Do Air Force personnel and other authorized purchasers who buy amusement or entertainment park tickets through a Department of Defense Nonappropriated Fund Instrumentality's 'Ticket and Tour' operation owe Texas sales tax on those tickets?

Plain-English summary

The Texas Comptroller's Tax Policy Division wrote this letter to resolve a question about the sales tax status of "Ticket and Tour" operations run by Department of Defense Nonappropriated Funds Instrumentalities ("NAFIs"). The question was whether tickets sold to Air Force personnel and other authorized purchasers — for example, tickets to amusement parks or other recreational events and services — are subject to sales tax.

The Comptroller had already agreed in earlier correspondence that federal instrumentalities like NAFIs can buy goods and services tax free. The remaining point of uncertainty was whether tax was instead due from the NAFI's customers — the people who ultimately buy the tickets or services from the NAFI and use them to get into the amusement event. Based on research and information the recipient submitted, the Comptroller agreed that no tax is due from any "authorized purchasers" on the price they pay for goods or services bought from a NAFI.

In summary: sellers of amusement and entertainment park tickets are not required to collect sales tax on sales to NAFIs, because NAFIs are federal instrumentalities, and — under 4 U.S.C. 107 — no tax is due from the authorized purchasers who buy the tickets through the NAFI program either. The letter notes it can be reproduced and forwarded to any appropriate sellers for their records, since the writer had no way to identify or contact "the various ticket suppliers involved" directly.

What this means for you

Amusement and entertainment park operators selling to NAFIs

If you sell tickets to a Department of Defense Nonappropriated Funds Instrumentality operating a "Ticket and Tour" program, this letter says you are not required to collect Texas sales tax on those sales, because the NAFI is a federal instrumentality.

Air Force personnel and other authorized purchasers buying through a NAFI

If you buy amusement or entertainment park tickets through a NAFI's "Ticket and Tour" program as an authorized purchaser, this letter confirms no Texas sales tax is due on the price you pay, under 4 U.S.C. 107.

Ticket suppliers and sellers more generally

The letter states it may be reproduced and forwarded to "any appropriate sellers for their records," so it is meant to be usable as guidance beyond just the original recipient, even though the Comptroller could not independently identify every ticket supplier involved.

Common questions

Q: Do amusement park ticket sellers have to collect Texas sales tax when selling to a Department of Defense NAFI?
A: No. The letter states that sellers are not required to collect tax on sales of amusement and entertainment park tickets to NAFIs, because NAFIs are federal instrumentalities.

Q: Do Air Force personnel or other authorized purchasers owe sales tax when they buy tickets through a NAFI's "Ticket and Tour" program?
A: No. The letter states that under 4 U.S.C. 107, no tax is due from authorized purchasers on the price paid for goods or services bought from a NAFI.

Q: Can this letter be shared with other ticket sellers?
A: Yes. The letter explicitly says it may be reproduced and forwarded to appropriate sellers for their records.

Q: What law does this exemption rely on?
A: 4 U.S.C. 107, which the letter cites as the basis for exempting authorized purchasers who buy tickets through the NAFI program.

Citations and references

Statutes and rules:

• 4 U.S.C. 107

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9510L1374F13

Original ruling text

October 17, 1995

Dear **:

I hope that this letter will resolve the issue we have been discussing about
the sales tax status of "Ticket and Tour" operations conducted by Department
of Defense Nonappropriated Funds Instrumentalities ("NAFIs"). This issue is
whether tickets sold to Air Force personnel and other authorized purchasers
are subject to sales tax.

As we have told you in earlier correspondence, we agree that federal
instrumentalities such as NAFIs can buy goods and services tax free. Examples
would include tickets to amusement parks or other recreational events and
services.

The point of uncertainty was whether tax is due from the customers of the NAFI,
who ultimately purchase the tickets or other services and use them to gain
admission to the amusement event. Based on the research you recently completed
and the information you submitted, I now agree that no tax is due from any
"authorized purchasers" on the price paid for goods or services purchased from
a NAFI.

In summary, we agree that sellers of amusement and entertainment park tickets
are not required to collect tax on sales to NAFIs because they are federal
instrumentalities, and that under the provisions of 4 U.S.C. 107, no tax is
due from the authorized purchasers who buy the tickets through the NAFI
program.

You have asked that we provide clarification and guidance to "the various
ticket suppliers involved." I have no idea who might comprise that group,
and am thus unable to know to whom such guidance should be furnished. My
contacts on this issue have all been with your office.

However, you may certainly reproduce this letter and forward it to any
appropriate sellers for their records.

I believe this will resolve any uncertainty about the applicability of sales
tax to this operation, but if you have further questions please feel free
to contact me.

Sincerely,

Martin Cherry
Chief, General Law Section

NOTE: Previous Accession Number 9510600L