_- :
The Attorney General of Texas
March 26, 1981
MARK WHITE
Attorney General
Honorable Lias B. “Bubba” Steen Opinion No. Mg- 316
Commissioner
Texas Department of Labor and Re: Computation of gross receipts
Standards tax imposed under article 850~1,
P. 0. Box 12157 V.T.C.S.
Austin, Texas 78711
Dear Mr. Steen:
You state that boxing and wrestling promoters are questioning the
Commission’s method of assessing three percent of the total gross receipts
of taxable athletic performances in satisfaction of the tax imposed by
article 8501-1, section D(a), V.T.C.S. It appears that the promoters feel that
the tax should be calculated on the remainder of the total receipts after
deducting therefrom the three percent tax. That is, since the ticket price
necessarily includes the three percent tax, the tax of three percent should
be figured only on the net amount of the receipts. This method, they claim,
will avoid the erroneous imposition of a tax upon a tax.
Your question is as follows:
Does the terminology ‘gross receipts’ as used in
section 11 of article 8501 mean the sum total of alI
admission charges for a given event?
Article 850~1, section 11(a), V.T.C.S., assesses and levies the tax in
question by directing that within 72 hours after the termination of the
taxable event, the Texas Department of Labor and Standards shall be
furnished by the promoter thereof a verified report on a form furnished by
the department showing the number of tickets sold, prices charged, and
amOUnt of gross receipts obtained from the event, and a cashier’s check or
money order made payable to the state of Texas in the amount of three
rcent of the total gross receipts of the event shall be attached tothe
everi led report.
It is hard to conceive how the next foregoing referred to language of
the statute could have been made more specific as to the subject matter of
the tax. A thorough search of the authorities, foreign and domestic, that
might have some bearing on the multiple term “total gross receipts,” has
revealed nothing as near in point as the commonly understood dictionary
definition of the word “gro.W: “It] he ‘gross’ earnings, receipts, or the like,
P- 1005
. -
Honorable Lias B. “Bubba” Steen - Page Two (MW-316)
are the entire earnings, receipts, or. the like, under consideration, without any
deduction for expenses incurred:!’ Websters New International Dictionary, 954 (191B.
It is obvious that the method of calcuation advanced by the promoters will
produce a tax assessment of only 2.91% instead of the 3% levied by the statute on the
“total gross receipts ” In fact, this 3% tax in question cannot be a tax on a tax for the
simple reason that it is not paid by the purchaser of the ticket. It is assessed against
the promoter of the athletic event and is paid from his profits, unlike the sales tax
which is paid by the purchaser. Many taxes similar to the boxing and wrestling tax
have graced the state and federal governments for many years, Among these we will
find the income tax and various types of gross receipts taxes, none of which seem to
have ever been attacked on the grounds here raised by the boxing and wrestling
promoters. The mixed beverage gross receipts tax is imposed on the permittee and
paid from his total gross receipts without any deduction for the amount of his tax. The
customer who purchases a mixed beverage pays no tax at all on such beverage,
consequently there can be no tax on a tax in such case, as there cannot be in the
instant case where the ticket purchaser also pays no tax. The income tax is paid from
the total taxable income of the taxpayer without any deduction for the amount
calculated for. the tax. If such a deduction was provided by law, it would only serve to
diminish the tax percentage specified in the tax levy. The legislature specified 3% of
the total gross proceeds as the tax required by the Texas Boxing and Wrestling Act, not
2.91% as urged by the promoters.
We conclude that the term “gross receipts” as used in section ll(a) of article 8501-
l, V.T.C.S., means the sum total of all admission charges for a given event.
SUMMARY
The term “total gross receipts” denoting the subject matters
of the three percent tax levied by article 8501-1, section 11(a),
V.T.C.S., means the sum total of all admission charges to any
taxable athletic performance, without any deduction for tax.
~MARK WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Robert Lattimore
Assistant Attorney General
P. 1006
. -
Honorable Lias B. “Bubba” Steen - Page Three (MW-316)
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Robert Lattimore
P. 1007