Thus, amusements provided jointly by a nonprofit and for-profit organization are taxable. This includes plays, musical concerts, and catered barbecues or spaghetti suppers. A nonprofit group may hire a for-profit organization to provide the expertise to produce an event without losing its exemption, as long as the nonprofit organization holds itself out as the provider of the amusement and all profits or losses revert to the nonprofit organization. If the for-profit entity has its name appear on tickets, advertising, etc., then the amusement service is taxable. Unless the event is solely for educational purposes, an agency of the State of Texas, city, county, school district, political subdivision of the State of Texas, or of the United States that hires a for-profit organization to provide the expertise to produce or provide a musical concert or other amusement event loses the exemption.
Some events have mandatory donations.
If the answers to both questions are yes, the transaction is a sale and not a true donation. Any charges taxed under the mixed beverage gross receipts tax are not subject to sales tax. If a cover charge is related to live entertainment and reduced drink prices, but the drink prices are above the cost of the ingredients, the cost of the entertainment must be incidental before the cover charge would be subject to mixed beverage gross receipts tax, i.e., a musician who plays solely for tips. Temporary membership cards to a private club. The cover charge is considered to be tied to the drink specials.