coupon books = intangible property) isn't limited to nonprofits — it applies to the nature of what's being sold, not who is selling it. Note that this ruling does not address what happens tax-wise when a coupon is later redeemed for a discount on a taxable item — it only addresses the sale of the coupon book itself.

Q&A

Q: Does a PTA need to charge Texas sales tax when selling coupon books/passbooks as a fundraiser?
A: No. The Comptroller ruled that selling passbooks — books of discount coupons — is a sale of an intangible, so it is not taxable.

Q: Why isn't a coupon book taxable if it's a physical booklet?
A: Because the Comptroller treats what's being sold (the right to a discount or a deal) as an intangible, rather than tangible personal property, even though the coupons are printed in a physical book.

Q: Does this ruling apply no matter what kind of coupons are in the book?
A: The ruling describes the passbooks as containing coupons like percentage-off deals and buy-one-get-one-free offers, and it is based on the facts presented — the letter itself notes that if additional or different facts existed, the opinion could change.

Citations

No specific statutes or administrative rules are cited in the original ruling text.

Original ruling text

September 9, 1994

Dear ****:

Thank you for your letter questioning whether the sale of ***** passbooks
by your PTA is exempt from Texas sales tax. I apologize for the delay in
responding to this request.

***** passbooks are books of coupons that may be used at various retail
locations. These may be percentage off coupons, buy-one, get-one-free coupons,
etc.

The sale of coupons or coupon books is considered the sale of an intangible.
Therefore, the sale of ***** passbooks is not taxable.

This opinion is based upon the facts presented. If there are additional or
different facts, this opinion may change.

Sincerely,

Tax Administration Division