Event Planners Overview
Event planners normally have a combination of taxable and nontaxable services. The taxability of charges for event planning services depends on factors such as:
- Whether the services are provided by a caterer in connection with the sale of food
- Whether the services are provided by a facility or venue providing taxable amusement services in connection with an event
- Whether the event is held at a venue owned or operated by the event planner
- The type of contract between the event planner and the client
Event Held at Venue Owned or Operated by the Event Planner or Employer
A venue owned or operated by an event planner, or by the event planner’s employer, may include:
- Amusement parks
- Theme parks
- Athletic facilities
- Restaurants
- Banquet halls
- Party rooms
- Similar locations
If food is prepared, served, or otherwise provided by the venue hosting the event, tax is due on the total amount charged to the customer, including:
- The event planner’s fee
- Entertainment
- Parking
- Security
- Transportation
Even if these are separately stated on the invoice, they are taxable. The venue is considered a food service operator, and the provisions concerning caterers found in Rule 3.293(k) apply.
If food is not provided by the venue, taxability will depend on the type of event and the contract with the client.
- Event planning services by venues selling taxable amusement services (e.g., amusement or theme parks) are taxable in total because the fee secures admission privileges. See Comptroller Rule 3.298, “Amusement Services.”
- A fee for arranging a conference or meeting without food or amusement admissions is not subject to sales tax.
Venue’s Tax Responsibilities
Venues must pay sales tax to suppliers at the time of purchase for:
- Consumables
- Equipment
- Replacement parts
They must also remit Texas use tax on items from out-of-state suppliers. Examples of taxable items:
- Audio-video equipment
- Margarita machines
- Tables, chairs, tablecloths
- Kitchen equipment
- Ice sculptures
- Moonwalks
- Piñatas
- Decorations
Venues may purchase tax-free items given to clients or guests during a taxable event using a resale certificate. Examples:
- Cellophane bags
- Goodie bag prizes
- Souvenir matchbooks
- Notepads, pens
- Floral arrangements taken home by guests
However, tax is due on similar items provided incidentally during nontaxable events, such as meetings.
Type of Contract and Tax Implications
Agency Agreement
An event planner may act as an agent of the client. Under this agreement:
- The event planner is authorized to make purchases on behalf of the client
- Cannot mark up prices of items purchased
- Billings must reflect the actual amounts paid to suppliers, including sales tax
- Charges for planning services, separately stated and not tied to itemized purchases, are not taxable
The event planner is considered an agent if:
- Disclosed to suppliers in writing
- Maintains proper accounting records
- Bills clients identically to supplier charges, excluding service fees
Event planners cannot issue a resale certificate on behalf of clients under an agency agreement. They must:
- Pay sales tax to suppliers
- Reimburse through client billing marked as “tax reimbursement.”
- Clearly state that tax was paid on invoices
Handling fees, if separately stated and not percentage-based, are not taxable.
Catering Under Agency Agreements
If acting as an agent arranging meals:
- The restaurant or caterer collects sales tax from the client or their agent
- The event planner cannot provide a resale certificate for these meals
Turn-key Contracts (Lump Sum Agreements)
Under a turn-key contract:
- One total fee is charged for all goods and services
- Charges include consultation, setup, delivery, and administrative services
If the event includes food service or taxable amusement:
- The total charge is taxable
Event Planner as Caterer (Turn-key Contracts)
If an event planner prepares and serves food, they are considered a caterer and must:
- Collect tax on the entire amount charged
- Include charges for consultation, event facility, and items like tables, chairs, and tablecloths
- Refer to Comptroller Rule 3.293(k)
Under a turn-key contract, the event planner must:
- Pay tax on taxable purchases, leases, or rentals
- Pay tax on services used (parking, security, cleaning)
- Issue resale certificates only for items transferred to the client (e.g., catering services resold to clients)
Meetings (Turn-key Contracts)
Turn-key contracts for nontaxable events (meetings, conventions) are not taxable.
- Snacks or beverages provided do not make the event taxable if their value is ≤ 5% of the total charge
- Event planner pays tax to the supplier on such services
Example:
A planner charges $1,000 for a meeting. Beverage service is valued at $50. Since it is only 5% of the total, the charge is not taxable. The planner pays the supplier’s tax.
Separated Contracts
Under a separated contract:
- Charges to clients are separately stated
- The planner is considered the seller and must collect sales tax on taxable items
- Tax is applied to the agreed price or cost, including delivery or transportation charges
Nontaxable:
- Separately stated charges for consultation or administration, if not tied to taxable sales
Taxable:
- Food, beverages, facilities, servers, tables, chairs, tablecloths, audio-visual equipment
- Parking, security, decorations, invitations, cleanup
Planners must collect tax even if these are itemized separately from food or beverage charges.
Event planners may issue resale certificates for items transferred to clients or guests:
- Souvenirs, napkins, food from third-party caterers, decorations taken home
- Consumables: crepe paper, candles, balloons
- Taxable services: security, parking, cleaning
However, planners must pay tax on:
- Equipment purchases, leases, rentals
- Directly used taxable services (computers, printers, AV equipment, moonwalks, etc.)
- Decorations that remain with the planner post-event
Entertainment Services
Separately stated entertainment charges (DJ, band, singer):
- Not taxable unless part of a venue’s contract
Example:
- A clown at a birthday party: not taxable
- A party room hiring the clown: entire charge is taxable to the customer
The entertainer’s charge to the planner remains nontaxable.
Facing a sales tax audit in Texas?
Contact our attorney for a consultation.
Frequently Asked Questions
Are event planning services always subject to sales tax in Texas?
Not always. The taxability depends on several factors including whether food or amusement services are involved, the type of venue, and the contract type. If the event includes taxable components like catering or amusement, sales tax likely applies.
What happens if an event planner owns or operates the event venue?
If the planner owns or operates the venue and provides food, the entire charge, including planning fees, entertainment, and even parking, is taxable. The venue is considered a food service operator and must follow tax rules applicable to caterers.
Is sales tax due when an event planner acts as an agent?
No, if the planner is a true agent (with proper documentation and accounting), then only the separately stated planning fee is exempt from tax. However, the planner must pay sales tax to suppliers and cannot issue resale certificates on the client’s behalf.
When is a turn-key event planning contract taxable?
A turn-key (lump-sum) contract that includes taxable items like food or amusement is fully taxable. But if the event is a nontaxable one, such as a business meeting, and food or drink is 5% or less of the total, the charge is not taxable.
Can event planners use resale certificates for supplies?
Yes, but only for items transferred to the client or guests during taxable events, like souvenirs or decorations taken home. For nontaxable events, planners must pay sales tax on those same items. Decorations retained by the planner are also taxable to them.