Section 3.289 - Alcoholic Beverage Exemptions(a) Exemptions. (1) Sales or use tax is not due on charges for admission to night clubs, dance halls, discos, etc., when the charges are subject to the mixed beverage gross receipts tax under Tax Code, Chapter 183. If the state refunds the mixed beverage gross receipts tax that was previously paid on cover charges, then the cover charges that were not taxed under Tax Code, Chapter 183, are subject to sales tax as a fee for admission to an amusement service. For information on amusement services, see § 3.298 of this title (relating to Amusement Services).(2) Sales or use tax is not due on the sale of mixed beverages, including ice or nonalcoholic beverages that are mixed with, or are intended to be mixed with, alcoholic beverages, and gratuities collected on those sales, if the receipts are taxable under Tax Code, Chapter 183. If the state refunds mixed beverage gross receipts tax that was previously paid on mixed beverages, ice, and nonalcoholic beverages, then sales tax is due on the original sales price that was not taxed under Tax Code, Chapter 183.(b) Issuance of exemption certificates. Persons who hold mixed beverage permits, late hour mixed beverage permits, or daily temporary mixed beverage permits issued by the Texas Alcoholic Beverage Commission are entitled to issue exemption certificates to their suppliers in lieu of paying sales tax on the purchase of alcoholic beverages, ice, mixes, and nonalcoholic beverages, if the receipts from the resale of these items are taxable under Tax Code, Chapter 183.(c) Resale. Sales of liquor, wine, beer, or malt liquor from a licensed manufacturer, wholesaler, or distributor to a retailer licensed under Tax Code, Chapter 183, are presumed to be for resale. No resale certificate is required.(d) Complimentary drinks. Any person who provides drinks to others without charge owes sales tax on the cost of the ingredients of the drinks.(e) Private club permittee. (1) Sales or use tax is not due on the sale of mixed beverages, and gratuities collected in connection therewith, if the beverages are served on the premises of the clubs to members or their guests and if the receipts are taxable under Tax Code, Chapter 183.(2) A private club is required to collect sales tax on the sales price of prepared foods, candy, meals, and other food products prepared, served, or sold for immediate consumption, whether or not sold in connection with the serving of alcoholic beverages. Charges for meals or other food products are subject to sales tax and must be separated from the charges for alcoholic beverages served to members and guests. For discussion of food and drinks sold for immediate consumption, see § 3.293 of this title (relating to Food; Food Products; Meals; Food Service).(3) A private club must pay sales or use tax on all supply items, equipment, and replacement parts that the club uses or consumes in providing service, except for items that qualify for exemption as manufacturing items, as explained in § 3.300 of this title (relating to Manufacturing; Custom Manufacturing; Fabricating; Processing). Also see § 3.293 of this title (relating to Food; Food Products; Meals; Food Service).(4) A private club may issue a resale or exemption certificate in lieu of paying sales tax for the purchase of those items furnished to members and guests with beverages, food products, or meals served for immediate consumption. The items must be of a nonreusable nature or qualify for exemption as wrapping or packaging materials that are used to wrap or package processed food and beverages. See § 3.293 of this title (relating to Food; Food Products; Meals; Food Service) and §3.314 (relating to Wrapping, Packing, Packaging Supplies, Containers, Labels, Tags, Export Packers, and Stevedoring Materials and Supplies).(f) Fraternal and veteran's organizations. (1) Fraternal and veteran's organizations that do not qualify for a private club exemption certificate may purchase beer, wine, or ale tax free from a distributor or other retailer only when the organization holds and maintains a valid retail dealer's on premise license, issued under Texas Alcoholic Beverage Code, § 69.01, or a valid wine and beer retailer's permit, issued under Texas Alcoholic Beverage Code, § 26.01. In addition to either of the above licenses, the organization must possess and publicly display a limited sales tax permit as a retailer. When an organization holds the required license and permit, it must collect sales tax on all taxable sales of beer, wine, or ale.(2) When a fraternal or veteran's organization that purchases or sells alcoholic beverages does not hold either of the retail licenses issued by the Texas Alcoholic Beverage Commission, it must pay sales tax on its purchases of alcoholic beverages.(g) Certificates required. A seller is required to collect sales tax on the sale of taxable items, unless the seller accepts, in good faith, an exemption or resale certificate from the purchaser, or the exception for resale in subsection (c) of this section applies, or the sale is exempt because it is subject to mixed beverage gross receipts tax under Tax Code, Chapter 183. See § 3.285 of this title (relating to Resale Certificate; Sales for Resale) and § 3.287 of this title (relating to Exemption Certificates). Attached Graphic
34 Tex. Admin. Code § 3.289
The provisions of this §3.289 adopted to be effective January 1, 1976; amended to be effective March 24, 1978, 3 TexReg 816; amended to be effective August 11, 1978, 3 TexReg 2562; amended to be effective October 19, 1984, 9 TexReg 5162; amended to be effective September 4, 1990, 15 TexReg 4834; amended to be effective March 27, 2002, 27 TexReg 2238