Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
550.0000 TAXABLE SALES OF FOOD PRODUCTS—Regulation 1603
550.0812 Charges Made by Caterers for Use of Premises. When billing their customers, many food service providers include charges for the use of premises. In general, hotel and restaurant charges for premises are subject to tax when the charges relate to an event where the hotel or restaurant serves meals, food or drinks; whereas hotel or restaurant charges for premises used for a meeting or some other event where no meals, food or drinks are served are not subject to tax. This standard also applies to "similar establishments" such as convention centers and country clubs. (Regulation 1603(a).)
Regulation 1603(h)(1) specifies that a "caterer" cannot be the same person who supplies the premises, e.g., a hotel, restaurant, or banquet hall, but must be a person who serves meals, food or drinks on the premises of a third party. In other words, the caterer must serve meals, food or drinks on the premises of the customer or on premises that the customer has obtained from someone other than the caterer.
Regulation 1603(h)(4) is written in terms of premises provided by the same person who provides the meals, food or drinks, i.e., someone who is not a "caterer" as defined in subdivision (h)(1). This subdivision applies only to unusual circumstances such as when the premises are used most of the time for purposes unrelated to the serving of food, meals or drinks.
Facilities that are not primarily used for serving meals, food or drinks, like aquariums, museums and zoos may also operate a cafeteria, snack bar or other eating concession. These facilities may rent some or all of their premises for catered events. Other types of establishments may designate specific areas of the property for events where meals, food or drinks are served, such as a winery with a courtyard for wedding receptions or a horse ranch with a picnic/barbecue area.
Under Regulation 1603(h)(4), if premises and catering are provided by the same person and if the primary purpose of a facility, or a specified portion thereof, is to serve meals, food or drinks, then the charge for that type of area is subject to tax. In other words, if a facility such as an aquarium operates a caf|fe and a group rents the caf|fe for a cocktail party, the charge for the premises is subject to tax. If a facility is not primarily used for serving meals, food or drinks and the group rents the entire facility, i.e., the whole aquarium, for the cocktail party, then the charge for the premises is not subject to tax. 8/6/03. (2004–2).