Taxing Texas Fairs, Festivals, Markets and Shows
- Sales Tax News
- Dec 7, 2012 | Gail Cole
T'is the season of craft fairs, winter festivals, holiday markets and shows, and with that season comes a whole host of … sales and use tax notifications. At least in Texas Comptroller of Public Accounts is a scrooge. Someone has to think about taxes, even during the holidays.
According to the Texas Comptroller, sales and use tax and franchise tax may apply to the following "temporary places of business:"
- arts and crafts shows;
- antique markets;
- gun shows;
- flea markets;
- swap meets; and
- other types of markets, shows, fairs and festivals.
Sales and Use Tax
Sellers at the above-mentioned shows are required to have a Texas Sales and Use Tax Permit, even if they are not Texas residents, if they:
- "Sell taxable items or taxable services; or
- Take orders for taxable items or taxable services; or
- Use the show to promote sales of taxable items or taxable services."
- Promote these events.
"Sellers" are defined as retailers, wholesalers, distributors, manufacturers or others who sell, lease, rent, or transfer ownership of taxable items or services.
Promoters bear the additional responsibility of "collecting and remitting the sales tax that should be collected by dealers, salespersons or individuals at these events" if they do not have active Texas Sales and Use Tax Permits or qualify for the occasional sale exemption.
Methods of collection vary, as do the markets, fairs, festivals, and shows. The general rule of thumb is this: if there is a centralized cash register, "both the market itself and the individual sellers must have sales tax permits . The market or mall is responsible for collecting and remitting the sales tax." If there is no centralized cash register, whoever makes the sale is responsible for collecting and remitting the sales tax.
Admissions fees are subject to sales tax, as are parking fees. Booth fees, floor space, and rental charges are not.
Occasional Sale Exemption
Pursuant to relevant Texas Tax Code, the following situations are eligible for an exemption:
- An individual may sell one or two taxable items or services a year without a permit, regardless of the value of the items. (151.304(b)(1)).
- An individual may "have sales of up to $3,000 in a calendar year of items that were originally acquired for personal use… ." Let the Craigslist ads and garage sales begin. However, if sales reach more than $3,000 over the course of twelve months, the individual is considered to be "engaged in business," must obtain a sales tax permit, and must collect and remit sales tax on any sales above the $3,000 limit. (151.304(b)(5)).
"Entities engaged in business in Texas are subject to the state franchise tax" unless:
- It is a sole proprietorship;
- It is a non-Texas entity that makes no more than five visits to Texas in an accounting year, does not stay more than 120 consecutive hours during those visits, and only solicits orders at trade shows.
See Texas Tax Code 171.084 for information regarding the franchise tax exemption for trade show participants.
Worried about sales and use tax compliance in Texas? Additional information about reporting sales and use tax for Texas arts and crafts markets, fairs, etc, is available at the Window on State Government. Or let someone else take care of it for you.