Is a university's alumni newsletter subscription fee, its $50 alumni placement-office registration fee, and its $100 lump-sum career-fair fee to companies subject to Texas sales tax?

Subject

Newsletter — Membership/Subscription Fee

Plain-English summary

A university (exempt from Texas sales tax as a governmental entity) asked the Comptroller about three unrelated fees it charges, and got three different answers:

1. Alumni/general-public newsletter subscriptions. Various university departments sell newsletter subscriptions -- the letter gives an example of a $10.00 five-month subscription and a $20.00 ten-month subscription. The Comptroller says charges for newsletters, whether sold as individual copies or as subscriptions, are taxable.

2. $50.00 alumni placement-office registration fee. A campus placement office charges alumni $50.00 to register, which makes them eligible for on-campus recruiting, gets them a newsletter, and gives them access to career counseling and workshops. The Comptroller says this fee is not taxable. The reasoning: because the university is exempt as a governmental entity, it would only owe tax on the taxable items it buys to produce the newsletter -- not on the registration fee itself. The letter notes this is "slightly different" from directly selling newsletter copies or subscriptions (item 1 above).

3. $100.00 lump-sum career-fair fee charged to companies. A department charges companies a flat $100.00 to attend an annual career fair, covering a reception, parking, booth space, and meals for two recruiters. The Comptroller says this fee is not taxable either, again because the university's governmental exemption means it would only owe tax on the taxable items (food, etc.) it purchases for the reception and meals -- not on the $100.00 charge itself.

The letter also notes two administrative points, without changing either: it does not alter a 1993 response the Comptroller previously sent to the university's Office of General Counsel, which addressed fundraising activities -- a different topic from the annual career fair discussed here. And the letter carries a note that it replaces a prior Accession Number, 9604191L.

What this means for you

Universities and other governmental/exempt entities

If you're a state university or similar governmental entity, selling a newsletter (by copy or subscription) is a taxable sale regardless of your entity's own exempt status -- the tax attaches to the sale of the publication itself. But fees that are really registration, membership, or event-participation charges (rather than a sale of a taxable item) can fall outside sales tax, with your exemption instead covering the taxable supplies you buy to run the program.

Accountants and tax professionals advising universities

This letter illustrates the Comptroller drawing a line between (a) selling a publication -- taxable no matter who sells it, and (b) charging a registration or lump-sum participation fee for a bundle of services/access (placement office registration, career-fair attendance) where a governmental entity's exemption shifts the tax burden (if any) to its own purchases rather than to the fee charged to the public or to participating companies.

Nonprofits with similar fee structures

While this letter turns on the university's status as a governmental entity (not simply "nonprofit"), the underlying structure -- newsletter sales vs. bundled registration/event fees -- is a useful comparison point for any exempt organization evaluating whether a fee is a taxable sale of a publication or a nontaxable membership/event charge.

Common questions

Q: Why is the newsletter subscription taxable but the $50 alumni placement fee is not, even though the placement fee also gets alumni a newsletter?
A: Per this letter, selling a newsletter (by copy or subscription) is a direct sale of a taxable item. The $50 fee, by contrast, is for registering with the placement office and everything that comes with it (recruiting eligibility, counseling, workshops, and incidentally a newsletter) -- the Comptroller treats that as a different kind of charge, and because the university is exempt as a governmental entity, only the university's own purchases used to produce the newsletter would be taxable, not the $50 fee.

Q: Is the $100 career-fair fee taxable if the university were not a governmental entity?
A: The letter implies it would not be a straightforward "yes" either -- instead it says the university would owe tax on the taxable items it uses for the reception, meals, etc. In other words, tax would attach to the university's own purchases of taxable goods, not automatically to the $100 fee charged to companies.

Q: Does this letter change the 1993 answer about fundraising activities?
A: No. The letter explicitly states it does not alter the 1993 response to the university's Office of General Counsel, because that letter addressed fundraising activities, which the Comptroller treats as different from the annual career fair discussed here.

Q: What is "Previous Accession Number 9604191L"?
A: The letter closes with a note referencing prior Accession Number 9604191L, indicating this letter (9604L1409A13) supersedes or replaces that earlier-numbered version in the Comptroller's STAR system.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=
• Opinion: https://star.comptroller.texas.gov/view/9604L1409A13

Original ruling text

April 30, 1996

Subject: RE: sales tax
To: ***

Thank you so much for your patience. As I explained earlier, I was teaching
classes and then I was selected for jury duty which delayed my response
longer than I had anticipated. I have restated your questions and provided a
response for each one.

1) Many departments have newsletters for alumni and the general public for
which they sell subscriptions. For example, one department sells a 5-month
subscription for $10.00 and a 10-month subscription for $20.00.

Response: The charge for newsletters, whether by individual copy or
subscription, is taxable.

2) A placement office on campus charges alumni $50.00 to be registered in
the office. This fee enables alumni to be eligible for on-campus recruiting,
receive a newsletter, get career counseling and attend workshops.

Response: The $50.00 registration fee is not taxable. If the university
wasn't exempt as a governmental entity, it would owe tax on the taxable items
used to produce the newsletter. This is slightly different from selling
copies or subscriptions to newsletters.

3) A department charges companies to attend an annual career fair. The
charge is a lump-sum of $100.00 and covers a reception, parking, booth space,
and meals for 2 recruiters.

Response: The $100.00 registration fee is not taxable. If the university
wasn't exempt as a governmental entity, it would owe tax on the taxable items
used for the reception, meals, etc.

This does not alter the 1993 response to the Office of General Counsel for
your university. The 1993 letter addressed fundraising activities which
again is different from the annual career fair.

NOTE: Previous Accession Number 9604191L