Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
550.0000 TAXABLE SALES OF FOOD PRODUCTS—Regulation 1603
(b) RESTAURANTS, HOTELS AND BOARDING HOUSES
550.0320 Averaging Five or More Guests—Manner of Determining. Since there is no prescribed time in Regulation 1603 for computing averages, it is our opinion there is no arbitrary period of time for which an average should be computed, and that the determination should be based on the facts of the particular case, so as to arrive at a reasonable period in each case. It would be confusing and undesirable to compute the average on a flat monthly basis in all cases, since a boarding-house with only a slight fluctuation in boarders might alternate monthly from status as taxpayer to an exempt status. On the other hand an arbitrary adoption of an annual basis for computing the average, without allowance for other factors, might work to the disadvantage either of the taxpayer or of the state in cases where there has been a sudden major change in the volume of guests served at the boarding-house. We believe that if a boarding-house which normally averages three guests enlarges its facilities to serve six, it becomes subject to the tax during the first reporting period in which its averages five or more guests. On the other hand, a boarding-house which customarily averages six paying guests should be considered exempt during the first reporting period during which, as a permanent policy change due to changes in facilities or personnel, it averages less than five paying guests. A definitely longer period of time should be required to establish an average where the decrease in guests is due merely to a decrease in business, and the boarding-house continues to offer its services to five or more and thus potentially will maintain its average. 9/4/51.