Licenses to Use Luxury Suites and Skyboxes Taxable in Texas

Aug 12th, 2013

The Texas Comptroller's Office has released a policy letter discussing the application of sales tax to "rentals" of stadium luxury suites and skyboxes. These are generally licenses and are thus taxable as admissions to amusement. Some rentals, however, are non-taxable leases of real property.

To determine whether the transaction is a taxable license or a non-taxable lease, auditors will look at what rights the contract gives the customer. A license grants the customer a non-exclusive right to use the suite. It does not give the customer exclusive dominion or control over the suite. A license may allow the customer to control decor, cleaning, or opening and closing the suite. These licenses are subject to sales tax.

A lease, however, must give the customer the exclusive right to use, occupy, and control the suite for a set time. The customer must have access to the suite "24 hours per day, seven days a week, other than when the stadium is hosting ticketed events." These leases are not subject to sales tax.

For both licenses and leases, the stadium owner will owe tax on items provided to the customer as part of the rental contract. The owner may not purchase these items exempt with a resale certificate.

http://aixtcp.cpa.state.tx.us/opendocs/open32/201307728l.html