Are concession stand food sales taxable when a school district runs the stands at sporting events instead of during the regular school day?

Subject

Concession Stand Sales — School District Operates Stands During Sporting Events — Sales Are Taxable Because Not Made During Regular School Day

Plain-English summary

The Comptroller was asked, informally by phone and then in writing, whether a school district's concession stand food sales at sporting events are subject to sales tax. The requester explained that the XYZ Independent School District (a placeholder name used in the letter itself) would operate concession stands selling food products during sporting events.

The Comptroller looked at the exemption most likely to apply, Tax Code 151.314(d)(1), which exempts food products, meals, soft drinks, and candy sold by a public or private school, school district, student organization, or parent-teacher association only if the sale is made under an agreement with the proper school authorities during the regular school day (or, separately, by a parent-teacher association during a fund-raising sale whose proceeds don't benefit an individual).

Because concession stand sales at sporting events happen outside the regular school day, the Comptroller concluded the exemption does not apply, and these sales are subject to sales tax.

The letter also invokes the general Texas rule that tax exemptions are construed narrowly against the taxpayer: exemptions are "the antithesis of equality and uniformity in taxation" because they shift a heavier burden onto other taxpayers, are not implied, and any doubt is resolved in favor of the taxing authority, citing Bullock v. National Bancshares Corp., 584 S.W.2d 268 (Tex. 1979).

As with other STAR letters of this era, the opinion is based on the facts as presented and could change if the facts are different.

What this means for you

School districts and booster/athletic organizations

If your school district (or an affiliated group) runs a concession stand selling food at sporting events, those sales are generally taxable, because the school-food exemption in Tax Code 151.314(d)(1) only covers sales made during the regular school day. Selling the same food during the school day under an agreement with school authorities is a different situation than selling it at an evening or weekend game.

Parent-teacher associations and student organizations

The exemption does have a separate branch for parent-teacher association fund-raising sales where the proceeds don't benefit an individual — but that is a distinct basis from the "regular school day" branch discussed in this letter, and it did not apply to the concession stand facts described here.

Accountants and tax professionals

Note how narrowly the Comptroller reads 151.314(d)(1): the exemption turns on when the sale happens (during the regular school day) rather than who is selling (a school district) or what is being sold (food). Timing outside the school day, such as sales at sporting events, defeats the exemption even though the seller is a school district. Also note the Comptroller's citation to Bullock v. National Bancshares Corp. as the general interpretive backdrop for construing exemptions narrowly.

Common questions

Q: Are food sales at school sporting event concession stands taxable in Texas?
A: Under this letter, yes — because they are not made during the regular school day, they don't qualify for the Tax Code 151.314(d)(1) school food exemption and are subject to sales tax.

Q: Does it matter that the seller is a school district?
A: Not by itself. The exemption in 151.314(d)(1) requires the sale to be made under an agreement with the proper school authorities during the regular school day. Being a school district satisfies part of the test but not the timing requirement.

Q: Is there any exemption that could still apply to a school-related food sale outside the school day?
A: The statute quoted also references a separate exemption for parent-teacher association fund-raising sales where proceeds don't benefit an individual, but that wasn't the situation described in this letter.

Q: Could this answer change under different facts?
A: Yes. The letter states the opinion is rendered based on the facts presented, and could change if there are additional or different facts.

Citations and references

Statutes and cases:

• Tax Code 151.314(d)(1) (exemption for school food sales during the regular school day)
• Bullock v. National Bancshares Corp., 584 S.W.2d 268 (Tex. 1979) (exemptions construed narrowly against the taxpayer)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9609L1437G03

Original ruling text

September 9, 1996

Dear ***:

I just want to take a minute to follow-up our telephone conversation and your
facsimile transmission with a written response.

As I understand it, the XYZ Independent School District will operate concession
stands selling food products during sporting events. You question the
taxability of such sales.

The exemption that most nearly applies is in Tax Code 151.314(d)(1) which
states:

(d) Food products, meals, soft drinks, and candy for human consumption are
exempted from the taxes imposed by this chapter if:

(1) served by a public or private school, school district, student
organization, or parent-teacher association under an agreement with the proper
school authorities in an elementary or secondary school during the regular
school day or by a parent-teacher association during a fund-raising sale the
proceeds of which do not benefit an individual;

These sales will not be made during the regular school day and so are subject
to sales tax.

Texas courts have held that exemptions are the antithesis of equality and
uniformity in taxation, since they place a heavier tax burden on other
taxpayers. Exemptions are not raised by implication, and all doubts are
resolved in favor of the taxing authority. Bullock v. National Bancshares
Corp., 584 S.W.2d 268 (Tex. 1979).

This opinion is rendered 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. 3-4680. The direct line is
512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. My Internet address is [email protected].

Sincerely,

Al Van Allen
Tax Policy Division

NOTE: Previous Accession Number 9609691L