Can a stadium skybox landlord separately state charges for parking passes, TV/phone use, electricity, and janitorial services in a suite license agreement so that only those specific items are taxed?

Plain-English summary

A stadium skybox operator asked the Comptroller's office whether it could separately state the cost of taxable items in a suite license agreement so that only those specific items would be taxed. Under the agreement, a licensor grants a licensee the right to use a skybox or suite to view normally scheduled amusement events and other events open to the public — the contract is a license only, not a lease or easement, and the licensor can rent the suite to someone else for private events the licensee can't access. Bundled into the fee were a limited number of parking passes, use of a television and telephone, complimentary event programs, electricity, janitorial services, and a personalized name plate for the door.

The Comptroller ruled that the full charge is taxable. Anyone who owns a facility where amusement services are provided is charging admission if payment is required to use the facility, and the amusement provider must collect tax on the total charge for use of the facility and the amusement services — no deduction is allowed from the sales price, citing Tax Code § 151.007(a). That means separately stating the parking passes, TV/phone access, electricity, and janitorial services on the invoice does not let the licensor tax only those individual items; the entire skybox license fee is taxed as one amusement admission charge.

The letter does offer the licensor one piece of relief on its own purchasing side: it may issue a resale certificate under Tax Code § 151.302 to its own vendors when it buys tangible personal property that gets transferred to the care, custody, and control of the licensee, and it may also issue a resale certificate for the janitorial services it buys to provide to the licensee.

What this means for you

Stadium, arena, and venue operators leasing skyboxes or suites

You cannot avoid tax on part of a skybox license fee by itemizing charges for parking, television/phone access, electricity, or janitorial service on the bill. The whole charge for the right to use the suite to view amusement events is taxable as an amusement admission, with no deduction for bundled extras.

Venue operators purchasing goods and services to furnish suites

You may be able to buy tangible personal property that gets passed through to the licensee's care, custody, and control — and janitorial services provided to the licensee — tax-free by issuing a resale certificate to your own vendors, since those costs are being resold as part of the taxable admission charge to the licensee.

Accountants and tax professionals structuring venue license agreements

This letter is a reminder that Tax Code § 151.007(a) bars deductions from the sales price of an amusement admission charge — attempting to carve out "nontaxable" components by separate line-item pricing does not change the tax result. The available planning lever is on the purchasing side (resale certificates under § 151.302), not on the pricing/invoicing side.

Common questions

Q: If a skybox agreement separately states charges for parking, electricity, and janitorial service, are only those items taxed?
A: No. The total charge for use of the amusement facility — the skybox — and the amusement services provided is taxable, with no deduction allowed for the sales price even if individual components are itemized.

Q: Why is the skybox license fee treated as an amusement admission charge?
A: Because a person who owns a facility where amusement services are provided is charging admission whenever consideration is paid to use that facility, per Tax Code § 151.007(a).

Q: Can the licensor buy the items it provides in the suite (parking passes, TV, janitorial services, etc.) tax-free?
A: The letter addresses tangible personal property transferred to the licensee's care, custody, and control, and janitorial services provided to the licensee — for those, the licensor may issue a resale certificate to its vendors under Tax Code § 151.302.

Q: Does it matter that the contract is called a "license" rather than a lease?
A: The ruling doesn't turn on that label — regardless of the license/lease/easement distinction in the contract, the charge for the right to use the suite to view amusement events is taxed as an amusement admission.

Citations and references

• Tex. Tax Code § 151.007(a) — sales price of an amusement admission charge; no deduction is allowed.
• Tex. Tax Code § 151.302 — sale for resale; basis for the licensor's resale certificates to its own vendors.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9501806L

Original ruling text

ALERT: For specific guidance relating to the care, custody and control of TPP when providing a taxable service, please see Rule 3.285, Resale Certificates; Sales for Resale (amended 11/01/2017).

January 2, 1995

Dear **:

I received the contract you faxed providing the details of a sky box rental
agreement on December 8, 1994. This letter is in response to your original
letter dated October 13, 1994, in which you asked for a ruling on whether
charges for taxable items could be separately stated in a lease agreement for
the sky box.

As I understand it, for a fee, a licensor will grant a licensee the right to
use the sky box or suite to view amusement events. The licensee may only use
the suite for normally scheduled amusement events and other amusement events
open to the public. The licensee may not access the suite when events are held
that are not open to the public and the licensor may lease the suite to a
third-party for nonpublic events. The contract states the interest granted is a
license only and that no tenancy, leasehold estate, or easement be created.

Included in the agreement are a limited number of parking passes, use of a
television and telephone, complimentary event programs, electricity, janitorial
services, and a personalized name plate for the door. If the cost of each item
is separately stated to the licensee, you question whether an allocation method
may be used to tax only the taxable items included in the agreement.

A person, who owns a facility where amusement services are provided, is
charging admission if consideration is paid for use of the facility. The
amusement provider must collect tax on the total charges for use of the
amusement facility and the amusement services provided. No deduction is allowed
in the sales price. Please refer to Section 151.007(a) of the Texas Tax Code.

The licensor may issue a resale certificate to vendors for the purchase of
tangible personal property that is transferred to the care, custody, and
control of the licensee. Please refer to Section 151.302. The licensor may also
issue a resale certificate for the purchase of janitorial services provided to
the licensee.

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

You may call me toll free at 1-800-531-5441, ext. 5-0037. The direct line is
512/475-0037. You also may write to Tax Administration Division, Comptroller of
Public Accounts.

Sincerely,

Lindey Osborne
Tax Administration Division