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# The Attorney General of Texas
March 26, 1981 MARK WHITE Attorney General Honorable Lias B.“Bubba”Steen Commissioner Texas Department ofLabor and Standards P.0. Box12157 Austin, Texas 78711 Opinion No. Mg-316 Re: Computation of gross receipts tax imposed under article 850~1, V.T.C.S.
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 ofatax upon atax. Your question isas follows: Does the terminology ‘gross receipts’ as used in section 11of article 8501mean the sum total of alI admission charges for agiven 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 e veri ledreport. 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,

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are the entire earnings, receipts, or. the like, under consideration, without any deduction for expenses incurred:!’ Websters NewInternational Dictionary, 954 (191B. It is obvious that the method of calcuation advanced by the promoters will produce a tax assessment ofonly 2.91%
“total gross receipts instead of the 3%levied by the statute on the

” In fact, this 3%tax inquestion 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 wewill 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 ofhis 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 ispaid from the total taxable income of the taxpayer without any deduction for the amount calculated for.the tax. Ifsuch a deduction wasprovided bylaw, it wouldonly serve to diminish the tax percentage specified in the tax levy. The legislature specified 3%of the total gross proceeds as the tax required bythe Texas Boxing and Wrestling Act, not 2.91%as urged by the promoters. Weconclude that the term “gross receipts” asused insection ll(a) ofarticle 8501- l, V.T.C.S., means the sum total of all admission charges for agiven 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 ofTexas JOHN W.FAINTER, JR. First Assistant Attorney General RICHARD E.GRAY III Executive Assistant Attorney General Prepared byRobert Lattimore Assistant Attorney General

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APPROVED: OPINION COMMITTEE Susan L.Garrison, Chairman Jon Bible Rick Gilpin Robert Lattimore

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